Articles | Light and Grace

In our previous articles, we discussed about how the Philippines has remarkably progressed in alleviating poverty for the past 30 years due to its robust economic growth, and how it is faring with its Asean contemporaries.

We found out that despite the fast GDP growth, our poverty reduction was not at the same pace and slower than Thailand and Vietnam. And as the World Bank had pointed out, this is mainly due to the persistence of economic inequality in which not everyone, especially the ultra-poor, have an equal level of opportunity to have access to proper nutrition, health care, quality education, jobs, and skills that are essential in eradicating poverty and creating inclusivity.

In alleviating poverty, giving cash and tangible productive assets is not the only solution. We must also equip the poor with the right training, knowledge, coaching and mentoring with encouragement. In today’s article, we are to discuss the impact of equipping the poor on financial health and livelihood.

In the previous survey of the Bangko Sentral ng Pilipinas (BSP), the share of Filipino adults with bank accounts grew to 56 percent in the first quarter of 2022, from 29 percent in 2019. This was relatively higher than Cambodia’s 33 percent, Laos’ 37 percent, Myanmar’s 48 percent, and Indonesia’s 52 percent. However, this is lower than Malaysia’s 88 percent, Thailand’s 96 percent, and Singapore’s 98 percent (World Bank Global Findex 2021). Despite this development, challenges remain for the financial inclusion agenda of the BSP. The main barrier is lack of income, and bank transactions persist that expose inequality in the financial aspect. Effective financial organization and instruments are required, be it at the national (formal) level or at the household (informal) level. Training and equipping the poor can be utilized to improve the financial well-being of ultra-poor families.

International Care Ministries, a nonprofit organization that serves the ultra-poor communities in Visayas and Mindanao, trains and equips families in ultra-poverty through its Transform program. The program is delivered through weekly group sessions. One of its key component is the livelihood training wherein a trained staff teach business skills, saving and how to manage their finances. Program participants are grouped into “savings groups” (SGs). These groups are typically five to 20 people who belong to the same community. These groups have their regular meetings at least once a week, and members are required to contribute a small sum each meting, which is collected by the group’s treasurer and serves as the group’s savings. These groups are also being mentored and coached by an ICM staff regularly so they may use their savings, should it be enough, in a lucrative and sustainable business. As their business progresses and accumulates profit, members of the group may now potentially open a savings account in a bank, joining the formal financial sector.

Presbyterian Agricultural Services (PAS), a nonprofit organization, also trains the ultra-poor in Ghana, which includes financial education plus productive assets, aside from technical training, and life skills. Their poverty intervention proved to be successful in increasing the participants’ income and monthly consumption (Banerjee et. al. 2015).

Livelihood training is also essential for poverty reduction. Communities, especially rural ones, may have resources such as land, crops, and other assets. However, these communities often do not have the skills on managing these assets and turning them into productive use. The Village Enterprise (VE), a nonprofit organization that conducts livelihood training in Uganda, teaches livelihood that utilizes the productive assets that they provide for their participants. They also train their participants on how to market their produce. This approach is proven to be effective in increasing the income and monthly consumption of the ultra-poor who trained under their poverty intervention program (Sedlamyr et. al., 2020).

The studies and program cited here are meant to address poverty on the community or “micro” level. How can the impact of a “micro” training in finance and livelihood be translated to national or “macro” perspective in eradicating poverty? Moving forward, the government must look on policy proposals on how they can efficiently equip the poor and make them “graduate” out of poverty. Teaching the poor innovative ways of managing their finances and livelihood makes it more sustainable than merely being a “reactionary” government.

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