First, it entails enhancing the policy and regulatory environment. Second, it means developing the market infrastructure. In the case of the MDP, it was developing and adopting the performance standards for microfinance and drafting the bill for the credit information system that was successfully passed into law. Third, it means developing the capacity of MFIs for sound and sustainable microfinance operations. Fourth, it entails increasing the capacity of end-clients in accessing and using financial services through financial literacy, consumer protection, and BDS.
Key success factors are government buy-in and an appropriately designed program. The key factors that contributed to the success of the MDP were (i) the strong commitment of the government and support from stakeholders to develop the sector and achieve sustainable microfinance; and (ii) a well-designed program that appropriately addressed the key constraints, accompanied by TA to support the program objectives and a grant for capacity development.
Within the broad context of inclusive growth, the growth and commercialization of the microfinance sector increased access to financial services, created jobs, and increased financial literacy. However, outreach to households below the poverty line remains limited. In view of the program’s stated objective to improve household income, reduce poverty, and reduce the vulnerability of the poor, there is a need to improve the breadth and depth of outreach to the poor. Support for strengthening social performance of MFIs may be considered to improve outreach to the poor. The initiatives of BSP, People’s Credit and Finance Corporation and microfinance network organizations in promoting financial literacy and consumer protection should be continued, as these develop the capacity of the poor to increase access to and use financial services. Further, MFIs should take full advantage of BSP’s responsiveness to advances in technology through mobile banking and e-money, as these offer tremendous opportunity to deepen and expand outreach to the poor.
The issuance of EO 558 initially threatened the foundation of the government’s market-based financing strategy for the sector. It did not have any significant adverse impact on the policy environment, as the market-oriented framework was already well established and institutionalized in the sector. Nonetheless, DOF-NCC needs to stay vigilant and continue to play a proactive role in preventing policy reversals that would threaten the market-oriented framework for microfinance.
Output performance measures of public sector and management programs could be improved through the inclusion of (1) anti-corruption measures, especially if the risk of corruption is high in the program and the country rates poorly on perceptions of corruption; and (2) strengthened internal and external audit functions to provide more transparency and accountability to government processes.
The results framework presenting clarity in project design, well-defined outcomes, and outputs with appropriate targets and indicators, is imperative in monitoring project achievements. This is necessary to help provide clear assessment and guidance on how to systematically track progress especially on how success will be assessed.
In cases where corruption is perceived as being high, support for better performance and greater accountability in public financial management systems plays a crucial role.
The needs of private sector entities and small-scale health providers, however, are different. Easy access to credit by small-scale providers, in itself, is insufficient. Needs and constraints also should be addressed. This covers (i) technical support—referral networks, continuous training, and colleagues’ advice; and (ii) family support—access to schools for children, work opportunities for the spouse, safety, and other needs and constraints. These must be identified and addressed to develop quality health services in rural areas. Among small-scale health providers, midwives are essential to reduce maternal and child mortality in underserved areas, and their specific needs must be identified and met. Innovative solutions are required to facilitate access to small credit without multiplying intermediaries—DBP, learning from experience, has now developed specific credit programs. PPPs, in the health sector must offer value for money. The involvement of the private sector often improves efficiency, the quality of services, and peers’ support. A PPP policy in the health sector must be designed within the context of local conditions. Outsourcing ancillary services is good practice for improving efficiency.
A careful stakeholder analysis involving consultations with all participants to identify needs, constraints, and potential benefits could have improved the project design, its assumptions, and risk mitigation strategies.
Inter-sector collaboration can bring significant benefits but is not easy: it requires significant efforts and a clear governance structure with specific reporting and coordination mechanisms. Leadership is essential and needs to be carefully established to ensure effectiveness and efficiency. The HSIAC should have been more actively involved and better coordinated the project.
This allows for any follow-up to be well-targeted on where improvements should have been made. It also allows the public to determine the quality of the recommendation when the report is published on the ADB website. (iii) Where it is available, the use of country information such as audit reports (both internal audit and external audit) can provide an alternative perspective on the success of the program.
Risk assessments should include the individual risk and its risk level before mitigation, the mitigation strategies and resultant risk to each risk and to the overall risk after mitigation. The PCR template should also allow for discussion on risk to explicitly consider whether the risk mitigation strategies had been successful.
The government is also dealing with many official development assistance partners, and there are grants and loans with better conditions than ADB loans. The project team insists that the government’s decision to change funding sources was unexpected, through project documents, this validation does not find significant evidence suggesting that ADB actively explored other development partners’ investment plans in the sector, prior to or in the early stage of the loan implementation. ADB should have also assessed its own comparative advantage in offering its assistance to the Philippine development assistance environment in the water sector.