The Philippines remains a global leader in microfinance, with an international report placing the country among the top five in overall microﬁnance business environment rankings.
The country ranked 4th out of 55 in the Economist Intelligence Unit’s “Global Microscope on the Microﬁnance Business Environment 2012,” jumping two places from ranking 6th last year.
This, as it highlighted significant changes which are seen to promote the development of an enabling microfinance environment.
These include central bank Circular No. 744, which redefined microfinance loans to include amounts up to P300,000 from the previous P150,000.
Also noted was the House approval of a draft law which allow foreign ownership of up to 40 percent in rural banks.
The country’s score improved by 4.8 points to 63.3 index points calculated based on its performance in regulatory framework and supporting institutional framework.
The Philippines was one of only three Asia countries in the top 10 of the report, which covers a year’s period to June 2012.
This year’s overall ranking was topped by Peru, Bolivia and Pakistan. Below the Philippines, meanwhile, were Kenya, El Salvador, Colombia, Cambodia, Mexico and Panama.
In terms of regulatory framework, the Philippines shared the top spot with Peru, scoring 80 points.
“The Bangko Sentral ng Pilipinas (BSP, the central bank) continues to promote an enabling environment for microﬁnance, seeing it as one of its key poverty reduction efforts,” the report said.
A number of public sector institutions meanwhile provide wholesale funds to support the sector’s growth, it added.
Although improving by five points, the Philippines posted a slightly weaker performance, scoring 50 and sharing the 15th place with Brazil, Nicaragua and Uruguay.
“The industry remains relatively fragmented, as there is no one dominant institutional type, set of institutions, or network and multiple regulatory and supervision regimes owing to the diversity of the types of service providers,” the report said.
The country’s weak showing in this indicator may also attributed to a low “stability” score, particularly in terms of “political stability.”