Among the many strategies to lift the world's poor, one of the most hopeful has been microfinancing. Launched by Muhammad Yunus in 1976, the Grameen Bank provided small loans to destitute Bangladeshi women-to fund small businesses-and repudiated the conventional wisdom that the poor are not credit worthy. Today, the Grameen model is applied around the world. In the Philippines, the CENTER FOR AGRICULTURAL AND RURAL DEVELOPMENT MUTUALLY REINFORCING INSTITUTIONS, or CARD-MRI, has been a leading innovator.
Jaime Aristotle Alip, the CENTER's founder, was introduced to microfinance as a young staff member at Philippine Business for Social Progress. In 1986, along with Dolores Torres and Lorenza Bañez and other rural development workers, he founded CARD to assist landless rural women working on the coconut plantations of Laguna Province. With a start-up fund of twenty pesos and Alip's "magic" typewriter-for writing grant proposals-the group set to work.
In early years of trial and error, the center applied the Grameen microcredit model. Its women borrowers guaranteed each other's loans and pledged to make loan payments and savings deposits every week. The strategy worked. By 1996, CARD had thirteen branches and seven thousand members, many of whom were now self-employed: raising chickens, goats, and pigs; operating tricycles and street-side restaurants; and working as tailors, market vendors, and mini-storekeepers.
Alip and his partners complemented the CENTER's lending program with livelihood-skills training and, in a strategic mid-course correction, modified their model to stress individual responsibility. They also launched a microinsurance program as a safety net against emergency expenses, so often a catastrophe for the poor.
In 1997, Alip converted four of the CENTER's microlending branches into full-service banks, or CARD Bank. In 1999, CARD's insurance program became a separate mutual benefit association offering life and disability insurance and a retirement savings fund. In Alip's concept, these units-the banks, the insurance operation, and the microlending branches-were "mutually reinforcing institutions," hence CARD-MRI. In 2005, CARD's training center became a Development Institute, yet another "reinforcing institution."
Today, CARD-MRI's 629 branches span the Philippines. More than half a million poor women are members and two and a half million people are insured. The center?s loan-repayment rate is above 99 percent. This has allowed CARD-MRI to wean itself from outside grants for its banking and insurance programs. Instead, it relies on profits. It now achieves a return-on-equity of 12.5 percent on assets of US$18 million. Alip is targeting a membership of one million in the near future. Meanwhile, CARD has expanded to Cambodia and beyond.
The CENTER's newest "reinforcing institution" is its Business Development Services. Its task is to help successful microentrepreneurs expand their businesses, accrue assets, and move into the economic mainstream.
This is the aspiration of every CARD member. But, as Alip and his colleagues acknowledge, only a few have advanced to become "mature clients," owning an income-generating business with over US$2,200 in working capital and capable of employing from five to fifteen workers. Most remain poor. Even so, their lives are better for CARD. It is one of the insights of microfinance that even small additions to a family's income can have profound consequences-for better housing, for better nutrition, and, most of all, for better education. Over time, these small benefits accumulate, securing and improving the lives of members and offering better hopes to the next generation.
Microfinance is not a panacea for poverty. But as practiced and enhanced by CARD-MRI in the Philippines, it is a hopeful path. Through it, says Alip, the poor are gaining control "over their resources and over their own destiny."
In electing the CENTER FOR AGRICULTURE AND RURAL DEVELOPMENT MUTUALLY REINFORCING INSTITUTIONS to receive the 2008 Ramon Magsaysay Award for Public Service, the board of trustees recognizes its successful adaptation of microfinance to the Philippines, providing self-sustaining and comprehensive financial services for half a million poor women and their families.