National Library Bibliothèque nationale .+. of canada du Canada Acquisitions and Direction des acquisitions el Bibliographie services Branch des services bibliographiques 395 Welbnglon Street 395. rue Wellington Ottawa.Ontano Ottawa (Ontario) K1A QN4 K1A QN4 NOTICE AVIS The quality of this microform is La qualité de cette microforme heavily dependent upon the dépend grandement de la qualité quality of the original thesis de la thèse soumise au submitted for microfilming. microfilmage. Nous avons tout Every errort has been made to fait pour assurer une qualité ens!.:.e the highest quality of supérieure de reproduction. reproduction possible. If pages are missing, contact the S'il manque des pages, veuillez university which granted the communiquer avec l'université degree. qui a conféré le grade. Sorne pages may have indistinct La qualité d'impression de print especially if the original certaines pages peut laisser à pages were typed with a poor désirer, surtout si les pages typewriter ribbon or if the originales ont été university sent us an inferior dactylographiées à l'aide d'un photocopy. ruban usé ou si l'université nous a fait parvenir une photocopie de qualité inférieure. Reproduction in full or in part of La reproduction, même partielle, this microform is governed by de cette microforme est soumise the Canadian Copyright Act, à la Loi canadienne sur le droit R.S.C. 1970, c. C-30, and d'auteur, SRC 1970, c. C-30, et subsequent an1endments. ses amendements subséquents. Canada • THE SUSTAlNABD..ITY OF CREDIT ASSISTANCE TO THE URBAN POOR: A Philippine Case Study Cristina R. Taiiada Department of Sociology McGiII University, Montreal July, 1994 A Thesis submitted to the Faculty of Graduate Studies a.,d Research in partial fulfilme!lt of the requirements of the degree of Master of Arts (c) Cristina R. Taiiada • 1994 National Ubrary Bibliothèque nationale 1+1 ofC3nada duC3nada Acquisitions and Direction des acquisitions et Bibliographie services Brancil des serviees bibliographiques 395 Welijnglcn Street 395. rue wemngtcn Ottawa. ontario Ottawa (Onlano) K1AQN4 K1AQN4 THE AUTHOR RAS GRANTED AN L'AU1EUR A ACCORDE UNE LICENCE IRREVOCABLE NON-EXCLUSIVE IRREVOCABLE ETNON EXCLUSIVE LICENCE ALLOWING THE NATIONAL PERMETTANT A LA BffiLIOTHEQUE LffiRARY OF CANADA TO NATIONALE DU CANADA DE REPRODUCE, LOAN, DISTRIBU1E OR REPRODUIRE, PRETER. DISTRIBUER SELL COPIES OF IDS/HER TIIESIS BY OU VENDRE DES COPIES DE SA ANY MEANS AND IN ANY FORM OR THESE DE QUELQUE MANIERE ET FORMAT, MAKING TmS TIIESIS SOUS QUELQUE FORME QUE CE SOIT AVAILABLE TO INTERESTED POUR METTRE DES EXEMPLAIRES DE PERSONS. CETTE TIIESE ALA DISPOSmON DES PERSONNE INTERESSEES. THE AUTHORRETAINS OWNERSmP L'AUTEUR CONSERVE LAPROPRIETE OF TIIE COPYRIGHT IN IDSIBER DU DROIT D'AUTEUR QUI PROTEGE THESIS. NEITHER THE THESIS NOR SA THESE. NI LATHESE NIDES SUBSTANTIAL EXTRACTS FROM IT EXTRAITS SUBSTANTIELS DE CEl 1 E­ MAY BE PRINTED OR OTHERWISE CI NE DOIVENT:ETRE IMPRIMES OU REPRODUCED WImOUT IDSIHER AUTREMENT REPRODUITS SANS SON PERMISSION. AUTORISATION. ISBN 0-315-99940-3 Canadti 11 • ABSTRACT Urban poverty in the Philippines is strikingly manifested with the problem of street çhildren. The labour of children is significant because of marginal household incomes. This thesis is an a~sessment of the credit prograrn of one community based Non-Government Organization in Manila. The Family and Children for Empowerment (FCED). attempts to augment household incomes through the provision of low interest loans to women for informai micro-enterprises. The study is exploratory. The results reveaI that most beneficiaries have achieved an income high enough to prevent their children from working and give farnilies the opportunity to irnprove their standards of living. However, limitations exist in the informai sector which hinder the expansion and stability ofthe enterprises. AIso, the cooperative credit prograrn itself is at a critical stage. The study finds an urgent need for the cooperative to implement measures for capital build-up if it wants to continue to subsidize and provide its low interest credit loans to urban poor petty traders and producers. III RÉSUMÉ • enfanl~ La problématique des de la rue est une manifestation marquante de la pauvreté urbaine. Les revenus obtenus par le travail des enfants sont importanl~ car ils permettent d'augmenter les faibles revenus des ménages. Cette thi1:se consiste en une évaluation d'un programme coopératif de crédit d'une organisation non-gouvernementale, basée dans un quartier de Manille. Le "Family and Children for Empowerment (FCED) tente d'augmenter les revenus des ménages en accordant des prêts aux femmes propriétaires de petites entreprises de typ.: informel. L'étude est exploratoire. Les résultats révi1:lent que la plupart des bénéficiaires de prêl~ ont pu améliorer leurs conditions de vie. Par conséquent. les revenus générés par le tmvail des enfants ne sont plus nécessaires. Cependant. en raison de limites inhérentes au secteur informel, les femmes ont des difficultés à stabiliser et à agrandir leur entreprise. De plus, le progmmme coopératif de crédit se trouve présentement dans une situation critique. L'étude démontre qu'il est essentiel que la coopérative établisse des mesures permettant l'accumulation de capital. afin de continuer à accorder des prêts à bas taux d'interêt pour les producteurs et vendeurs du secteur informel urbain. iv ACKNOWLEDGMENTS This thesis would not have been possible without the support, guidance aI'd assistance of many. First of ail. 1would like to thank the McGilVCanada International Development Agency Fellowship Program for the opportunity to pursue my dream of studying abroad. My heartfelt thanks go to my supervisor. Professor Donald Von Eschen whose constant encouragement. sincere interest and critical insights inspired my work. 1also wish to acknowledge Professors Vii Locher. Donald Attwood and David Barron. who were a1ways ready to offer their valuable advice. 1should also acknowledge Miss Teresita Silva, the president of the Family and Children for Empowerment and Development. Inc. for allowing me to conduct my case study research on the organization. and giving me access to ail relevant documents. Special thanks goes to the staff of the Cooperative who did not tire in answering my numerous questions. 1am specially grateful to the persons 1 interviewed. for their wiIlingness to participate in this research. Finally. 1 must thank my parents, Bobby and Zeny Taiiada, Their love. support and encouragement carried me through the difficuit writing stage of this thesis. They too were responsible in opening my eyes to the significance ofseeking solutions to the poverty ofmajority of our countrymen and women. They taught me to be sensitive to the plight of the poor, for every Filipino has a right to live with dignity. TABLE OF CONTENTS • Glossary Chapter I. INTRODUCTION _..... 2 Poverty, the Infonnal Sector. and the Need for Credit in the Third World 3 Response of Aid Agencies and Non-Oovemrnent Organizations 5 The Need for Indepth Studies 7 A \:ase Study: An NOO in the Philippines 8 Metllods 13 Organization of the Paper 14 Il. AN OVERVIEW OF THE FCED AND THE COMMlJNITIES IT SERVES 15 A Description of the Communities of FCED 15 Family and Chïlclren for Ernp!)wennent and Developrnent (FCED): An Agency ProfIle 20 Parents Multi-Purpose Cooperative 33 m. A DETAll.ED ANALYSIS OF THE FUNCTIONINO OF THE CREDIT PROGRAM 42 The Central Questions 42 Methodology 43 Findings of the Study 46 A. Incorne 46 B. The Long Run Sustainability of the Credit Program 79 IV. CONCLUSION AND RECOMMENDATIONS 103 Endnotes 112 Selected Bibliography .. 116 Appendix A . 120 Appendix B .. 121 Appendix C .. 122 Map .. 126 List of Tables • 3.1 The Distribution of the Sire of Households of the First and Second S?mples 48 3.2 Daily Earnings of Husbands of the First and Second Samples 50 3.3 Per Capita Daily Income of Husbands of the First and Second Samples 50 3.4 Per Capita Incomes of the Households of the First and Second Samples 53 3.5 Combined Per Capita Income of Husbands and Contributing Adult Members of the First and Second Samples 54 3.6 The Daily lncome of the First Sample 57 3.7 Comments on the Effects Produced by the Extra Earnings Generated by the FlTSt Sample 58 3.8 Per Capita Income of Households in the First Sample with Children in School 59 3.9 Cooperative Loan Utilization 70 3.10 Experiences of Competition 72 3.11 The Effect of the Level of Community Building on Repaynent Rate of the NGOs 98 • G10ssarv Barangay - the term is used to designate a community of families living within a certain area or village COV - Community Volunteer FCED - Family and Children Empowerment for Development IBCWC - Inter-Barangay Council for the Welfare of Children IGP - Income Generating Project ISSEC - Integrated Social Services and Enhancement Center (the former name of FCED) LCWC - Local Council for the Welfare of Children NGO - Non-Govemment Organization Sari-Sari Store - a mini retai! store located in the homes of the poor 1993 Peso Exchange rate to a US Dollar - P27.30 = US$I.OO • 2 • CHAPTER 1 INTRODUCTION This is a study of the credit program of a Philippine non-governrnent organization in a squatter area of Manila. Arnong the principal airns of this organization is to encourage a.'1d assist poor families send their children to school. It atternpts to do this, in part, by establishing a credit prograrn to help mise family incornes through micro-enterprises in the informai sector. The program is grounded on the basis that higher incornes wouid free the families frorn needing the incorne their children could earn by working. This thesis gives an overview of the aims and structure of this NOO, and then examines its credit program in detaiI. It focuses on the latter because this is the principal way the organization hopes to augment the incorne of families.