Notes From the Field

The Island of Samar and Leyte Agriculture Cooperative (ISLACO) was founded in 2017 as part of the efforts to rebuild the region after the devastation of Typhoon Yolanda. Since then, they have been receiving support and assistance from different government agencies and non-government organizations. The Cooperative has leveraged this support to assist their members in areas that include improving agricultural produce as well as linking potential markets through the development of a consumer line of cacao and other agricultural products under the brand name of Island Wealth.

As part of their mission to spur economic activities and development among their farm members, the Cooperative also developed a microfinance loan program. The onslaught of different calamities and disasters hampered their operation, however, including the repayment abilities of their members. This was exacerbated by the pandemic which resulted in an increase in delinquent borrowers. In addition, ISLACO staff, management and the Board of Directors were not given complete training on credit policy, borrower information verification procedures, and legal considerations of the loan documents.

ISLACO staff, management and the Board of Directors recognized the need for a thorough review and assessment of the ISLACO loan program. In this regard, Grameen Foundation and Farmer-to-Farmer sent me to assist ISLACO with this initiative.

After a thorough review and assessment of the loan program, including a random sample of loan files, measures taken on delinquent and defaulted loans, and detailed interviews with ISALCO management and staff, I conducted a 4-day, hands-on, workshop with ISLACO staff, management, and members of the Board of Directors, in which we exchanged ideas and developed solutions to fill gaps in the loan policy and strengthen the overall program. The seminar included visits and interviews with ISLACO members engaged in a variety of commercial activities, including coconut, rice, poultry, and hog farming.

Due to the interactive nature of the workshop, the solutions developed with ISLACO had organizational buy-in, and ISLACO expressed their view that the solutions were appropriate for their members.

The results included a better-defined and verifiable application and legal documentation process as well as providing more clarity to the borrowers and guarantors on their loan obligations. The Board also agreed to establish a network with neighboring financial institutions to share information. Finally, the recommended actions included engagement between ISLACO staff and members to develop appropriate family and business budgets that included the repayment of loan proceeds. To the extent that this process educates members on the fundamentals of financial management, ISLACO will provide benefits beyond the loans themselves.