Quality Integration
&
CEVI Community Economic Ventures, Inc.
ANNUAL REPORT 2009
NUAL REPORT
TABLE OF CONTENTS
Introduction 3.....General Introduction About Microfinance & VisionFund 4.....Country Specific and MFI Introduction 5.....Client Image with Accompanying Client Story
Summary 6.....Fiscal Year MFI Highlights 7.....Achievements for the Year 8.....Endorsing Quote from MFI Senior Leadership Person
Overview 9.....Who is VisionFund and How Does VisionFund Work? 9.....Commentary on Global Network (including VFI and WVI) 10...What is Microfinance?
Governance 12....Message from Scott Brown 14....Message from Board Member Chairperson 15....Message from MFI CEO 16....Board of Directors
Operations 19....Areas of Operation 20....How Does the MFI Operate 21....Product Portfolio 22....General Introduction to Unique Holistic Model of Development 24....Endorsing Quote from MFI Leader in Operations
Social Performance 26....Client Story 30....Overview of Typical Clients and Impact on Children
Financial Performance 32....Auditor’s Report 33....Balance Sheet 34....Statement of Cash Flow 35....Statement of Revenue & Expenditures 40....Statement of Changes in Equity
Quality and Integration
13
Microfinance is a proven, acclaimed method for helping impoverished communities move toward economic self-sufficiency through the provision of small loans and other financial services. The United Nations named 2005 the ‘International Year of Microcredit,’ recognising it as a vital element in achieving the Millennium Development Goals. In 2006, its importance was further recognised when the Nobel Peace Prize was awarded to Muhammad Yunus and Grameen Bank for developing concept of microcredit. The thriving global movement to provide financial services to the poor has proven its effectiveness. VisionFund is a leader in this movement, particularly in the area of providing microfinance services in combination with holistic, development assistance.
INTRODUCTION
GENERAL INTRODUCTION ABOUT MICROFINANCE & VISIONFUND
Source: http://www.visionfundinternational.org/
4
Introduction
COUNTRY DESCRIPTION AND MFI INTRODUCTION The Philippines is an emerging economy with a democratic system of government. It is located in Southeast Asia, the archipelago consisting of more than 7,000 islands, of which over 800 are inhabited. The major island groupings are Luzon in the north, the Visayas in the center and Mindanao in the south. The country is considered one of the best in terms of strategic location, skilled and highly trainable human resources and a potential market for enterprise development due to its fast growing population.
O R N D TIU C IT
Community Economic Ventures, Inc. is a nonstock, nonprofit organization in the Philippines. It is organized to respond to the needs of micro entrepreneurs engaged in trading manufacturing, service-typed and agricultural businesses through provision of financial and technical assistance. Aimed at developing sustainability and alleviating poverty, CEVI provides microentrepreneurs better alternative to access credit, build up capital, micro-insurance and generate savings. CEVI also extends appropriate consultancy services and training to its client as part of its implementation of the Credit Plus Education Program. Based in Bohol, the Community Economic Ventures, Inc. (CEVI) operates within 12 provinces and 11 cities across the country.
Quality and Integration
Cirila Lico Villamor, CEVI CLIENT Cirila Villamor was born in the town of Calape, Bohol. In 1987, she moved to Puerto Princesa City, Palawan where she met her husband Rolly Villamor. She now has three children named Irish, Irene Ruth and Iver Clarence. Before becoming an entrepreneur, she took a job as a cashier at Palawan Drug, a local drugstore in the city and as a sales representative in an appliance stores there. When she married Rolly, she began a business of buying and reselling rice to the market. She was happy to be adding some additional income to support her family and she was content with her family’s financial situation. However, soon some conflicts ensued at her husband’s workplace, which resulted in him losing his job. They decided to move to Cebu with the prospect of employment and hoping to start a new life. They pawned their house for travel fare and a few days’ worth of stay in Cebu. Little Cirila know that she was about to experience one of the hardest times of her life. Two days after giving birth to her third child, the baby passed away. She was in an unfamiliar place and her heart was torn into pieces- she could barely feed her family. To make matters worse, she also developed vertigo. Cirila and her husband decided there was no life for them in Cebu and moved back to Palawan. Rolly began driving to earn small amounts of money for his family and slowly, but surely, Cirila began saving so she could start a buy & sell business so she could sell rice to the market. In 2003, while at a relative’s house, she came across CEVI. She immediately inquired and prepared the documents to apply for membership. She decided to open a sari-sari store in front of the house she rented in San Pedro, a barangay next to hers- she chose that location because her cluster association met in that barangay. Cirila enjoyed attending cluster meetings- she was able to learn business tips from other members and earned their trust and respect which was evident when they elected
her to be their cluster Treasurer. She began to diversify the products she sold to include dried fish, dry goods and vegetables. Unfortunately, her vertigo got the best of her and she had to take a break from her business and her membership with CEVI. Her husband began managing the store and assumed responsibility for all the household needs while she rested and recuperated. Once Cirila recovered she returned to her sari-sari store and became an active member of CEVI once again. She also focused on her children’s education, looking for ways to lessen the school fees. Cirila happily shares her children’s achievements. Her daughter, Irish Villamor, received a scholarship from Nagao Natural Environment Foundation and graduated Magna Cum Laude with a degree in Bachelor of Science in Environmental Science. She now works at the legal Department of Palawan Council for Sustainable Development (PCSD) while studying law at a university. She finds joy that her second daughter placed in the Top 10 of a drawing contest and her youngest child has dreams of becoming a police officer or an engineer. Though Cirila is happy with her life, she has many dreams she has yet to accomplish. She would like to expand her store and see her kids finish college with flying colors. She owes it all to CEVI, she says, “I have to thank CEVI because it gave me the opportunity to be an active entrepreneur and at the same time learn through Bible Reflections. CEVI is something you can depend on. If you cooperate and pay your dues properly, you will really appreciate the programs since they help improve how you handle and maintain your business.”
5
11 Social Performance
FISCAL YEAR HIGHLIGHTS AND ACHIEVEMENTS Enhanced Integration with World Vision Area Development Project (ADP) and Partners
SUMMARY
Involved in the formulation of the World Vision Development Foundation Economic Development Strategy both at national and ADP programming levels. CEVI commitment to ADP is that at least 60% of its clients reside within ADP areas, of which 20% are sponsored families. CEVI has partnered with the Heavenly Treasures, an NGO based in California,which helps provides an international market of the handicrafts products of CEVI clients. CEVI implemented a Christian Witness Integration Project. CEVI has collaborated the church leaders, from both Catholic and Evangelical Churches in order to realize and integrate a Christian nurturing program to CEVI cluster meetings, which is being attended regularly by its clients. The partnership was being carried out with the Basic Ecclesiastical Communities (BEC) in Isabel Leyte, members of Metro Tagbilaran Evangelical Association of Ministers (MTEAM) in Bohol, and Davao Ministerial Interfaith (DMI) and local churches in Davao City.
Quality and Integration
Maintained Quality and Growth
7
Capacity Building
CEVI maintained a status as a category 3 MFI at
CEVI institutionalized its managerial strengthening
VFI network with increased number of clients and loan portfolio. CEVI ranked 2nd in Asia and one of the top 10 among 47 countries in the VFI family.
program. Appropriate leadership trainings were provided to the department heads, branch managers, area managers and area accountants to strengthen the organization.
Early of 2009, CEVI has rolled out the group – expanded methodology (GEM). The new approach is a shift from a solidarity group to a family guarantee loan that helps improve monitoring system, competitiveness, and productivity. GEM has attracted and gained the loyalty of the clients that reduced the number of exit clients from 46% last year to 26% this year.
CEVI also enhanced and re-launched its individual loan product called Asenso Loan to its clientele. It is designed to cater existing clients who graduated from group loan and needed bigger capitalization to expand their businesses. It is also offered to those qualified non-CEVI clients who need larger loans.
CEVI has established a team that focus on product development and standardization of business processes. The VFI Business Development Manager actively supported the relaunching of global standardization at CEVI.
CEVI became the first Filipino MFI to go active in
VFI Asia Director and Business Development Manager conducted supervisory training to the middle and senior managers of CEVI.
PlaNet Rating conducted an institutional and social performance assessment at CEVI.
CEVI conceptualized new strategies for 2010 and enhanced its vision and mission statement.
CEVI piloted the use of Progress out of Poverty Index (PPI) based from 2004 Annual Poverty Indicator Survey (APIS), a poverty assessment tool developed by Mark Schreiner for Grameen Foundation, Consultative Group to Assist the Poor (CGAP) and the Ford Foundation.
VisionFund International also piloted a Social Performance Assessment (SPA) tool at CEVI. This tool will assess and identify the areas that need to be strengthened to effectively fulfill the mission.
Kiva partnership. CEVI was also being featured in the July 2009 issue of Entrepreneurs magazine, highlighting its KIVA partnership and implementations.
CEVI established a Service Quality Assurance Unit
The VisionFund has chosen CEVI to pilot the World
CEVI allocated a training fund for cluster
Vision Micro funding project together with Rwanda and Mexico.
CEVI received recognition from the Consultative Group to Assist the Poorest (CGAP) for transparency in social performance reporting.
CEVI achieved a green rating based on the VFI global standards.
and re–assessed staff through performance appraisal, which is done yearly to help maximize staff members’ potential and work effectiveness.
management and leadership trainings for CEVI members.
8 Summary
“I joined CEVI since 1998 and I witnessed its growth, the ups and downs and felt the pain when we started it. I was a new graduate in the field of Agriculture when I joined CEVI. I have no idea about microfinance and never expected that it would expand to Luzon, Mindanao and other parts of Visayas region. I thought it would only operate in Bohol in partnership with the two ADPs but the call for CEVI is to provide a boundless microfinance services. One unique quality of CEVI is its emphasis on Christian Witness in every aspect of its operation. CEVI is not just a microfinance. It is a Christian organization that aims people to attain fullness of life. The way it provides services is sincere. It has touched so many lives of people by also bringing credit plus education in the community. Through its efforts, people learned how to generate savings in their own, and were given an opportunity to start a livelihood to raise their children well.�
GAUDIOSO B. CALIBUGAN Quality and Integration Officer
WHO IS VISIONFUND AND HOW DOES VISIONFUND WORK?
Quality and Integration
13
VisionFund is one of the world’s largest microfinance institution networks managed by a Christian nonprofit organisation. Impacting over two million children and their families each year in 43 countries, and in over 500 World Vision area development programmes, these microfinance institutions serve in every region where World Vision works. The network of microfinance institutions, affiliated with VisionFund, integrate microfinance into existing World Vision development programmes. The combination of World Vision’s humanitarian and development services coupled with microfinance provides long term sustainability in these communities. In essence, VisionFund provides the economic ‘engine’ that helps these communities and families overcome poverty. As a team, the two organisations, VisionFund and World Vision, couple microfinance services, sound financial principles and management with transformational development interventions. Since VisionFund focuses primarily on rural areas, the initial support and development of microfinance institutions by donors is important. Without this support, these microfinance institutions would not be able to become sustainable due to the difficult markets where VisionFund focuses. Like World Vision, VisionFund is a Christian non-profit organisation. As part of the World Vision partnership, VisionFund serves people in need regardless of race, religion, gender, or ethnicity.
OVERVIEW
VisionFund is the microfinance arm of World Vision. In 1993, World Vision began to implement microfinance programming through the creation and development of microfinance institutions to benefit the economically active poor. In 2003, World Vision created VisionFund as the microfinance subsidiary of World Vision, to oversee and manage the network of microfinance institutions.
Source: VisionFund Annual Report 2009
World Vision, founded in 1950, is a Christian humanitarian organisation working in 96 countries. It serves children, their families and communities in conditions of poverty, primarily through programmes of transformational development, disaster management, and promotion of justice. In fiscal year 2009, generous donors gave $2.575 billion in cash and goods, enabling 40,000* employees to offer physical, social, emotional and spiritual support. *Includes full-time, part-time and temporary staff and microfinance institution employees
10 Overview
WHAT IS MICROFINANCE? Microfinance refers to the practice of providing microloans, generate microsavings, and microinsurance to the poor to foster small scale entrepreneurship. It breaks the cycle of poverty by addressing the fact that most poor do not have a credit history and are therefore ineligible for traditional financial services. Small loans provide the working capital to grow a business, which allows the poor to create a sustainable livelihood and exert greater control over their financial future. As a business generates profits, recipients build assets, save money and can provide food for their families, while sending their children to school. From these first steps, hope is born. In addition, as their businesses expand and they hire employees, the overall community’s economy is lifted. Microfinance leverages donations to provide additional lending resources from initial donated capital. For example, a person’s initial donation can be multiplied four to seven times, and then recycled to multiple borrowers as many as 25 times. That is the multiplying power of microfinance. Microfinance leads to more education, better health, improved diet and nutrition, and greater resilience to disasters for poor families. In addition, it lays a foundation that allows other humanitarian interventions to be effective while providing the economic engine that allows the transition from dependency to sustainability. Additional financial options lead to increased average household earnings and the ability to save for times when a business slows, a child gets sick, or a crisis occurs. In addition, communities are able to pay for services like schools, clinics and water wells, moving from dependence on aid to self- sustainability. As businesses thrive, people move from a survival-only style of living to a position where their hopes and dreams, particularly for their children, can become reality. Thus children are the primary beneficiaries of microfinance, albeit indirectly.
Source: VisionFund Annual Report 2009
“I was in need of additional capital so I inquired from my old cluster members about CEVI. I was able to join because of my existing transportation business. Using my loan, I was able to buy an old motorcycle.” JANET BUCOY, CEVI Client and Tricycle Operator and Store Owner
Quality and Integration
13
“After I joined CEVI, my business prospered which also means progress financially and most significantly my spiritual life grew and strengthened because of the biblical reflections done every meeting.” MICHELLE ESCOTIDO with husband, CEVI Client and Balut Vending Owner
“The success of my restaurant business lies with my food recipes. Customers keep coming in my restaurant because the food we serve tastes better than others.” HELEN MATEMATICO, CEVI Client and Restaurant Owner
MESSAGE FROM SCOTT BROWN
GOVERNANCE
Community Economic Ventures (CEV) demonstrated both economic strength and organizational purpose during 2009 in light of a global economic crisis that left most of the financial world stunned and shaken. CEV’s quality leadership, sound fiscal decisions and drive to excellence resulted in a banner year for the VisionFund (VFI) and World Vision (WV) affiliated microfinance institution (MFI). At the close of fiscal year 2009 CEV experienced a 25% gain in outstanding portfolio, whilst reducing the level of loan and increasing the number of active borrowers served by more than five thousand individual micro entrepreneurs. Furthermore, nearly 15,000 additional children were positively impacted by the work of CEV compared to the previous year.
Quality and Integration
13
The quality of programming at CEV was noted by external institutions as well. CGAP, Consultative Group to Assist the Poor, awarded seven VFI affiliated MFIs with the MFI Silver Certificate for the 2009 Social Performance Reporting Award. CEV was among the VFI affiliated MFIs receiving this reporting award. The award recognized CEV’s transparency in social performance reporting through key indicators. In addition, the VFI board recognized the CEO, Jonar Dorado for his excellence in leadership.
In 2009, through a network of 43 affiliated MFIs, VFI focused most of its micro lending to areas where WV has ongoing area development programmes. In partnership with both VFI and WVI, CEV coupled microfinance services, sound financial principles and management with transformational development interventions. VFI’s total loan portfolio for 2009 was $381 million USD while serving roughly 624,000 active borrowers.
Over the past year CEV successfully partnered with Kiva, an organization that connects individual investors with micro borrowers supported through CEV which led to over $500,000 in zero interest lending to CEV.
It is with celebration that VFI congratulates CEV on last year’s fiscal and social success. CEV’s fiscal approach coupled with sound management provided an environment that allowed the MFI to grow and flourish. I join VFI in anticipating many future years of growth and success for this exceptional institution. To learn more about VFI, the microfinance subsidiary of WV, please visit www.visionfundinternational.org.
Scott Brown President & CEO, VisionFund International
14 Governance
MESSAGE OF THE BOT PRESIDENT Praise God from whom all blessings flow! Over the past few years, I became a witness of how God abundantly and continually poured out His blessings to the Community Economic Ventures Inc. (CEVI). And despite the growing apprehension due to economic recession and its impact on the poor, 2009 was a testimony of God’s faithfulness to CEVI as evidenced by its growth in resources, scope and its quality of operation. CEVI played and will continue to play a very significant role in the holistic development of World Vision’s Area Development Programs. Committed not only by providing loans to entrepreneurial poor but also credit, education and values formation. Many families through the enabling of CEVI can now see the hope that will bring about a better future for their children. In partnership with World Vision and other organizations we will continue to be channels of hope and contribute in the transformation of those whom we serve. I would like to express my deepest appreciation to all of you at CEVI for your great achievements this year. We have so much to thank the Lord for – dedicated leadership, hardworking staff, but most of all His manifold blessings for greater ministry. Much is given, much is required. Continue to be faithful to the calling God has for each of you and for CEVI.
ELNORA BAILEN- AVARIENTOS
Quality and Integration
15
MESSAGE OF THE CEVI EXECUTIVE DIRECTOR
Welcome, Our dream is, we want people to attain fullness of life. This is our driving force why we continue to think how to best way present and offer our products and services. Reminiscing the years that passed, starting from the day of its inception until today, I am very amazed and proud that CEVI has already gone far in fulfilling its mission and vision. CEVI today is a far cry of what I previously remembered it is. We are now considered as a big MFI based from the VisionFund International standards. This proves that God is truly at work in His ministry of transforming families and communities. The recent global economic recession and calamities that stroked our nation made our faith stronger and became resilient undeterred by these circumstances. We grew by 28% in loan portfolio and very pleased to see the good trends of our operations. Embarking on a new tact to face industry challenges, we are also happy that we keep partnered and maintained good relationships with the local and international networks, with special mention to World Vision and VisionFund International. Every year we are becoming better! Service is indeed a privilege especially to a heart that is willing. And this is true to all of us because God called us to serve. I would like to thank you for your earnest efforts and generous support and guidance. We have full faith that God will always bless the works of our hands.
Warmly,
JONAR B. DORADO, CPA
16 Governance
BOARD OF Elnora Avarientos is the National Director of World Vision Development Foundation in the Philippines. She has 25 years of work experience in World Vision and once responsible for giving support and guidance to national directors and leadership teams in countries such as Cambodia, Indonesia, India, China and Papua New Guinea in enhancing their capacity to lead, manage and deliver quality ministry, through coaching and mentoring.
Elnora B. Avarientos WVDF Executive Director Mr. Eduardo C. Jimenez is presently working as Microfinance Consultant of the Bangko Sentral ng Pilipinas. Looking at policy issues affecting the practice of microfinance in the banking sector, he is also the Housing Microfinance Consultant of the Asian Development Bank. Mr. Jimenez has previously worked as consultant of United Nation (UN) and other UN attached agencies as well as with other bilateral organizations.
Eduardo C. Jimenez Microfinance Consultant of the Bangko Sentral ng Pilipinas Florelyn Plaza Tiu is the Sponsorship Operations Projects Manager of World Vision International. She supports the Associate Director Sponsorship Operations to enhance the effectiveness and efficiency of field based sponsorship operations with the aim to enhance program impact on children, their communities and donors through improved sponsorship service performance, programming and related work processes.
Florelyn Plaza Tiu WVI Sponsorship Operations Manager Liberty Rigor is World Vision’s Program Group Manager since 1995. She is a Certified Public Accountant. Prior to her present position, she has worked as Regional Coordinator, Chief Accountant and Semi-Senior Auditor in World Vision Manila area.
Liberty B. Rigor Program Group Manager
Quality and Integration
17
DIRECTORS
Rommel Peter Caringal is the VisionFund International Regional Director, in Asia Pacific Region. He provides leadership in the execution of Vision Fund strategies involving 11 countries of Asia Pacific region. He has more than 15 years of extensive experience in microenterprise / microfinance sector in the areas of setting up commercial companies, organizational management, product and services development, human resource, organizational development, Management Information System (MlS), capacity building, board development, various program innovations for greater sustainability.
Rommel Peter D. Caringal VFI Regional Director, Asia Pacific Region Remedios N. Geraldes is an ADP Program Quality Specialist for World Vision international Asia Pacific Region since 2003. She provided support to the improvement of transformational programming through the implementation of Transformational Development Indicators, building capacities for design, monitoring and evaluation of programs and facilitates intentional learning for quality. She has been working with World Vision for 23 years and has been into different roles and responsibilities prior to her present position.
Remedios N. Geraldes ADP Program Quality Specialist for WVI-Asia Pacific Region Ardy Roberto aside from being an author, he is also a producer of international awardwinning seminar. He is a co-founder and CEO of Salt & Light Ventures, Inc., which is a learning event organizer that have won both local and international awards for the seminars and conferences.
Ardy Roberto Chairman Salt and Light Foundation
OPERATIONS
CEVI Currently Operates in 12 Provinces and 11 Cities Across the Philippines
Quality and Integration
19
Provinces and Cities Served Agusan del Sur South Cotabato Zamboanga Agusan del Norte Davao Bohol Cebu Leyte Negros Oriental Iloilo Palawan Cavite
20 Operations
HOW DOES THE MFI OPERATE? VisionFund manages external debt funding and World Vision donated resources for the benefit of micro enterprise lending and savings programmes. The funds are invested in the network of microfinance institutions in 43 nations worldwide. VisionFund seeks to have each microfinance institution become operationally and financially sustainable so that the lending and social impact are able to carry on well into the future. VisionFund strives to provide strong governance, solid internal controls, robust risk management, and deep integration with other World Vision ministries. The microfinance institutions, in turn, are then empowered to extend credit and savings services to individual and group entrepreneurs, primarily in World Vision area development programmes. The institutions endeavour to allow borrowers to self select their own groups and their own business ventures. As businesses succeed, loans are repaid, and microfinance institutions are able to lend those funds to other clients.
agree to guarantee one another’s loans. This allows VisionFund to reduce costs and provide small loan amounts (loans typically range from $50 to $500). The group screens potential borrowers and tracks each repayment, building its members’ leadership skills and sense of pride along the way. Weekly meetings offer accountability and support, and also build business skills. Solidarity Groups Designed for more experienced entrepreneurs with larger enterprises, solidarity groups have fewer members than community banks, with an average of threeto-six people guaranteeing each other’s loans. Members who make repayments on time become eligible for larger individual loans (loan sizes typically range from $300 to $800). Individual Loans
Loans made by VisionFund-affiliated microfinance institutions are handled in the following three methods: Community Banks These loan circles create an opportunity for the poorest entrepreneurs to obtain credit. Self-selected groups of 20–30 borrowers
Source: VisionFund Annual Report 2009
Borrowers who have grown their businesses successfully through a solidarity group or who have their own collateral qualify for individual loans, typically ranging from $500 to $5,000. Individual loans usually require either two guarantors or collateral. Borrowers often create a multi year business plan in consultation with their loan officer.
Quality and Integration
CEVI PRODUCT PORTFOLIO
%
%
%
Loan Product
%
Product Distribution %
CEVI offers four loan products catering to economically active poor namely Yaman, CROP, BABE and Asenso loan. Yaman loan product, which targets micro-entrepreneurs involved in trading and commerce, covers majority of the portfolio and is offered in almost all of the branches nationwide. Crop Loan on the other hand, is second that targets micro-entrepreneurs involved in farming, highly availed in Mindanao Areas (Trento and Surallah Branches). Then BABE Loan is exclusively offered in Bais, Estancia and Sara Iloilo Branches that targets microentrepreneurs involved in hog raising while Asenso Loan the least, targets small and medium scale entrepreneurs, existing or new clients with greater need for capitalization has just been recently launched in Talibon branch.
21
22 Operations
GENERAL INTRODUCTION TO UNIQUE HOLISTIC MODEL OF DEVELOPMENT Area Development Programmes (ADPs) lay a secure foundation on which small businesses can build. In conjunction with clean water, health care, stable food sources, and education, communities can turn to income generating ventures. VisionFund’s network of microfinance institutions integrates microfinance into World Vision’s programmes. This unique combination of immediate aid and long-term development leads to sustainable developmental changes. The result is a truly holistic, integrated approach to community development that empowers poor families and communities to solve their own problems in innovative ways.
Quality and Integration
23
Education and Literacy Educating children and families is critical for the future of a community. For example, published studies show that when girls learn to read at the eighth grade level, benefits to the community include reduced mortality rates and increased income per capita. World Vision’s integrated approach helps communities build their own schools and provide their own teachers. Water Communities often have access only to dirty, disease-infested water that spreads diarrhoea and deadly parasites. Simply providing access to clean water and improving sanitation can cut child death rates in half. World Vision serves communities by drilling new wells, protecting existing water sources, and piping water from safe springs. This water is safe for drinking, cooking, bathing, and nourishing crops and livestock. Health Care Studies show increased family income often translates into better health, and health services for families, including children. Microloans provide the working poor with the additional resources they need to provide health care for their families. By being able to access health care and increase the frequency between clinical visits, mortality rates for children drop. Food and Agriculture By securing its own regular and sustainable sources of food, a community is able to cut death rates among vulnerable families in half again (when added to water and health improvements). The right seeds and tools, plus training in agriculture and animal husbandry, enable a community to increase its production of meats, vegetables and grains for healthy diets. Improved storage capabilities enable families to survive periods of food shortage. Source: VisionFund Annual Report 2009
24 Operations
“I thank God in CEVI. It is really a blessing working in this ministry that provides both spiritual and financial needs of the people. The way CEVI handles staff and clients are different. It knows to value relationship. And this relationship has been one that held us unique from the rest. Everybody in the organization cares. This is the kind of culture that I am always proud at CEVI.�
EDWIN P. CRESCENCIO Operations Manager
86% Job Sustained
25,992 Children Impacted
75,579
SOCIAL PERFORMANCE
Women Outreach
26 Social Performance
CEVI Client Success Stories Helen Matematico Helen Matematico lives in Moalboal, Cebu. She is 37 years old and is married to Reynaldo Matematico, a sea diver. While Reynaldo he financially supports his family by providing diving services to foreigners interested in exploring the beautiful Cebu sea, he also helps Helen to raise their children. However, the busy lifestyle of these working parents only leaves them the evenings to spend time together and with their kids, Renalyn and Renann. Renalyn, 20, is a college graduate while Renann, 19, just graduated from high school. Both children enjoy and even prefer working in the restaurant business, helping their mother. Helen’s restaurant started off small but has gradually progressed and expanded over time, resulting in increased profits. Although Helen’s restaurant faces much competition from other restaurants, Helen has been effective at maintaining a strong customer base by providing food and service far superior to others. She claims that her business’ success lies with the quality and taste of her food. A large portion of her clientele consists of foreigners who have settled in her town, and they claim that aside from the great food Helen serves, she offers great customer service. As her restaurant became more successful, Helen was able to hire some of her relatives and friends to join her work force. An added touch, Helen’s restaurant is situated on the seashore, which allows her customers to enjoy the view of the sea and the refreshing air. Helen is now in her 17th cycle with CEVI and has already availed two loans at PhP 25,000. When she first began, she started with a loan of PhP 6,000 to gain additional capital for her business. She is thankful for CEVI and for the loans that were granted to her- with the capital she was able to expand her business a great deal. In turn, the additional income generated helped her provide for her children’s education and to make a suitable house for her family to live in. Helen’s daily profits now hover around PhP 7,000 on average, but range from PhP 20,000 to 50,000 during the peak season. Her annual profit is about PhP 450,000.
Helen’s dream is to have her children complete their studies and start businesses of their own. At the moment, her business plans include creating an extension near her restaurant so she can maintain her competitive advantage and serve a larger customer base. She is excited to continue on as a CEVI member.
Quality and Integration
27
Zenaida Pacurib Alegarbes Zenaida Pacurib Alegarbes, a resident of Hubang Poblacion, Bunawan, Agusan del Sur, has been a CEVI client for 2 years. Zenaida first learned about CEVI from her neighbors. Upon hearing how the loans from CEVI changed their lives, she did not hesitate to join their association, especially since she needed capital to grow and improve her businesses – she runs a sari-sari (general) store, has a rice field, and is engaged in hog raising. Zenaida has 4 children, three of whom have already graduated from college; her youngest child is a first year at college and is studying to be an accountant. Zenaida and her husband, Daniel Magnifico, have worked very hard to be successful in their business ventures so that they can fulfill their dream to have their children earn college degrees. Having a strong sense of determination to grow her businesses, Zenaida never feared that her investments would fail. With her first loan of PhP 6,000 she was able to expand her product offering at her sari-sari store. She was able to use a portion of the loan to invest in her piggery and to also hire labor to plant in her rice fields that span 6 hectares. Zenaida is now on her 5th loan cycle with a loan amount of PhP 14,000. Her annual profit from her sari-sari store, hog raising, and rice farming is PhP 18,000,150,000 and 150,000, respectively. Approximately 50% of the income generated from her business ventures is re-invested into her business and into her younger daughter’s education. With the support of her children and husband, Zenaida is hopeful for success- she would like to set an example within her cluster association and in her community. To further expand in her rice farming, Zenaida would like to purchase more rice fields to multiply harvest in the coming years. She also would like to expand her hog raising business. Zenaida believes that with the right attitude and smart investment decisions, she will be able to use each availed loan from CEVI to accomplish all her dreams. Zenaida is an active cluster chairman among the many cluster associations in the Trento Branch. In fact, her officer position enabled her to develop leadership skills and strengthen her relationship with her neighbors in the community. She is a disciplined leader and constantly reminds her fellow cluster members to be responsible. She expresses the highest praise of CEVI, saying that the trust and values that CEVI have given her have molded her to be a better person. CEVI has also given her the opportunity to grow her businesses and, most importantly, allowed her to pay for the education of her children. It was through CEVI that she was able to learn how to speak in front of people and become a leader. She values the trust that the members of her cluster association have given to her. Zenaida is just one of the satisfied clients of CEVI who lives life with contentment and fullness despite the challenges she may face because her strong belief in God makes anything possible.
28 Social Performance Michelle Escotido As a CEVI client for almost seven years, Michelle N. Escotido reminisces on her short beginnings as a microentrepreneur. She is the wife of Orlando M. Escotido, who is also a micro-entrepreneur, and a mother of one child. She vividly recalls the days when their balut (unhatched duck egg) vending started in the 1994, before she became a member of CEVI. The business started when her husband, Orlando, would sell balut via bicycle. Within a few months, Michelle and Orlando saw that there was a high demand for balut, which helped them continue to persevere and prosper. To fulfill the increasing demand, they realized they needed more capital to cover the costs of purchasing additional balut and materials and hiring labor for the production of balut. In 2002, Michelle was informed of CEVI by her neighbors and saw the chance to raise capital for her business. With the encouragement and support of her husband, she decided to join CEVI. She was one of the pioneer members of CEVI’s cluster association in Sto. Niño, South Cotabato. With her first loan cycle of PhP 6,000, she purchased additional materials, such as baskets, needed for balut vending. When the balut vending business first started, they only had one basket and one bicycle to sell the balut within the barangay and to nearby barangays. With additional capital borrowed from CEVI, their business grew and they were able to expand their business to include balut making and the buying/retailing of fresh duck eggs. They were also able to purchase motorcycle and sidecar to more efficiently deliver fresh eggs. In fact, Michelle and Orlando have been so successful that they have now established outlets in Davao and Tagum to sell fresh eggs. Because of the substantial growth, they have an average daily income of PhP 5,000- 6,000 and, as of December 2009, an annual profit of PhP 600,000. The additional
income has enabled them to purchase land, purchase a car and renovate their house. The business started with just the couple handling the operations, but now they have 3 drivers who deliver eggs to the outlets and 1 assistant. Their business has made a considerable impact on their community by generating employment. Currently, Michelle is already in her 17th loan cycle and has a current loan of PhP 25,000. She has been able to launch another business - she owns an outlet/office for the direct selling of Avon, Sara Lee and Natasha products. Though she initially realized that there was risk in starting such a venture, she continued to believe that hard work and time can make for a successful business, and she was right. She proudly claims, “After I joined CEVI, my business prospered which means I made progress. Not only was I able to improve my financial standing, but more importantly, I was able to grow and become stronger spiritually through the Biblical Reflections that are done at every meeting.” She and her husband believe that with the continuous financial support from CEVI and their trust in the Lord, their dreams for their daughter to finish her studies will come true. Michelle, like many micro-entrepreneurs, can continue to avail large loans from CEVI for business expansions because she has a proven track record which is based on hard work, commitment and perseverance- values that are necessary for an entrepreneur to prosper. Indeed, Michelle is proof that a committed and motivated person deserves the opportunity to have access to services that will help them prosper in business and in life.
Quality and Integration
29
Janet Bucoy A true-blooded Zamboangeñan, at the age of 16, Janet moved from Mindanao to Palawan with her parents. Leaving familiar faces and places behind, she had no choice but to adapt to her new home. School greatly helped her to make new friends and get accustomed to the new environment she was dwelling in. Years passed by, unnoticed, and soon Janet was marching to get her college diploma. Janet met her ex-husband in Babuyan, a barangay of Puerto Princesa City that she called her second home. She had two children with him, Ryan and Weljane, but when her youngest, Weljane, was in the first grade, Janet and her husband decided to live separately due to conflicts. From that point on, Janet worked very hard to be able to feed her kids and send them to school. She worked for the city as a Coordinator of Women in City Hall for ten years, however once she sensed there were issues within the department, she resigned to avoid tension. Janet did not want to begin the job hunt again so she registered to an Avon outlet and began to sell beauty products. Soon after, she met Alvin Cardejon, her current partner. Being with Alvin eased the burden of being a single mother who was constantly faced with challenges. In 2003, Alvin, Janet and the kids moved to Roxas, a town in north Palawan. She continued to sell Avon products and soon began to sell Natasha products, while Alvin focused on mechanical work fixing motorcycles. That same year, Community Economic Ventures, Inc. opened in Roxas and Janet was one of the first members to join. She used her loan as additional capital to support her and her partner’s businesses. As she recalls, she and her co-members in the cluster enjoyed meeting and paying their dues. Her house was near the sea so she decided to use her next loan to begin a fishing business. With her loan and savings, she was able to buy a boat and other fishing equipment. Her son, Ryan, and Alvin would go fishing and she would sell their catch. Although they had begun their fishing business, Janet continued to sell Avon and Natasha products and Alvin continued to be a mechanic in his spare time. After some time, their fishing business grew and required more help- Janet hired six people from her town. After two years, Janet became pregnant with her daughter Yvennet. After giving birth, she decided to withdraw her membership from CEVI and her family began to rely on the fishing business. Some more time passed and soon, Janet and Alvin decided to sell their boat and house so that Alvin could focus on his mechanical job. The boat was sold for PhP 70, 000 and the profits were used to buy a lot with a nipa house in Roxas. Alvin used his skills to restore an old motorcycle and assemble a sidecar to create a tricycle. Janet asked her relative to drive the tricycle, which results in her getting a boundary of PhP 120 per day. Janet once again found herself in need of additional capital so she got in touch with her old cluster members to inquire about CEVI. She was able to join because of her existing transportation business.
With her loan, Alvin was able to assemble two more tricycles and Janet hired more drivers. Janet was excited to be earning an income again and simultaneously began to build a new, bigger house. Janet was happy to provide transportation and jobs to people in her community, while Alvin worked on establishing his shop where he does overhaul, welding and vulcanizing. In May of 2008, Janet opened a small sari-sari store in front of her house because she had time to manage the store and wanted to earn a little extra money for her family’s daily needs. Life was becoming easier when suddenly, a tragedy happened in their family. On January 24, 2009, her son Ryan, 27 years old, got electrocuted and passed away. It was very tragic experience for Janet and her family who felt that things were just starting to improve for them. Two days later, Yvennet, who was 5 years old, fractured her leg while playing with other kids on a tricycle just outside their house. With all the trials her family was facing, Janet broke down into tears one afternoon- she was frustrated and felt like giving up. Yvennet innocently told her mother, “Kaya mo yan ma, malaki ka naman eh. (You can do it Ma, you’re an adult!)” Janet couldn’t help but laugh and found strength and encouragement in her daughter’s words. Janet’s faith in God and the comfort He offers to Janet and her family allows them to deal with the negative experiences and keep moving forward. To date, Janet manages three tricycles and she has saved money to purchase a brand new sidecar. She earns PhP 360 daily from renting tricycles. The sari-sari store and welding/ repair shop earn PhP 500 per day. Her most recent plans for business growth and expansion include: improving Alvin’s shop, buying a transformer valued at PhP 50, 000, and expanding her sari-sari store. Janet shares, “One thing I learned from Biblical Reflection in our weekly cluster meetings is to depend on God for everything.” Prior, she depended on her strength to help her through, but the trials she has faced in her life have made her realize there is God who will be her source of strength and give her the courage to go on.
30 Social Performance
OVERVIEW OF TYPICAL CLIENTS The majority of the world’s poor are self employed. Most people living in poverty, however, do not have access to the capital needed to grow their small businesses and increase profits.VisionFund affiliated microfinance institutions strive to serve the entrepreneurial poor who are economically marginalised. This is especially true for the rural poor, who typically have even less access and fewer options than others. VisionFund looks for borrowers primarily in World Vision area development programmes with the following three characteristics: Strong Work Ethic Focuses on the hardworking, entrepreneurial poor who need access to capital to grow their business to a level that will sustain themselves and their families. Prior Business Experience Provides microloans to the entrepreneurial poor who are willing to be trained as first-time borrowers. Additionally, those with prior business experience are sought out because they are more likely to repay their loans and become mentors to other entrepreneurs. Women Caregivers Majority of borrowers are women. In 2009 over 68 percent of all micro borrowers were women. This is a staggering statistic in light of the reality that women control less than one percent of the world’s assets. VisionFund focuses on women, as they are more apt to spend additional income on health care and education for their children.
IMPACT ON CHILDREN Microfinance is an investment in the future, especially in regard to children. With new income from micro enterprise, poor families invest in their children’s education. Studies show that children of microfinance borrowers are more likely to go to school, stay in school longer, and have lower dropout rates. VisionFund’s experience confirms these findings. As loans are repaid, the money is recycled, giving donations increased impact. For example, in Rwanda, a donation of $75 can affect at least 30 children over a five year period by providing access to food and education. Among more than 800 Rwandan active borrowers, family income and assets doubled in 19 months. Recipients benefit from better nutrition, improved living conditions, better health, better sleep, increased education, and an improved outlook on life.
Source: VisionFund Annual Report 2009
FINANCIAL PERFORMANCE
32 Financial Performance
REPORT OF INDEPENDENT AUDITORS The Board of Trustees and Members Community Economic Ventures, Inc.
We have audited the accompanying financial statements of Community Economic Ventures, Inc. (a nonstock, nonprofit organization), which comprise the statements of assets, liabilities and fund balance as at September 30, 2009 and 2008, statements of income and expenses, statements of changes in fund balance and statements of cash flows for the years then ended, and a summary of significant accounting policies and other explanatory notes. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the Philippines applicable to NonPublicly Accountable Entities (NPAE). This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
FINANCIAL PERFORMANCE
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of Community Economic Ventures, Inc. as of September 30, 2009 and 2008, and its financial performance and its cash flows for the years then ended in accordance with accounting principles generally accepted in the Philippines applicable to NonPublicly Accountable Entities (NPAE).
January 7, 2010 Makati City, Metro Manila
MANABAT SANAGUSTIN & CO., CPAs Partner CPA License No. 0035026 SEC Accreditation No. 0047-AR-2 Tax Identification No. 112-071-561 BIR Accreditation No. 08-001987-11-2007 Issued July 10, 2007; Valid until July 9, 2010 PTR No. 1564064MB Issued January 5, 2009 at Makati City
Quality and Integration
33
34 Financial Performance
Quality and Integration
35
Community Economic Ventures, Inc. Sarrabia-Co-Torralba Building 2, Espuelas Street, Tagbilaran City 6300, Philippines Telephone: (038) 412-2356 | 501-0170 | 235-5463 Fax: (038) 412-2356 http://www.cev-inc.org