The National Credit Council

The National Credit Council (NCC) was created by Administrative Order (AO) 86 and amended by AO 250. It is mandated to:

• Rationalize and optimize the use and delivery of the various credit programs of the government;
• Develop a national credit delivery system incorporating the attendant capability upgrading and institutional strengthening mechanisms;
• Encourage a higher level of private sector participation in credit delivery; and
• Define and rationalize the role of guarantee programs and guarantee agencies.

Credit Policy Improvement Program

In late 1996, the NCC became a recipient of a grant from the United States Agency for International Development (USAID), which finances the Credit Policy Improvement Program (CPIP). The Project started on January 2, 1997 and will end on 31 October 1998. The Project's primary role is to help the NCC in rationalizing government credit and loan guarantee programs, formulate appropriate savings and credit policies, and encourage the implementation of viable alternatives to directed credit and loan guarantee programs, which would not have a hidden fiscal cost for the government. The Project envisions a viable sustainable private financial market, with the government providing a supportive policy environment and institutional framework to that market. To support this vision, the CPIP has four immediate goals:

• The effective functioning of the government's policy making agency on credit, the NCC;
• The rationalization of the government's policies on credit, savings and loan guarantees;
• The creation of enabling policy environment that will facilitate the increased participation of the private sector and microfinance institutions in the provision of financial services to all sectors of the economy, especially the basic sectors; and
• The improvement and effectiveness of government-sponsored credit programs.
  

Following are the two components of the Project:

• Policy review and technical analysis of issues surrounding the efficient provision of financial services. Corollary to this is the formulation of policy interventions, supervisory and regulatory frameworks and various innovative approaches in the provision of financial services to basic sectors; and
  
• Advocacy activities designed to help NCC promote credit policy and program reforms and to encourage the adoption and implementation of viable alternatives to directed credit and loan guarantee programs.

National Strategy for Microfinance

A National Strategy for Microfinance was initially formulated and presented during the National Microfinance Strategy Conference conducted on November 20, 1996 at Byron Hotel. The Conference was attended by microfinance practitioners from the private sector and the member lending institutions of the NCC. The strategy paper was refined further on January 1997 with the help of CPIP, in time for its presentation to the Philippine Delegation attending the February 1997 Microfinance Summit in Washington D.C.

As the vehicle for the Social Reform Agenda's (SRA) Flagship on Credit, the NCC Secretariat actively advocated the NCC policy during their attendance to different SRA meetings and workshops such as Government and Basic Sector Joint Action Planning Workshop on the SRA (July 23 to 24, 1997), National Technical Assessment on SRA Localization (December 4 to 5, 1997), among others. Policy advocacy was likewise done by the Secretariat on their meetings with different donor agencies like the United Nations Development Program and other entities and personalities interested in microfinance.

Capacity Building on Microfinance

To enhance their understanding and appreciation of microfinance, members of the NCC Secretariat participated in forums. These include "Financing Microenterprises" at the Asian Institute of Management (January 20 to 24, 1997) and "International Conference on Breaking the Barriers in Microfinance" (June 20 to 21, 1997).

Under the USAID-funded CPIP, the NCC likewise sent a delegation of Philippine officials to a study visit in Indonesia to look into the microfinance operations of Bank Rakyat Indonesia (BRI) and Bank Dagang Bali (BDB) on June 1-10, 1997 The same delegation also participated in the Microfinance Training Program at the Economics Institute in Boulder, Colorado on July 7 to August 15, 1997.

Advocacy

The NCC Secretariat provided valuable information as resource persons about the NCC policies, plans and programs and the SRA Flagship on Credit during the Microfinance Conference and Workshops conducted by the Punla sa Tao Foundation in Cebu, Cagayan de Oro and Baguio Cities, respectively on August 12, September 5 and September 12, 1997.
Vigorous policy advocacy was done by the NCC member agencies and the Secretariat, with the help of the CPIP consultants for the passage of two certified urgent bills under the SRA. These bills, the Anti Poverty and Agri-Com bills were enacted into Republic Act (RA) 8425 otherwise known as "The Social Reform and Poverty Alleviation Act" and RA 8435 otherwise known as "Agriculture and Fisheries Modernization Act of 1997". These laws were signed last December 11, 1997 and December 22, 1997, respectively.

Likewise, the NCC Secretariat and the CPIP consultants actively participated in the meetings and activities of another USAID funded project, the Coalition for Microfinance Standards, where the NCC Executive Director is a member.

Policy Studies

As of December 31, 1997, the following have been completed under the CPIP:

• Database on directed credit and loan guarantee programs;
• Study on bank regulation and supervisory requirements for microfinance institutions;
• Identification of barriers to savings mobilization;
• Formulation of appropriate interest rate structure on loans;
• Assessment of the performance of government non-financial agencies (GNFAs) implementing directed credit programs (DCPs);
• Case study on the best practices of GNFAs in implementing DCPs; and
• Study on the effect of mandated loan allocation of financial intermediation.

The above were presented to the NCC Executive Committee (Excom) and the NCC Sub-groups during a series of workshops conducted at the Manila Galleria Suites (September 11, 16, 23 and October 3, 1997) and at Batangas Evercrest Resort and Golf Club (November 27 to 28, 1997).

Strategic Planning and Information Sharing

The NCC / CPIP Lotus Network was also developed under the program in October 1997. The system will be installed in the offices of NCC member agencies to facilitate the exchange of information and data, particularly with regard to the progress of CPIP.

In order to review the progress of the project and to prioritize its activities for 1998, the NCC Secretariat, the CPIP consultants and the USAID Project Officer conducted a planning conference on December 10 to 11, 1997 at Mimosa Resort in Pampanga. The conference resulted in the adoption of a policy and advocacy plan to be pursued by the NCC, considering the transition from the present Ramos administration to the next administration.