Friday, May 22, 2015


Banks have failed to achieve FINANCIAL INCLUSION on their own.  Let me rephrase that.  Banks are not so successful as the Bangko Sentral ng Pilipinas (BSP) would have it.  This is without what the BSP calls other "financial service providers", like cooperatives, microfinance NGOs, etc.

I think, that is why BSP is pushing for this thing called "National Strategy for Financial Inclusion (NSFI), reportedly set for launch in July this year. 

Just what is FINANCIAL INCLUSION?  BSP Gov. Amando M. Tetangco, in his speech, defined it as the state 

"..where there is ACCESS to a wide range of financial products and services that are responsive to the needs of all Filipinos and supports broad-based and inclusive growth.." (emphasis, provided).  This is the yardstick of financial inclusion.

Gov. Tetangco also cited data on challenges and unrealized opportunities facing banks, and other financial providers:  

* 36% of our 1, 634 cities and municipalities have NO BANKS at all;

This means 588 such areas have no access to banks. 

However, if you add other "financial service providers" (include cooperatives, microfinance institutions, pawnshops, etc.), only 12% of all cities and municipalities would remain unserved by authorized financial service providers.

* While only four of ten Filipino adults save, 68% of those who does, keep their money at home; 33% save at banks; 7.5% in cooperatives; and 2.5% in paluwagans.

* 47% of Filipino adults are borrowing; of which 62%  of loans is sourced from family, relatives and friends; 10% from informal lenders; 12% from formal institutions; 10.5% from cooperatives; 9.9% from microfinance NGOs; and only 4.4% from banks.

These data are from the Nationwide Baseline Survey on Financial Inclusion (2015). 

Again, in a speech, Gov. Tetangco mentioned the performance of various sectors in the grant of microfinance.  It will be remembered that BSP, since 2000 has adopted microfinance through its accredited banks, etc., and has been promoting microfinance.

BSP reports that as to loan performance, BSP-accredited/supervised banks have granted an outstanding amount of P11.4-billion in microfinance loans to some 1.2-million clients.

On the other hand, some 16 Microfinance NGOs, with a combined network of 2, 190 branches, have granted P11.6-billion in outstanding loans to some 2.5-million borrowers.

This to me is an interesting part of the report, also from the BSP speech of Gov. Tetangco. 

I quote: "..Data from the Cooperative Development Authority say 67.9% of 10, 675 reporting cooperatives have provided financial services to 6.5-million members..". (Note: only 10,675 of over 24,000 cooperatives registered, submitted their annual progress report to CDA in 2014).

(What? No data on amount of loans granted by cooperatives?  This speaks volume. Not even BSP could get indicative data on such loans? Paging CDA.).

 By these, I have no intention to denigrate the role of banks on financial inclusion.  After all, banks must be sustainable and must earn for their stockholders.  They are not designed nor they pretend to have been designed for the poor.  They will have to participate in financial inclusion within the parameters of what open market forces would allow them.

That cannot be said of other "financial service providers", like cooperatives, or microfinance NGOs, for example, which have different ownership structure, conceptual framework than banks'. 

My point here is that cooperatives, including other financial service providers outside the control and supervision of BSP, will have a big role to play in financial inclusion.  

That is the reason behind the crafting of the National Strategy for Financial Inclusion.  Gov. Tetangco also reported that under the leadership of BSP, 13 government institutions have joined together to create a draft of the National Strategy for Financial Inclusion (NSFI).

To quote Gov. Tetangco, NSFI "..shall provide a platform for coordination among the many stakeholders with important in financial inclusion.  It provides the blueprint useful in designing and implementing financial inclusion policies and programs that focus on four areas.

These areas are (1) policy, regulation and supervision; (2) financial education and consumer protection; (3) advocacy programs; and (4) data measurement..."

So, here.  (END).



NREA 2015 National Convention Cebu

NREA 2015 National Convention Cebu

Sunday, May 17, 2015


COOPERATIVES paid a total of P18.358-million in various fees to the Cooperative Development Authority (CD) during the first eight (8) months of 2014.

This is according to CDA's Statement of Revenues covering the period January 1- August 31, 2014 ( ).

The fees, collected from registration, amendment of Articles of Cooperation and By-laws; certifications; and miscellaneous fees, were equivalent to 67% of the target revenues for the period.

Top performing offices/regional extension offices are Central Office, with a percentage of collection accomplishment versus targets of 841%; followed by Manila Extension Office-NCR, 188%; Calamba, 128%; Davao, 94%; and Naga Extension Office, 93%.  (END).

Friday, May 8, 2015


Cooperatives with lending activites are urged to fix their respective credit databases soonest to be able to submit basic credit data to the Credit Information Corporation (CIC), which announced that it is ready to accept such data by June 2015.

Jaime P. Garchitorena, CIC president, made the call during his address at the Cooperative Financial Cluster Summit held last April 17-18, 2015 at Tagaytay City, attended by some 700 cooperative leaders.

CIC is a government-owned and controlled corporation mandated to operate a centralized credit registry that will collect positive and negative data on loan borrowers.

It will also provide basic credit information to individuals and entities who have or were given access rights to the same.

Cooperatives engaged in lending activities, such as credit cooperatives, are among the institutions tasked under to submit credit data to CIC under R.A. 9510, or the Credit Information Systems Act (CISA).

Garchitorena said that the establishment and eventual availability of a comprehensive, centralized, and accurate credit information system would inspire financial inclusion.

Not only will it lessen lending risks for creditors, but it would also allow borrowers to leverage on their good credit standing to access loans they needed for business expansion, he pointed out.

He also mentioned that CIC was aware of the challenges faced by cooperatives lacking the proper technological infrastructure to comply with CISA, even as he urged anyone needing technical assistance to get in touch with CIC.

Cooperatives, through the Philippine Cooperative Center, are among the shareholders of CIC.

(From CIC press release:  ).

Friday, April 24, 2015




Section 1.  Legal Basis.  The legal basis for this Rule are as follows:

    "ART. 23. Type and Categories of Cooperatives. - (1) Types of Cooperatives - Cooperatives may fall under any of the following types:


    (e) Service Cooperatives is one which engages in medical and dental care, hospitalization, transportation, insurance, housing, labor, electric light and power, communication, professional and other services;


    "(t) Workers Cooperative is one organized by workers, including the self-employed, who are at same time the members and owners of the enterprise, its principal purpose is to provide employment and business opportunities to its members and manage it in accordance with cooperative principles."

Section 2.  Guiding Principles.  It is the declared policy of the State to foster the creation and growth of cooperatives as a practical vehicle for promoting self-reliance and harnessing people power towards the attainment of economic development and social justice.  The State shall encourage the private sector to undertake the actual formation and organization of cooperatives and shall create an atmosphere that is conducive to the growth and development of these cooperatives.

    These Rules shall serve as a guide to service cooperatives which are engaged in labor contracting and sub-contracting arrangements as defined under existing laws, and workers cooperative that provides labor to, and produces products in, an enterprise owned by the worker-members.  The purpose is to harmonize policies and practices of cooperatives in the light of existing treaties, laws, rules, and regulations on the matter.

Section 3.  Applicability.  This Rule shall cover the following:

    a.  Labor service cooperative - a cooperative that is engaged in providing a specific labor, job, or service to a principal under a contracting or sub-contracting arrangements as may be defined under existing laws and in accordance with the cooperative principles set forth under the Philippine Cooperative Code of 2008 (R.A. 9520); and

    b.  Workers cooperative - a cooperative organized by workers, including the self-employed who are at the same time members and owners of the enterprise.  The principal purpose is to provide employment and business opportunities to its worker-members and manage it in accordance with the cooperative principles.

    Section 4.  Distinction and Authorized Activities.  The following shall be the distinction between labor service cooperative  and workers cooperative:

    a.  Labor Service Cooperative:  

    As to nature of activities - Engaged in contracting and sub-contracting arrangements as defined by law;

    As to existence of employer-employee relationship - Existence of employer-employee relationship is at all times observed in contracting and sub-contracting arrangements during the deployment of the member.  Trilateral relationship exists between and among the principal, contractor, and the member-employees.

    b.  Workers Cooperative:

    As to nature of activities - May engage in labor and production, including contracting and subcontracting arrangements in support of the main activity as defined by law.

    As to existence of employer-employee relationship - Self-employed individual is allowed by the cooperative in regard to its enterprise.

    Section 5.  Definition of terms.  The meaning of each term as used in this Rule shall be as follows:

    I.  For those falling under workers cooperative.

    a. "Self-employed" refers to one who has his/her own personal occupational capacity put to productive use by applying his/her own capital raised by himself of together with other self-employed persons pursuing related occupational interest.

    b.  "Skilled Worker" refers to to a worker possessing technical knowledge and expertise to accomplish a work.

    c.  "Worker Cooperative" refers to a cooperative organized by workers, including self-employed individuals who are owners and members of the enterprise.

    d.  "Worker-member" is also referred to as member-owner.  He/she also works in the cooperative or is deployed as a worker with a principal availing of services offered by the cooperative.

    Worker-member ownership means work and management are carried out jointly, without the typical limitations of individual work, nor exclusively under the rules of conventional wage-based labor.

II.  For those falling under labor service cooperatives:

   a.  "Cabo" is prohibited activity referring to a person or group of persons or to a labor group which, in the guise of cooperative, supplies individual members or workers to an employers, with or without any monetary or other consideration, whether in the capacity of an agent of the employer or as an ostensible independent contractor.

   b.  "Contracting" or "Subcontracting " or "Labor Contracting"  refers to an arrangement whereby a principal agrees to put out or farm out with a contractor the performance or completion of an specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal.

   c.  "Contractor" refers to a labor service cooperative engaged in a legitimate contracting or subcontracting arrangement providing either labor services, skilled or temporary workers, including individual member-employees, or a combination of services to a principal under a Service Agreement.

   d.  "Contractor's member-employee" includes an individuual member of a cooperative who has been deployed by the cooperative to perform or complete a job, work or service pursuant to a Service Agreement.  It also refers to members who are regular employees of the contractor whose functions are not dependent on the performance or completion of a specific job, work, or service within a definite period of time, such as administrative staff.

   e.  "Principal"  refers to a person or entity, including government agencies and government-owned and controlled-corporations, who puts out or farms out a specific job, service or work to a contractor.

   f.  "Service Agreement"  refers to the contract between the principal and contractor containing the terms and conditions governing the performance or completion of a specific job, work or service being farmed out for a definite or predetermined period.

   g.  "Solidary liability"  refers to the liability of the principal pursuant to the provisions of Article 109 of the Labor Code, as direct employer together with the contractor for any violation of any provision of the Labor Code, as amended, and these Rules.

   It also refers to the liability of the principal, in the same manner and extent that he/she is liable to his/her direct employees, to the extent of the work performed under the contract when the contractor fails to pay the wages of his/her employees, as provided in Article 106 of the Labor Code, as amended, and these Rules.

   h.  "Substantial capital" refers to the capital required by DOLE for labor service cooperatives to engage in labor contracting and sub-contracting arrangement.  However, for purposes of registration with the Authority, the minimum capital requirement is Fifteen Thousand (Php15,000.00) pesos.

   i.  "Trilateral Relationship"  refers to the relationship in a contracting or subcontracting arrangement where there is a contract for a specific job, work or service between the principal and the contractor, and a contract of employment between the contractor and its worker-member.

   There are three (3) parties involved in these arrangements:  the principal who decides to farm out a job, work or service to a contractor; the contractor who has the capacity to independently undertake the performance of the job, work or service; and the contractual employee who may or may not be cooperative members, engaged by the contractor to accomplish the job, work or service.

   Section 6.  Legitimate contracting or subcontracting.  Contracting or subcontracting undertaken by a cooperative shall be legitimate if all the following circumstances concur:

   (a)  The contractor must be registered as a labor service cooperative with the Authority in accordance with these Rules, and carries a distinct and independent business and undertakes to perform the job, work, or service on its own responsibility, according to its own manner and method and free from control or direction of the principal in all matters connected with the performance of the work except as to the results thereof;

   (b)  The contractor has substantial capital and/or investment; and



Wednesday, April 22, 2015


    "Without cooperatives, there will be no real financial inclusion and no genuine inclusive growth."

    Thus, said Ray Elevazo, Executive Director of the Cooperative Development Authority (CDA) in his remarks during the culmination of the Cooperative Financial Cluster Summit held last April 17-18, 2015 at Tagaytay City.

    Although we (cooperatives) are here...they forgot, or maybe, refused to believe that the cooperative movement is a century-old Philippine mass movement that dared and still bravely dares to advance inclusive growth and financial inclusion, even in the past when these phrases were still not popular and fashionable, he pointed.

    As the Cooperative Centennial fever draws in, we decided to advance through clusters.  And now, we are concluding the first cluster congress, among a number of scheduled cluster congresses this year, Elevazo said.

    Now, what we are writing is not only a chapter but a story that will tell the government and the economic elite, that cooperatives are a significant part of the Philippine economy, he concluded.  (END)
Related Posts with Thumbnails