New Horizons > December 2002

A strategy towards self-sustainability

By Larry Millan, Executive Director, ECLOF Philippines

At the end of June 2001, just before the opening of our first branch office, we had disbursed from our head office new loans totalling only P2,250,000 (US$43,706).

By the end of 2001, all the new loans for that year came to P9,345,000 (US$181,527). Of this amount, our Antipolo branch, which opened in September, 2001, had released P2,340,000 (US$45,455).

The low level of lending activities in our head office in Quezon City for 2001, and subsequently for the first quarter of 2002, was the best argument for ECLOF to go into the market-place and to become effective stewards of God’s resources.

We began a solidarity lending operation for Antipolo in July and August of 2001 and based it at the head office to save on overhead expenses. However, hardly any clients came in. Of the three groups who showed up at the office, two were former clients.

Right place
The most common complaint from the clients was that the office was so far away that they had to sacrifice a day’s earnings just to pay for the trip.

Therefore, what we really ended up doing was to require clients to subsidise our savings on overhead expenses. Worse still was that we actually lost money because the income from the operation nowhere near covered staff salaries.

Things were very different when we finally opened a branch in Antipolo itself in September, 2001. We received a deluge of loan applications. We had to turn down quite a few because they were not viable, but the fact is that when we made our presence felt in the market-place, our service delivery became more effective. This was clear by the end of 2001 when we showed a total of P2.34 million (US$45,455) of new loans to 36 groups consisting of over 180 individuals.

The new Antipolo branch is appropriately located in a market-place where our clients have their businesses. After 31&Mac218;2 months, the performance of the branch, with only one loan product, was better than the head office’s performance after seven months with three loan products. The head office was simply located too far from the clients.
Just as Jesus began His ministry by going to where the people who needed Him were, so we must go to where people are and offer our services to them there.

Right product
In a survey by a well known Asian regional economic review, one company came first among 208 multinationals for four straight years because it was the most innovative in responding to customer needs, and among the companies that others try to emulate.

This shows that our clients should be our primary concern and it would do us well to be sensitive to their needs. We can do this by offering them a simple and responsive loan program.

Keep it simple
A simple loan program is straightforward and free of difficult requirements and complicated procedures. It is precisely this simplicity in the loans offered by what we call 5–6 operators (i.e. loan sharks who make a loan of 5 pesos one day and collect 6 the next) that makes them so attractive. And, since some clients lack a basic education, the simpler the program the better.

In order to have good loan programs, research and planning must be done prior to introducing anything. I foresee our branch operations having two, or at most three, loan programs: a solidarity loan program and one or two other loan programs that address the particular needs of an area. For example, with the Vegetable Farming Loan offered by our La Trinidad branch, which opened late in 2002, we have targeted local vegetable farmers.

Ministry
We have a ministry. The primary work of this ministry is to offer service not money. Money is merely the medium by which we render our service. This is the corporate culture we want to have. It must be clear to all ECLOF Philippines employees why they are with ECLOF and whom they are here to serve.

If the duty of the staff is to serve their clients: it is the duty of ECLOF, as a corporate entity, to serve its employees in return. In fact, our employees are not all that different from our clients, and are likely to come from the same sector of the population. As such, ECLOF should not see its staff as different from its clients, but as people on two sides of the same coin.

It is easy to provide service, but it takes desire and a conscious effort to provide excellent service.

Underlying the desire to provide excellent service is the desire to improve oneself. This is an attitude that reflects Jesus’ teaching that a person must first and foremost be a good steward of his or her own person in order to attain life’s fullness.

The best testimony to ECLOF’s existence, and the way that it will achieve longevity is to have both a sustainable operation and one that is able to grow and expand.

Management
Since the core operation of ECLOF involves the handling of money, it is imperative to have sound financial management in order to be successful.

However, sound financial management is not limited to making the right decision on where or where not to put money.

First, a clear and well-defined financial policy is needed. This will serve as the foundation for a sound operation. Guidelines should clearly delineate where discretion is allowed, and where it is not. Effective financial policy turns a decision-making situation into a simple problem solving procedure.

Second, to ensure that correct decisions are taken, we must have an appropriate management information system. We use information technology in order to deal with the enormous amount of information available today, the speed in the communication of information and the need to manage large amounts of information effectively and efficiently.

Third, the use of resources must be maximised. Any resource, no matter how plentiful, will be expended if not used rationally. The Parable of Talents gives the best illustration of the use of resources. Saving or being thrifty does not always guarantee the best result. It hardly ever has.

It is the use of our assets that determines how good we are as stewards. One way to measure this is to have some form of cost-benefit analysis, especially for major asset acquisitions.

ECLOF Philippines has been entrusted with an enormous amount of resources. These may not be as much as other groups have, but they are nonetheless enormous for us. With our assets comes great responsibility. God has called us to be in the market-place among His people. We have been provided with everything that we need to be good stewards. Let us make good use of His gifts so that we may harvest richly and be allowed to serve more.

This is an edited version of an address made by Larry Millan during the opening worship service of the seventh general assembly of ECLOF Philippines.