LANDBANK, Smart launch breakthrough mobile savings and livelihood partnership for 4Ps

Published October 8, 2013

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The Land Bank of the Philippines (LANDBANK) and Smart e-Money, Inc. (SEMI), a wholly-owned mobile financial services subsidiary of Smart Communications, Inc. (Smart), have jointly launched today a pioneering partnership for a mobile-based incentivized credit, voluntary savings, insurance and livelihood program that will benefit over four million Pantawid Pamilyang Pilipino Program (4Ps) beneficiaries and more than five million small farmers and fisherfolks in the agricultural sector.

Dubbed Panalo SIKAP (short for Sa Ipon at Kabuhayan Aahon ka Pinoy, which roughly translates to “through credit and livelihood, Filipinos will grow”), the program is supported by the United States Agency for International Development (USAID), the Bangko Sentral ng Pilipinas (BSP), the PLDT-Smart Foundation (PSF), the Department of Social Welfare and Development (DSWD), and the Department of Agriculture(DA), making it the largest public-private partnership for inclusive growth, financial inclusion and financial literacy in the mobile arena and a world’s-first out of the over 40 conditional cash transfer deployments worldwide.

Panalo SIKAP aims to address savings mobilization and micro enterprise development to generate micro savings across the country especially within the basic sector, which largely remains underbanked. The program seeks to reduce vulnerability of the poor through financial literacy, promotion of culture of savings, and micro entrepreneurship.

The program highlights an innovative social protection enhancer with a socialized interest of only 5 percent per annum from the usual 20- to 35-percent annual interest from other micro-finance institutions.

"This is another milestone for concretizing financial inclusion efforts through a sustainable and scalable program targeting the base of the pyramid. As a bank, it gives us the opportunity to create and develop credit profile and credit score among the poor by enabling them to transition from being unbanked to becoming fully banked segment," said Gilda E. Pico, LANDBANK president and CEO.

“Financial inclusion, poverty alleviation and livelihood is everyone’s business. While the issues concerning development as a whole are complex, this program is a foothold in scaling up opportunities for micro savings and entrepreneurship for our countrymen who need to break out the cycle of hardship. We support this initiative and we’re very keen on working closely with all partners to make sure that it makes an impact,” said Manuel V. Pangilinan, chairman of the PLDT-Smart Foundation as well as PLDT and Smart.

“We’re excited over this breakthrough service that will benefit those who need it most. It’s an example of how mobile technology can be used in public-private partnership programs in support of social good. With our partners, we expect Panalo SIKAP to further narrow the digital financial access divide in our country and to create sustainable livelihood for the 4Ps and agriculture sector beneficiaries," said Orlando B. Vea, chief wireless advisor, Smart.

"USAID is proud to be a strategic program partner in ensuring an effective and comprehensive on-ground financial literacy and education campaign plan in coordination with the DSWD. We need these beneficiaries to fully understand the value and opportunity of credit, livelihood and savings and how it could change their lives and make this as an initial step towards economic empowerment," said Gloria D. Steele, USAID mission director in the Philippines.

Under the program, recipients of the government’s Pantawid Pamilyang Pilipino Program can voluntary participate by authorizing LANDBANK to auto-deduct from cash grants for their auto-savings. The amount can vary from P50 to a maximum of P100 per month or P100 or P200 per bimonthly payout depending on the beneficiary’s choice. The auto-savings will be the basis for loan availment.

LANDBANK, in turn, can provide 50 percent of the total accumulated future savings of the beneficiary as loanable amount. Based on the beneficiary payout, the amount can either be P1,500 or P3,000. This credit facility can be used to avail of a Panalo SIKAP livelihood package that includes a startup phone, a free retailer SIM, merchandising material, selling guide, and an initial P2,500 initial load inventory.

Aside from their auto-savings, beneficiaries who voluntary participate will pay a maximum amount of P56.61 a month which is just 4 percent applied to loan repayment of the total deduction. The rest goes into savings. They will also be required to set aside a minimum of 20 percent from their gross revenues per month from the Panalo SIKAP livelihood business as additional savings build up.

All the income will be stored in mobile savings build-up account enabled by the Smart e-Money platform and linked to the beneficiary’s LANDBANK ATM cash card.

Through the program, beneficiaries will not only enjoy the auto-savings features but at the same time have the opportunity to have immediate access to a credit facility for livelihood and in the process, providing them access to financial services and capital.

Those who avail of the loan can also enjoy a mortgage redemption insurance that covers death or total disability of the borrower while the loan is outstanding.

This program is on top of the existing P250-billion credit facility of LANDBANK set aside annually for its mandated and priority sectors, and focuses on the provision of a retailer load micro-enterprise in the countryside and among the bottom of the pyramid segment.

Smart, through Smart e-Money, Inc. (formerly Smart Hub, Inc.), has been a pioneer in mobile financial services with world-first services such as Smart Money and Smart Load. For its growing inclusive business strategy, Smart is the only Philippine telco that has been recognized by the United Nations Development Program with a World Business Development Award in 2008.