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Microfinance for Decent Work: Action Research (MF4DW) (Philippines)

Philippines
1-Mar-08
30-Jun-12
Keywords
Access to finance

Project description

The Microfinance for Decent Work: Action Research programme explored the linkages between microfinance and Decent Work with 16 microfinance institutions , testing adaptations to products, services, and delivery techniques that could result in tangible increases in decent work for clients.

At the outset of the MF4DW, each participating MFI conducted a diagnostic survey among 200 of its clients to determine their most pressing work-related challenge. The analysis was guided by ILO�s vision of decent work for all and its goal to promote opportunities for women and men to obtain decent and productive work, in conditions of freedom, equity, security and human dignity. Within this framework, the diagnostic determined child labour, working conditions, formalisation, job creation and productive employment, risk management/over-indebtedness, and women�s empowerment, as key challenges keeping microfinance clients from obtaining decent work. Each MFI then selected a key decent work challenge and implemented an innovation to address it.

Partner organisations are:
Cambodia: Anghor Mikroheranhvatho Kampuchea Co. Ltd.
Viet Nam: Tao Yeu May Fund.
Philippines: Negros Women for Tomorrow Foundation (two separate programmes run).

Primary thematic area

Secondary thematic areas

Financial services

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Project evaluation

Evaluation source

Changes at the client level were captured through a series of client surveys. The ILO, along with research partners, established impact through a mix of econometric methods, in particular, the use of the difference-in-differences (DiD) methodology, which compares changes before and after the implementation of the innovation in the control and treatment groups.

In Cambodia, AMK conducted 3 surveys over the span of 2.5 years on a sample of 1200 clients in two provinces: Kompong Cham and Kompong Thom.

In Cambodia, VFC conducted 4 surveys over the span of 2.5 years on a sample of 1155 clients in 3 provinces: Kompong Chnang, Kandal, and Kompong Thom.

In Viet Nam, TMY conducted 5 surveys over the span of 2.5 years on a sample of 1000 clients in two provinces: Hanoi Capitol and Nam Dinh.

In Philippines (1), NWTF conducted 5 surveys over the span of 2.5 years on a sample of 1000 clients in two branches on Negros Occidental island.

In Philippines (2), NWTF 5 surveys over the span of 2.5 years on a sample of 1286 clients in two branches on Cebu island.

Evaluation methodology

Quantitative (quasi-experimental).

Programme targets

By sharing the findings and experiences from this action research project, the ILO hopes to encourage microfinance practitioners, researchers, policymakers and donors to undertake intentional innovations, and evaluate their impact, because it is a promising way to enhance results for the betterment of all stakeholders involved.

Results achieved

Cambodia (AMK):
- Reduction of 3.4% in late payments
- Asset building through 10% increase of insurance uptake;
- Financial attitude through 8% reduction in clients' believe that it is impossible to save, an 1% increase in clients' association of savings and security, through improved handling of debt, as well as attitude towards borrowing.

Cambodia (VFC):
- 10% decrease of negative perception towards insurance
- Partially improved attitude towards savings
- 9% increase of setting money aside for future emergencies
- 22% increase in ability to put money aside for emergency expenses;
- Little evidence with respect to asset building (except for 8-10% increase of savings incidence);
--Increased borrowing from informal source by 19-22%
- 9% increase in taking out loan to repay another
- Ability to cover HH expenses reduced by almost 20% while ability to cover unforeseen HH expenses increased 8-13%

Viet Nam:
- 15% decrease in attitude that keeping track record of income and expenditure is not necessary;
- 4% reduction in attitude that expense analysis is not necessary;
- 10 to 17% increase in positive attitudes towards savings;
- 22% increase in ability to put money aside for emergency expenses;
- Increase in motorbike liability insurance by 5%;
- Decrease of 12% in taking out loan to repay another;
- Ability of HH to cover their expenses increased by 3.3%

Philippines (1):
- 13% treatment effect in perception of lower barriers to entrepreneurship;
- Business profit increased by PHP 2,000 (approx. USD 50) which was almost double the baseline profit, ownership of motorized vehicles increased by 3.5%;
- Incidents of late repayment decreased by 4%, taking out a loan to repay another loan decreased by 10%;
- Incidents of late repayment decreased by 4%, taking out a loan to repay another loan decreased by 10%;
- Inconclusive results for debt- and precaution-related financial attitudes, and for financial behaviour/risk management.

In Philippines (2):
- Cross-borrowing decreased in multiple indicators: 22% reduction in taking out loan to repay another, 7% reduction in borrowing from formal and 1.5% from informal sources;
- Repayment difficulties decreased by 7%;
- Improvement of precaution-related financial attitudes;
- Financial behaviour/risk management;
- Vulnerability: while study shows significant increase in ability to cover all household expenses (4.2%), it also finds a decrease in the ability to cover unforeseen household expenses;
- Clients took less insurance, e.g. decrease of >30% in life insurance (negative impact on asset building))

Targets met?

By sharing the findings and experiences from this action research project, the ILO hopes to encourage microfinance practitioners, researchers, policymakers and donors to undertake intentional innovations, and evaluate their impact, because it is a promising way to enhance results for the betterment of all stakeholders involved.

2023

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