Livelihood scheme teaches Yolanda survivors better financial management

ILOILO, Philippines – The recovery work continues two years after Super Typhoon Yolanda (Haiyan) hit the coastal towns and small islands in Iloilo province.

Apart from building shelters and marine resource management for fisherfolks in reconstruction work, many of the survivors need livelihood because of the limited resources to support income-generating activities. 

Given this need, 4 non-governmental organizations that were at the frontline of delivering relief goods post-Yolanda to the coastal towns of Batad, Carles, Concepcion, and Estancia, have integrated a livelihood component in its reconstruction work.

International humanitarian organization Christian Aid and the Iloilo Caucus of Development NGOs (Iloilo CODE-NGO), together with Panay Rural Development Center, Incorporated (PRDCI) and University of the Philippines Visayas Foundation, Incorporated (UPVFI), gathered around 800 beneficiaries for a general assembly under its livelihood program, which adopted the concept called Community-Managed Savings and Credit Association (CoMSCA). 

Held in Estancia National High School with the theme “Save and Share Because We Care,” the event was an avenue for sharing of stories, experiences and practices on how Typhoon Yolanda survivors coped and recovered from the calamity and gradually went back to normalcy two years after. 

Background on CoMSCA 

The idea of CoMSCA evolved from numerous interventions that sought to offer financial assistance for livelihood. It is a community-managed initiative wherein groups in the community mobilize and manage their own savings and provide loans to members. It also offers a limited form of financial insurance.

CoMSCA is different from micro-finance institutions. It is self-managed and independent, which means the members of the group in the community are the ones who manage the money they put in. It is considered time-bound or it follows its own financial cycle and group members share equity at least once a year in proportion to savings.

The concept works best in the Philippine context for it creates local pools of capital and it provides access to useful lump sums which can be used for predictable expenses, to reduce shocks to vulnerable livelihood, to facilitate household cash-flow management, and to allow short-term investment in income-generating activities.

The adoption and implementation of the CoMSCA concept in 3 municipalities has been proven to work because of the socio-economic characteristic of the communities involved which are mostly very poor.

The face behind CoMSCA

Engineer Ernesto Macabenta, a micro-finance specialist that offers support to livelihood activities for people’s organizations, developed the idea of COMSCA.

Having observed and studied the advantages and disadvantages of offering different forms of finance support for livelihood, Macabenta envisioned  a type of savings system suited for the Philippines, which is practical, and not too complicated to implement.  

In 2009, Macabenta formalized CoMSCA in Cotabato and eventually, the concept was adopted in many parts of the country and implemented by World Vision Development Foundation, Incorporated as its economic program.             

Macabenta is an associate director of World Vision. 

It was eventually adopted by Christian Aid and its project partners and implemented in post-Yolanda reconstruction work in the 4 municipalities in Iloilo which are project sites of Iloilo CODE-NGOs, PRDCI and UPVFI. 

According to Faye Joy Pabiona, project manager of “Rebuilding for the Better” project, CoMSCA is well suited for Yolanda-hit areas because the communities are mostly in isolated locations which hinder people’s access to financial aid from established financed institutions. 

“Majority of the people in distant communities and small islands lack the necessary legal document that are required to access financial support for livelihood activities making recovery slow to achieve,” explained Pabiona.     

Pabiona added that CoMSCA is flexible and simple to adopt and implement because transparency is embedded in its system. It provides a frequent opportunity to save and regular opportunity to borrow. The system itself is savings-based and not credit-based.

How it works in Iloilo 

Iloilo CODE-NGO organized Yolanda survivors into clusters for CoMSCA in the 3 municipalities. Vilma Perote, CoMSCA officer of Iloilo CODE-NGOs, explained how the system works:

• Individuals are organized into clusters. On the average, there are 22 members per cluster, but a cluster may have 10 to 25 members.
• Cluster members discuss among themselves the savings and credit mechanism that are applicable to the group and how they will make the system operational.
• The members elect among themselves a chairperson, record keeper, box keeper, money counters, and 3 key holders in charge of opening and securing the box that serves as the money vault for the cluster.
• Each member has P20 per share and can have a maximum of P100 share per week. Members are only allowed to borrow an amount equivalent to twice the amount of their total share. So if a member has a total share of P300, the cap on the amount that he or she can borrow is P600.
• Members have 3 months maximum to return the amount that they borrowed from the group and they enforce a 5% service charge based on the total amount they borrowed.
• The group sets a maximum of one-hour meeting on a weekly basis where they open the box and count the amount, decide how much funds to release, and make records of the transaction. All transactions are done in the presence of all members during the meeting.
• The members treat the amount as a social fund. They also determine how much support they will give to help members for medical assistance or in the case of a death in the family.

Social change and learnings 

CoMSCA has many observable social impacts on members of the community. Emmanuel Areño, executive director of Iloilo CODE-NGO, underscored the changes in attitude they observed among community members.

“We have observed emerging leaders by implementing CoMSCA. It developed leadership skills, not only among chairpersons, but also among cluster members. It also promoted among themselves the value of discipline and time management as they handled meetings with regularity,” said Areño.  

“Managing their own resources made them more responsible in using money and improved their sense of accountability,” added Areño.   

For his part, Jorge Ebay, executive director of the UPVFI, shared that “it also improved people’s financial literacy and made them better understand that financial systems need not be complicated for them to adopt and implement.” 

“It likewise changed their attitude towards contracting debt from informal providers which are rampant in locations with high poverty incidence,” Ebay emphasized.  

Andres Tionko, PRDCI executive director, also stressed that CoMSCA is “people’s empowerment at work. It re-inculcated the value of unity through community work by pulling resources into a collective rather than individual effort.”

The experience that Yolanda survivors underwent reoriented people in Iloilo’s coastal towns on the value of household and community-based practices on disaster risk reduction and climate change adaptation. The implementation of COMSCA reinforced this concept – this time on livelihood – and had made them realize that the power to recover from disasters rest in collective action.

The project “Rebuilding for the Better” will be completed in September 2016. The livelihood component through CoMSCA now has a total of 64 cluster beneficiaries. Five clusters are being supervised by UPVFI in Isla Higantes, Carles, 5 by PDRCI in the Municipality of Batad, and 54 by Iloilo CODE-NGO in the municipalities of Concepcion, Carles, and Estancia. – Rappler.com

Ted Aldwin E. Ong is the lead mover of Rappler MovePH in Iloilo.