Banks, CSR and the poor | Inquirer Business

Banks, CSR and the poor

/ 12:34 AM September 15, 2016

Bank corporate social responsibility should focus on uplifting the plight of the poor. In the Philippines, where our banks  make their profits, the rural poverty has hardly changed in the last 10 years. It is still about 40 percent, more than twice  (e.g. Vietnam, Thailand, and Indonesia at 17-19 percent) to 20 times (e.g. Malaysia at 2 percent) that of our neighbors.

Banks do CSR by giving money or money-equivalent donations (e.g. feeding programs, health services etc).


According to Investopedia, “social responsibility is the idea that businesses should balance profit-making activities with activities that benefit society.” But a more progressive CSR  view is that these activities should relate to a corporation’s main mission and core competence. In addition,  it should promote sustainability.

Traditional CSR


Banks exercise CSR when they “feed the hungry” and “cure the sick.” But an added view is that they should do what  is in their core competence: lend money, but also to higher risk sectors like agriculture, where the poor are located. This way, with these people now having jobs enabled by their enterprises made possible through the bank loans, the poor can now have enough money to feed and cure themselves. This is also more sustainable.

Adopting this view is probably  why the cement  sector bested 32 other industry sectors in becoming the sole Sustainable Development Hall of Fame awardee of the Federation of the Philippine Industries. Although the cement companies had nutrition, health and education programs, they added activities that were central to their mission  of providing quality and safe cement.

For example, instead of just teaching mathematics to poor children (which others can do equally well), they taught  masonry skills to the unemployed. This  created jobs, while at the same time contributed to the cement industry’s mission.

In the same way, banks should have as a key part of their CSR activities a way of lending to the poor who would otherwise not get loans. This is because the poor do not know how to make feasibility studies.

Consider the table below provided by the DA’s Agriculture Credit and Policy Council.

The table shows that 80 percent of the required credit shortage can be provided by the banks. The different commodity sectors have different amounts and percentage gaps. Apparently, the  Fisheries sector was  not given the proper attention in the above table. Only 600,000 of the 3.2 million fisherfolk were considered, and yet they are  the poorest sector in our country.

Given these limitations, there is still an identified P462 billion credit gap identified in the above table which banks  can address through their CSR activities. For 2014, only 1.9 percent of all bank loans went to the agriculture sector. No wonder we have a high rural poverty level and no inclusive growth.


Successful model

Banks should extend loans only to those who can provide good feasibility studies. Unfortunately, the poor do not have the capability to do this. Thankfully, there is a successful model that addresses this problem.

From 1974 to 1980, a DTI program called Masicap recruited the top senior university and college students from around the country to help such people prepare  feasibility studies. In 2001, these Masicap alumni met at a reunion and decided to continue this work by establishing the Masicap Foundation.

They asked the same DTI secretary who supervised them in the seventies to chair this foundation. Former Secretary and  Senator Vicente Paterno gladly accepted, and guided this foundation for the next 12 years. He often contributed his own money.

From 2002 to 2015, this foundation, with an annual P5 million budget and a core group of 3 people each  in 7 Mindanao provinces, helped poor people prepare feasibility studies for bank submission. They got a total of P4.6 billion  in loans, or P350 million a year. Not bad for such a shoestring budget! An interesting highlight is that President Duterte knows this foundation well, since he supported its national start in Davao City when he was mayor.

A bank need not reinvent the wheel. It can duplicate and appropriately modify  this 13 year success story by contacting  Masicap president Nanette Agdeppa (0917-5401580). In addition to a bank’s current programs, it can apportion a part of its CSR budget for this purpose.

This pioneering initiative  will then fulfill the progressive view of a CSR consistent with and complementary to an organization’s mission, using its core competence, and  providing a sustainable way of eradicating poverty and achieving inclusive growth.

The author is chair of Agriwatch, former Secretary for Presidential Flagship Programs and Projects, and former undersecretary for agriculture, trade and industry. For inquiries and suggestions, e-mail [email protected] or telefax  8522112.

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