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Microfinance challenges: empowerment or disempowerment of the poor?

 | 
Isabelle Guérin
, 
Jane Palier

Part II - Microfinance in its environment

9. Women’s survival strategies and experiences with support services as home-based micro-entrepreneurs in Metro Manila

Christine Bonnin

Texte intégral

1As the informalisation of labour markets increases globally, so too has women’s participation in them (Chen 2001). Though offering a source of livelihood, informal work is fraught with conditions of insecurity, economic growth stagnancy, below minimum wages, poor working environments and long hours (Joshi 1997). In the context of the Philippines, a combination of local and global factors has contributed to the abundance of the informal economy. The colonial legacy of landlessness and rapid urbanisation of the National Capital Region have created ongoing rural-urban migration, maintaining a constant labour surplus in the city and very low wages. Economic reform and liberalisation policies, executed under Structural Adjustment Programmes, and the after-effects of the Asian Financial Crisis of 1997, have produced a state of chronic unemployment and underemployment and increased commodity prices, eroding the ability of households to maintain an income level necessary to meet their basic requirements (Illo 2002).

2Within this changing environment, low-income women in particular must respond by taking on expanded roles and seeking new ways to generate income for themselves and their families. The informal economy provides a space for women to engage in vital income-generating activities, either to supplement the household income or, increasingly, as a survival strategy. According to an ILO (2002) study, informal employment now accounts for 73% of women’s total (non-agricultural) employment in the Philippines.

3As informal work becomes more notably important as a livelihood source for low-income women, attention from government bodies, nongovernmental organisations (NGOs), and other concerned groups, has increased. The limited successes of large-scale development approaches of the past (Dignard and Havet 1995) and recognition of the profound social costs of economic restructuring has shifted the focus to micro-level interventions, targeting informal enterprises as the viable alternative for poverty alleviation (Rankin 2001). Support services directed towards women micro-entrepreneurs have been expanding, particularly in the form of microfinance. Nevertheless, the diverse activities that women undertake necessitate a greater awareness of their specificities, including particular operating environments (i.e., the socio-cultural, political and economic settings) to ensure that support services adequately address women’s interests.

  • 128 Funding for this research was provided by the Canadian International Development Agency under thei (...)
  • 129 The National Statistics Office 1995 Urban Informal Sector Survey cited in Joshi (1997) reports tha (...)
  • 130 Reproductive labour entails work undertaken in order to ensure the maintenance and reproduction of (...)

4This article provides a sample of some of the key findings from a CIDA-funded128 research project on a particular gendered informal activity in the Philippines: the sari-sari store. Best described as the traditional neighbourhood variety store of the Philippines, the sari-sari store is one of the most common types of informal trade micro-enterprise129 found there. Women are vastly over-represented as operators and workers, as the stores are home-based and enable productive and reproductive labour130 to be combined (Eviota 1992).

5The study explores the specific constraints, opportunities and needs associated with this livelihood strategy for women in low-income urban communities. It also investigates women’s experiences with the various support services that they have found available to them, such as informal financiers, microfinance institutions (MFIs), and non-microfinance NGOs.

Figure 1. Republic of the Philippines

Figure 1. Republic of the Philippines

1. Research Methods

  • 131 A total of 30 interviews were actually completed: 24 used in the analysis, plus six pilot intervie (...)

6Fieldwork in the Philippines was undertaken over a three-month period, from June to September 2003. The study utilised qualitative methods, consisting of in-depth interviews with 24 women sari-sari micro-entrepreneurs131 and a focus group discussion with a group of 21 women vendors. Interviews and consultations were also held with various representatives of government agencies, local government officials, NGOs and MFIs.

  • 132 Interviews were conducted in English, Filipino or a mixture of both, depending on the participant’ (...)
  • 133 Data on informal settlers was only available for Barangay Addition Hills. A 1996 study conducted b (...)

7Greater Metro Manila is composed of several cities and smaller municipalities, which are divided into barangays, the smallest political units. Interviews with micro-entrepreneurs132 were conducted in three low-income urban communities, all with very sizeable populations experiencing insecure housing133: 1) Welfareville Compound, in Barangay Addition Hills, Mandaluyong City; 2) Barangay University of the Philippines (U. P.) Campus, Quezon City; and 3) Barangay Balingasa, also located in Quezon City.

8This paper will review some of the major results from the research in the following sections. These will be presented and discussed under thematic headings relating to the following areas: impacts of the economic crisis, gender-related issues, working conditions, housing vulnerability, business strategies and experiences with access to micro-enterprise supports (from both ‘formal’ and ‘informal’ sources).

2. Impacts of the Economic Crisis

9Some of the experiences of sari-sari micro-entrepreneurs are indicative of the larger economic crisis happening in the Philippines. This is most clearly evident from women’s responses about the factors influencing their movement into informal employment and on the changing business fortunes they have met with.

  • 134 Philippine government labour market statistics do not clearly differentiate between formal and inf (...)

10Most women reported having waged work134 positions prior to opening their business, many making the transition to informal self-employment as a consequence of job displacement. Some reported being laid-off in the period following the Asian Financial Crisis of 1997, usually from export-oriented industries and factory labour. Often, women started the sari-sari store out of the need to find an alternative source of income when their spouses lost their jobs due to company closures. Awareness of the insecurity of formal waged employment was apparent, as women spoke of how they favoured the independence of being self-employed or one’s “own boss”, without the fear of being laid-off or fired later. For the majority of respondents the sari-sari store has become the main source of income for the household.

Figure 2. Metro Manila (Mandaluyong and Quezon City highlighted)

Figure 2. Metro Manila (Mandaluyong and Quezon City highlighted)
  • 135 Aling Josie is a pseudonym as are all the personal names used in this paper. “Aling” denotes a tit (...)

11Industry closures stemming from the economic crisis can also have a direct impact on informal micro-enterprises. The case of Aling Josie135 illustrates how sari-sari stores can suffer from the shutdown of surrounding businesses. Since the early 1990s Aling Josie has operated a sari-sari store with an attached carinderia (food stall). She recalls a time when she used to prepare three meals a day, as well as offer merienda (snacks) twice daily, for people employed in the neighbouring businesses. However, many of these companies have since closed down and she has had to cut back, now serving only meals at lunchtime. Her daily customers have dropped from 120 to 20 and her income is dwindling, making her question the future of her business.

3. Gender Roles and Expectations

12For most women, having to quit formal employment upon marriage or after having children is another motivating factor behind the decision to open up a sari-sari store. Aling Rose, a middle-aged store operator said: “I used to work in a bookstore in Cubao, but I stopped when I got married… to raise the children… that is the expectation. I thought of going back to work but then my husband said, “if you work then we will have to get a maid so it’s the same thing [financially]”... so its better to open a sari-sari store…”

13Aling Rose’s experience corresponds with the gendered expectations that exist within the Philippines, which continue to typify men as the family breadwinners and women as self-sacrificing mothers. Although the labour force participation of women is significant (see Table 1) the expectation remains that once married, reproductive work will assume primacy over other ambitions. Women are regarded as secondary earners, translating into lower wages and gender-based discrimination in the hiring process and during layoffs (Illo 2002).

4. Working conditions: long hours and double burdens

  • 136 Estimated hours of work provided by interviewees usually combined the hours spent performing store (...)

14The sari-sari store is viewed as the ideal means of bringing in income, providing women with the flexibility to engage in both productive and reproductive labour simultaneously. However, along with this comes the burden of having to juggle multiple tasks, requiring that women stretch their workday in order to accomplish everything. Micro-entrepreneurs discussed their long hours of work, fifteen and a half hours per day on average136, extending well past the average workday of a formal job.

15Most women received no form of assistance with household tasks and childcare responsibilities. One sari-sari trader referred to her work as “three-in-one,” meaning running the store, taking care of the children, and performing the household tasks all on her own. Aling Yang, an older, windowed storeowner, runs her store jointly with her daughter-in-law Louise. She says they had to cutback on the number of meals offered at their sari-sari store/carendaria despite customer demand: “I cannot handle preparing the merienda anymore. Even Louise cannot handle merienda because she is putting in long hours already. She goes to bed at 1:00 a. m. and gets up very early to prepare the kids’ lunch and their school bags, and after school she also has to help with the assignments of the kids. We just don’t have any more strength to offer any extra meals like merienda as we used to.” Aling Yang’s business’ potential is constrained as she and Louise struggle daily to perform a variety of necessary household activities.

5. Housing Insecurity

16In the communities studied, most of the women resided in informal dwellings. Their insecure housing status caused anxiety and a sense of powerlessness. As described by one store operator: “We are squatters… there is a Chinese owner but he doesn’t need the land at the moment. He can demolish our houses anytime if he wants to use the land. And then we will have to transfer again. If he came today… he can demolish us, no problem… everyone here is like that.” Flimsy dwelling structures and crowded conditions also mean that destruction by calamities such as fires or typhoons is a pressing reality, as shown in the words of Aling Loida: “I am afraid because sometimes we have a fire here. That’s why I cannot buy any more items (for the store)… if someone will make rice and then forget about it there will be another sunog (fire).” Her awareness of the instability of her home/store precludes her from investing a significant amount in the growth of her business.

6. Market strategies

  • 137 Customers are generally neighbours, those living nearby, those who pass the store regularly on the (...)

17Women sari-sari traders undertake a variety of strategies to maintain their pool of loyal customers137, attract new ones, and increase sales. Market transactions such as buying and selling are often merged with complex social activities in order to “manipulate the laws of supply and demand” (Seligman 2000). For stores in low-income communities, business interactions rely on strong social networks of reciprocity and behaviour according to mutually understood cultural norms and values. Such socio-cultural mechanisms can act both as an insurance mechanism and as a constraint for sari-sari micro entrepreneurs.

18Allowing “special customers” to make credit purchases at their stores is a strategy pursued by most. The practice of offering items on credit, referred to as utang, is typically extended to those who prove to be loyal, regular, customers (suki) of that particular store. Utang helps secure customer loyalty in an environment where the supply of sari-sari stores is great, and competition high. However, traders cite collection of repayment as one of the biggest problems facing their business. Women often worry that bad news will be spread about the store if they demand that poor-paying customers honour their obligations. Core cultural values that operate in the Philippines, such as pakikisama (maintaining harmonious interpersonal relations) and the means to achieve it, such as taking pains to avoid causing hiya (shame, inferiority or embarrassment) are very important to the maintenance of neighbourhood relations. It also means that storeowners have to be very skilful in negotiating repayment without ruffling any feathers: getting angry or upset is unacceptable.

19Feeling a sense of powerlessness in coping with customers who do not pay their debt was common, as was the sense of feeling pressured into providing utang to prevent customers from going elsewhere. When asked to estimate weekly earnings from the store, many women found this difficult because of income fluctuations caused by erratic collections. In a few extreme cases, the accumulation of un-recovered credit forced stores into bankruptcy.

20On a positive note, the credit provided by sari-sari stores may play a role as a partial buffer from household food/consumption shocks that would otherwise be felt in their entirety as a result of customers’ highly inconsistent incomes. Also important to food security is the selling technique adopted by sari-sari traders known as tingi, or the dividing of goods into smaller-sized portions than are usually available in the marketplace (i.e. selling vinegar or cooking-oil by the cup), making them affordable for individuals with very small amounts of disposable income at any given time.

21Social interaction between vendors and customers is another means of sustaining and enlarging the consumer base of sari-sari stores by forging bonds of familiarity that will ensure loyalty. It also helps provide women with some sense as to the possible creditworthiness of a person. This process of information sharing earns sari-sari micro-entrepreneurs the reputation of being the community “news source” or information provider. The sari-sari store as home-based marketplace is an important location of both economic and social exchanges..

7. Experiences accessing business supports from ‘formal’ and ‘informal’ sources

22Many micro-entrepreneurs use loans in order to finance their business, sometimes to expand the range of goods sold or to renovate the store, but more frequently to ensure the day-to-day survival of the business. In the latter case, loans are habitually required to maintain the basic stock and keep the store running. The most common method women use to access funds is via informal financial arrangements: either through informal financers, loans from a neighbour, or from a grocery wholesaler with whom the storeowner is a regular customer.

  • 138 The term is likely to have risen as a result of the association of these lenders with the South As (...)

23Informal financers were the largest loan source for the sari-sari operators interviewed. Often referred as “Bombays138”, they travel from door-to-door, offering small to medium-sized loans, typically to women-run micro-enterprises. Many also carry a variety of household items, such as blankets, thermoses, CDs, DVD players, and refrigerators on credit, to be paid daily on a rent-to-own basis.

24Purchasing goods in this manner is attractive because of the appearance of affordability: paid in very small amounts on a daily basis, the acquisition feels easier on the pocketbook, and the item is obtained right away. Nevertheless, informal financers charge high rates of interest. In fact, they are also sometimes called the “5-6” because, over the period of a week, for every five pesos loaned, six will have to be repaid: an interest rate of 20% (Kondo 2003). For some micro-entrepreneurs, the daily payment to informal financers was almost half their gross daily income. As one store operator said: “I wouldn’t take another loan because I could not make the repayment. Before, I got bankrupt because of the 5-6… it is like you are just working for them.”.

25Despite these difficulties, informal financers remain the most popular lending source because of their easy accessibility, small daily repayment, lack of requirements and conditions, and immediacy of the loan. Women also explained that informal loans were a preferred form of support to MFIs and NGOs because there was no requirement for regular attendance at seminars, which is important given the multiple roles and responsibilities that they have to manage. When asked about a locally-operating NGO, Aling Florence, a 32-year-old entrepreneur with three children replied: “I have heard of that organisation but I don’t know anything about what it does… I don’t have the time… for the seminars… because I am the only one who does all the chores and so I have no time for other things… with the Bombay you don’t have to attend any seminars so it is good.”.

  • 139 The Philippine Enterprise Development Agency and Tulay Sa Pag-Unlad Inc Development Corporation.
  • 140 Background investigations of the support services operating in the study communities, in part prov (...)
  • 141 Loans are provided to small groups of women, utilising a method of ‘social collateral’ or peer pre (...)

26However, some of the store operators from Welfareville Compound – where two different MFIs were active, PEDA and TSPI139 had been availing of microcredit loans. Women from the other communities reported that MFI resources were not presently being offered in their areas140. The lending format of these two organisations is modelled after the Grameen Bank methodology141, and in addition to providing loans they afford members with access to health and life insurance.

27Some interviewees said that their involvement with MFIs has been positive because it has helped in the expansion of their businesses, allowing them to increase the amount and variety of goods. One participant, Aling Lena, was very proud of the fact that she was the only one in her community able to avail of the largest possible loan, which she attributed to her successful ability to repay. However, she explained that it was rare for women to receive large loan amounts because many of them are unable to repay consistently, as the loan gets diverted to “non-productive” uses such as household consumption.

28Group formation was seen as a problem by a few interviewees who were not accessing the resources of the MFIs despite their wanting to, because they were concerned about the other members’ repayment capability. Since groups are generally formed among neighbours, some women are not confident about the prospect of forming groups with other micro-entrepreneurs in the area, which may indicate something about how well the neighbouring businesses are doing, or that would-be group members also run sari-sari stores and are in direct competition. Thus, the popularity of the sari-sari store as a livelihood choice for women could pose a significant obstacle to their involvement with microfinance supports.

  • 142 The National Network of Informal Workers in the Philippines.

29NGOs were another support source accessed for both loans and livelihood training programmes. In this case, the only traders currently involved with an NGO were from Balingasa and were members of PATAMABA142. In general, these women were most knowledgeable as to the range of supports available to them, particularly government supports and services, whereas most women from the other communities knew of only one or two local initiatives, if any. This is likely because part of the NGO’s mandate is networking with other NGOs and people’s organisations and helping its members to secure services and supports from a wide variety of sources.

30In Welfareville, interviewees knew only of the MFI that they were involved with, despite the fact that both the local government and the central government (under the Department of Social Welfare and Development) had livelihood training and lending programmes in place. This could be a reflection of the practice of these institutions, of discouraging women from seeking alternative sources of funds, as accessing additional loans at the same time could hinder their repayment ability.

Conclusion

31In the instance of the sari-sari store, a number of features exist that distinguish the situation of urban low-income women engaged in this type of livelihood activity, even between communities, and may present possible implications for support interventions. The home-based nature of the business creates a very strong relationship between housing vulnerability and livelihood insecurity. Sari-sari traders respond to fluctuating conditions with a variety of coping strategies, yet gender divisions of labour mean that the women’s energy, business potential, and ability to secure supports are frequently constrained, as evidenced by their preference for the more flexible, informal sources of loans. It would seem that in this case, women’s concerns regarding gender-based accessibility problems and the repayment potential of group members who are also likely to be business competitors, has meant that microfinance supports are frequently not perceived as a viable option and are thus unable to benefit sari-sari traders to the degree that they could. In addition, socio-cultural codes that prescribe inter-personal interaction in the Philippines exert a role in market and financial relations that may be unique from other cultures and require specific insight and examination.

Annexes

Annexe

Table 1. Republic of the Philippines Country Statistics

Total Population

77.2 million

Urban Population

59.3%

Currency value at time of research (mid-2003)

1 USD = 53 PHP

GDP per capita

912 USD

GDP per capita

3,840 PPP USD

Population living below the national poverty line

36.8%

Population living below $ 1 a day

14.6%

Female estimated earned income

2,838 PPP USD

Male estimated earned income

4,829 PPP USD

Ratio of estimated female to male earned income

0.59

Female economic activity rate

49.7% (age> 15)

Female economic activity rate

61% of male rate (age> 15)

Female share of non-agricultural wage employment

42%

Human Development Index Rank

85

Gender Development Index Rank

66

Life expectancy at birth

69.5 years

Under-five mortality rate

38 (per 1,000 live births)

Source: Human Development Reports, United Nations Development Programme (2001).

Notes

128 Funding for this research was provided by the Canadian International Development Agency under their Awards Programme For Canadians.

129 The National Statistics Office 1995 Urban Informal Sector Survey cited in Joshi (1997) reports that sari-sari store operators make up 30% of the total informal sector operators in industry sub-sectors. Of this, women operators represent over 70%, while males make up less than 30%.

130 Reproductive labour entails work undertaken in order to ensure the maintenance and reproduction of the labour force, including childbearing, child-raising, and domestic duties. Productive labour is that work which is performed in exchange for monetary or in-kind remuneration.

131 A total of 30 interviews were actually completed: 24 used in the analysis, plus six pilot interviews.

132 Interviews were conducted in English, Filipino or a mixture of both, depending on the participant’s preference. Quotes included in this article may incorporate Filipino words (with translations provided) as often interviewees switched between languages during the course of the discussions.

133 Data on informal settlers was only available for Barangay Addition Hills. A 1996 study conducted by the Comprehensive and Integrated Delivery of Social Services programme of the Department of Social Welfare and Development surveyed 5,544 households (61.2% of the total Barangay population) and found all of these to be informal settlers (MIMAP Project Updates, 1998).

134 Philippine government labour market statistics do not clearly differentiate between formal and informal work categories. Rather, the categorisations used by the Department of Labour and Employment, which have been used to provide estimates of informal employment, are the divisions between classes of work such as “wage and salary workers”, “self-employed or own-account workers and employers” and “unpaid family workers” (Dejillas 2000).

135 Aling Josie is a pseudonym as are all the personal names used in this paper. “Aling” denotes a title of familiar respect for women.

136 Estimated hours of work provided by interviewees usually combined the hours spent performing store-related work with time spent on reproductive labour as the nature of the home-based enterprise enabled women to engage in both at the same time, making it difficult to separate the two.

137 Customers are generally neighbours, those living nearby, those who pass the store regularly on their way to work/school, or relatives.

138 The term is likely to have risen as a result of the association of these lenders with the South Asian Diaspora (Punjabi and Sindhi) who have settled in the Philippines and feature prominently in this field. However, not all informal lenders are of South Asian descent. Filipino informal financers are also prevalent but they are not generally referred to as “Bombays” (Kondo, 2003).

139 The Philippine Enterprise Development Agency and Tulay Sa Pag-Unlad Inc Development Corporation.

140 Background investigations of the support services operating in the study communities, in part provided with information from local Barangay chairs, corroborates the statements made by women traders in U. P. Campus and Balingasa, that MFIs are currently not operating in those areas.

141 Loans are provided to small groups of women, utilising a method of ‘social collateral’ or peer pressure from group members, in order to ensure repayment. Groups proving to be good borrowers have access to increasingly larger loans.

142 The National Network of Informal Workers in the Philippines.

Table des illustrations

Titre Figure 1. Republic of the Philippines
URL http://books.openedition.org/ifp/docannexe/image/4779/img-1.jpg
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Titre Figure 2. Metro Manila (Mandaluyong and Quezon City highlighted)
URL http://books.openedition.org/ifp/docannexe/image/4779/img-2.jpg
Fichier image/jpeg, 179k

Auteur

PhD Research Scholar in International Development Studies, Dalhousie University, Nova Scotia (Canada)

© Institut Français de Pondichéry, 2005

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