ESSEN, Germany ? A P300 million loan to boost microfinance in the Philippine countryside has been signed between a German bank and a confederation of cooperatives in the Philippines.

The German bank IM Bistum Essen signed the agreement with the National Confederation of Cooperatives (Natcco), which launched in early 2007 the Microfinance Innovations in Cooperatives (Micoop) ?to deliver microfinancing to the enterprising poor in areas where banks and even cooperative are reluctant to operate.?

?Many financial institutions are reluctant to provide loans to the poor because they believe they are bad borrowers. But Micoop believes otherwise. We give the enterprising poor a chance to put up their own businesses by freeing them from usurious financiers,? Evelia Tizon, Micoop Group chief, said.

Loans outstanding in all branches in 2007 amounted to P349 million, increasing to P574.8 million in 2008. The program also boasts of having 101,000 members in 2008.

Under the Micoop Program, Natcco enters into partnership with a qualified member cooperative to help put up branches or satellite offices in areas of high poverty incidence.

The cooperative has the option to choose between the build-operate-adapt-transfer (Boat) or the 50/50 partnership scheme. The host cooperative provides the manpower, while NATCCO provides the training, supervision, as well as the funding.

There are currently 64 Micoop branches in provinces all over the Philippines.

Citing the large investment required as well as the long return-on-investment (ROI) of microfinance projects, Raul Calayan, Natcco Treasury & Credit Chief, said: ?This loan will definitely help improve Natcco?s liquidity because we project it will generate P3 million in savings annually, plus potential revenue.?

IM Bistum Essen has been in international banking since 1966, and its clients include hospitals, foundations, religious housing companies, institutions for elderly and disabled people, pension schemes, and private clients.

Last year, 2.7% of the bank?s loans were allotted for microfinance projects.

?As a cooperative bank, IM Bistum Essen does not work on the principle of maximising profits. Instead, we are obliged to perform a supporting role for their members and clients,? it said in its most recent Annual Report.

Natcco has 327 members, with a networth of P835 million.