Philippines: Microfinance Development Program

Date: December 2012
Type: Evaluation Reports
Evaluation; Finance
Series: Project Performance Evaluation Reports
Project Number: 38579-013


The Asian Development Bank (ADB) approved the Microfinance Development Program in 2005 to support the Government of the Philippines in addressing systemic weaknesses in its microfinance sector. To achieve this, the Microfinance Development Program was designed to (i) enhance the enabling policy and regulatory environment to promote market efficiencies and a better outreach of microfinance services to the poor at competitive prices; (ii) build viable microfinance institutions; (iii) strengthen regulatory and supervisory capacity and oversight for the microfinance sector; and (iv) increase financial literacy and consumer protection for users.

The 2007-completed program included a $150 million program and a technical assistance grant. Overall, the program is rated successful. All policy actions were realized, with the outreach of microfinance institutions almost doubling to 2.1 million borrowers over the program’s term. And products and services provided to clients—including microfinance housing loans, micro-agri loans, microinsurance, remittances, and mobile banking services— become more diversified.

While the program helped catalyze growth and commercialize the microfinance sector, its outreach specifically to the poor was limited. Evaluative findings show that only 3.7% of sample clients lived below $1.25 a day, and only 10.2% below $2. The program’s impact on reducing poverty is not known, because of a lack of quantitative indicators for monitoring poverty in its design and monitoring framework.

Lessons learned from the program were (i) developing the microfinance sector entails a comprehensive approach that addresses key constraints at all levels (from policy environment and market infrastructure to consumer protection and developing business services), (ii) the main success factors were strong government commitment and an appropriate program design; (iii) the  program successfully eased constraints to the expansion of microfinance services, but outreach to the poor needs to be improved; (iv) the National Anti-Poverty Commission’s information system should have been assessed at the formulation stage, and policy action incorporated in the program design; and (v) vigilance needs to be exercised in maintaining market-based principles for sound and sustainable microfinance operations in the Philippines.


  • Acknowledgments
  • Basic Data
  • Executive Summary
  • Introduction
  • Design and Implementation
  • Performance Assessment
  • Other Assessments
  • Issues, Lessons, and Follow-Up Actions
  • Appendixes