Stimulating development through a poverty alleviation fund

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Stimulating development through a poverty alleviation fund

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Rosario Caceres, 41, makes home decorations out of sea shells in Baranggay Rizal, Municipality of Gubat, Province of Sorsogon, Philippines.

The Northern Mindanao Community Initiatives and Resource Management Project helped develop the abilities of poor rural communities to play an active role in their own economic and social development. One way the project achieved this was by setting up a poverty alleviation fund in selected municipalities. The fund provided a combination of seed money and much-needed credit to organized groups of poor producers, fishers, indigenous peoples and women who had, with project assistance, developed viable plans for sustainable livelihoods.

Cashing in on cassava chips in Los Arcos, Prosperidad

In 2005, Banal na Kaharian ng Dios na Buhay (BKDB), a self-help group of cassava producers from Los Arcos, about 12 kilometres from Prosperidad, Agusan del Sur, received  financing of PHP 40,000 ($850) from the poverty alleviation fund. This was the standard amount set by the Northern Mindanao project for all self-help groups. Half was considered a grant and half an interest-bearing loan.

With the money, BKDB initially developed value-added cassava products such as cassava cakes and cassava rolls. It then decided to concentrate on cassava chips, an inexpensive snack with a long shelf life and large potential market. 

The project provided the group training in cassava production and processing.  It also arranged a study tour for them in Leyte province, in eastern Visayas, so that they could learn directly from other cassava processors.  With this knowledge, the group set up a small processing centre and began to produce chips under the brand name of C3. 

Like other self-help groups, BKDB had rough times, particularly initially when it had no regular buyers. Prosperidad, the nearest market, could only be reached on foot or by habal-habal (a kind of motorcycle taxi).  To expand their client base, group members brought their products to the nearest school, 7 kilometres away, and sold directly to students and teachers. 

Today, C3 cassava chips are sold in supermarkets, canteens and stores not only in Prosperidad, but as far afield as Butuan City (about 85 kilometres away).  The group even hires sales agents. Members’ earnings have shot up from less than a dollar to PHP 420, or almost US$9.00.

With its profits, the group repaid their loan of PHP 20, 000 to the community institution. These organizations, generally cooperatives, farmers’ organizations or former self-help groups, were trained by the project to administer poverty alleviation fund resources and serve as umbrella organizations for self-help groups.  Under the project, community institutions were entitled to receive the interest accrued on the loans as payment for their services but used the principal amount to finance other microprojects as authorized by their Municipal Project Office. 

In time, BKDB branched out into other activities as well.  For instance, it started the village’s first convenience (sari-sari) store. Villagers can now buy rice and other basic goods there instead of having to travel to town, a saving in both time and transport costs. They can even buy on credit.

Subsistence farming  and microfinance growth in the remote village of Say-uga

“We heard about the poverty alleviation fund just in time,” relates Mary Joy Valcovera, a young mother and a native of Say-uga, a small village in Dumarait, Balingasag, Misamis Oriental. Mary Joy and her husband grow bananas on their one-hectare plot of land. A few years ago, they netted PHP 1,600 (about US$34) a month from their activities. With the birth of their child, they could barely make ends meet. “There were days when we had to eat cooked bananas for breakfast, lunch and dinner,” Mary Joy recalls.

In 2006, their financial situation worsened. Pests and disease attacked their banana plants, wiping out almost half of their harvest. The couple were resigned to borrowing from the local money-lender when Mary Joy heard about assistance available to members of self-help groups taking part in the Northern Mindanao project.  

Determined to overcome her problems, Mary Joy joined the Say-uga Farmers’ Association and attended the orientation and training sessions organized by the project. By year’s end, her perseverance had paid off. She received a loan of PHP 2,000 (about US$43) from the Dumarait Comprehensive Agrarian Reform Farmers Association (DUCARFA), a community organization, which at the time had 49 members and three affiliated self-help groups, including Mary Joy’s.  It had used its earnings from administering poverty alleviation fund loans to launch a small lending service.  Its lending rate was advantageous: only 3 per cent, payable in one year with a six-month grace period. 

With the money and applying some of the techniques Mary Joy had learned during project training sessions, the couple was able to rehabilitate their farm.  Today their gross sales amount to PHP 2,000 (US$43 per month). 

DUCARFA   is now responsible for seven self-help groups and has extended loans to more than 140 farmers. Because of its excellent record, it was chosen by the project to administer a second tranche of poverty alleviation fund resources.

“Our experience in administering poverty alleviation fund resources has improved our management skills and helped us to grow and mature into a viable small business and change agent for our members,” Agapita ‘Giging’ Examinada, DUCARFA Secretary, reports.

Steps towards empowerment in Kitcharao

In Kitcharao, a poor municipality in Agusan del Norte, Caraga, another member of a self-help group has no doubt about how the poverty alleviation fund has changed his fortunes. “I no longer have to beg. I can support my family by selling mats,” Neneng Tebang says. 

Tebang lives in Mahayahay – a resettlement area for the Mamanwa, who are among the poorest of all the indigenous groups in Mindanao. Traditionally nomads, the group can no longer maintain this lifestyle. Land titles and concessions issued to other people have made them trespassers on what was once their traditional domain. Most Mamanwa beg for money to buy food; some even steal to ease their hunger. The Mamanwa often face hostility and discrimination from local populations because of their hand-to-mouth existence.

Many attempts have been made to alleviate the plight of the Mamanwa people, but most have failed.

In April 2004, thanks to the Northern Mindanao project’s efforts, 20 Mamanwa formed a self-help group called NALUMA. Time was then needed to strengthen this new organization, a process complicated by cultural differences.  Eventually, NALUMA accessed PHP 40,000 from the poverty alleviation fund and additional resources from a project fund for indigenous business ventures. 

As its livelihood venture, NALUMA chose to make and sell handicraft items.  This brought some security to the group:  “The project’s assistance brought food to our table. I can now stay in the forest longer, gathering as much rattan as I need to make hammocks, without worrying about whether my family has eaten or not,” says Ricky Mansanna, a NALUMA member and expert hammock maker.

Hammocks are NALUMA’s best-selling items since the Mamanwas are the only makers of hammocks in the area. Their market is not confined to Kitcharao but extends to neighbouring towns. 

Lotty Magsanay, a volunteer community organizer and head of a self-help group, has noticed a difference in the Mamanwa community in Mahayahay: “The poverty alleviation fund has helped unite the Mamanwa here. They are more involved in village activities and less afraid to speak out. They can work on their own.” These changes in attitude will help them find other ways to overcome poverty.

Magsanay also points out that NALUMA is fortunate to live in Kitcharao, where the Municipal Project Office processes microprojects in record time by bringing together all local government and stakeholder representatives concerned in twice-weekly meetings to discuss microproject proposals.  Because of this ‘one-stop shop’ policy, all microprojects, no matter how complex, are processed in one day.

“We no longer spend so much of our time and resources just to get a microproject approved,” Magsanay says.  Fidel Bocboc, chairman of the Multi-Stakeholders Committee, adds: “If we followed the usual bureaucratic process, it would take months to approve a microproject. With our ‘one stop shop’ policy, we bring development to communities faster.”