Microcredit Governance

Different scholars argue that good governance is crucial for an effective and efficient delivery of microcredit services to the enterprising poor and builds financially viable local financial intermediaries and sustainable microcredit programs. Microcredit governance includes the provision of adequate financial and technical support for the income-generating activities and micro-entrepreneurial projects of the poor who have been historically excluded from the mainstream commercial banking system. Hence, the application and utilization of microcredit as a tool for poverty reduction becomes the primary responsibility of the government. Microcredit now becomes part of the Philippine government's poverty alleviation programs that is fully advocated and supported by the international donor community and implemented in collaboration with credit-granting institutions from the civil society and business sectors. The governance of microcredit programs is further enshrined in the Philippine government's development thrusts and priorities along the lines of self- employment generation, food for the family, children's education and decent housing. The attainment of these thrusts and priorities through microcredit programs, however, emphasizes most heavily on institutional arrangements for the transfer of wholesale credit funds from the international donor community to retail microcredit facilities administered by credit-granting civil society organizations in the barangays and finally to individual borrowers. Anchored on the principles of good governance for sustainable human development Microcredit Governance provides research-based theories and empirical evidences to support the theoretical proposition that financial viability objectives are attainable in government-driven poverty alleviation and rural development interventions. The findings and observations are sufficient to encourage organized business sector actions in pro-poor microcredit programs in collaboration with the government and civil society organizations