By Dr. Kevin W. Prine
President & CEO, Outreach International
Alongside our local program partners and leaders, Outreach International supports communities to organize and access the resources necessary to overcome their most pressing challenges. For many households, such challenges pertain to food shortages, and it is through processes that are community-led, driven, and owned that we have seen families overcome such difficulties. Even more impressive, this approach has evolved from food supply solutions into self-sustaining entrepreneurial undertakings. For me, there is no better example of such united action than the rice loan programs of organized groups in the Philippines. These loan programs exemplify what people can do if they put the principle of community-led development into practice.
Some context: In the Philippines, up to 80% of rural households look to rice growing as a primary source of income (through both labor and sale of excess production) and, of course, food. But this dependency is also the Achilles’ heel for many families. During drought and the lean months between planting and harvest, families face rice shortages. Further, with the increasing usage of tractors, many households have had their incomes reduced or had to go
further from home to find work. Although this is often a sign of an improving economy with higher quality living, there is much unnecessary suffering without adequate education opportunities, training, and capital. Families have no choice but to take out loans or borrow rice at interest rates as high as 10% per month. The added burden of perpetual debt is inevitable.
Community-based organizations (CBOs) supported by Outreach in the Philippines have devised a solution: a community-managed loan initiative in which communities purchase rice in bulk at affordable prices and then allow household members to borrow that rice during lean periods at low-interest rates. Supporting CBOs in implementing these loans is Outreach’s long-term partner Outreach Philippines, Inc. (OPI), and its experienced team of trained facilitators. CBO members conceptualize, plan, and develop loan policies and systems that best suit their needs with coaching from these facilitators. Such policies guide these members in managing their loans equitably, sustainably, and without corruption.
Outreach International provides the start-up capital for CBOs to purchase the rice for their first cycle of loans. This “seed” money gives communities the chance to operate their lending and borrowing programs without the burden of start-up expenses or being accountable to unscrupulous lenders and debt collectors.
But, it’s more than just rice. Since Outreach first partnered on this program more than a decade ago, we have seen how CBOs use their rice loans to strengthen their communities’ capacity to do much more. For example, we have seen them use their accrued interest toward spin-off loan programs, infrastructure development, and recently, toward providing additional food support to families burdened by COVID-19-related food and income shortages.
Perhaps even more significant is the community leadership, capacity, and commitment that have emerged through the implementation and management of rice loans. By implementing these programs, communities gain the experience of working together toward a shared objective and the confidence that comes from achieving success together through collaboration. Groups that manage rice loans have solid organizational structures filled with local people who earn various leadership roles that grow and sustain their community’s efforts. CBOs have also tailored management systems and policies that ensure their loans function as smoothly as possible. And, those who oversee the rice loans develop essential skills for sustainable community development and become instrumental in future project development and implementation. These additional benefits of a rice loan program give a community the experience, confidence, and skill to address future challenges.
The first rice loan programs developed and implemented in the Philippines were established in 2008. Since then, more than 500 tons of rice have been distributed to families via some 9,200 loans with a consistent 100% repayment rate. As of April 2021, we have 20 active loan programs in the Philippines with approximately 1,200 households.
If you would like to learn more about these rice loans, the CBOs that manage them, and their incredible impact, please see my team’s publication, “Rice Loans and People’s Organizations in Rural Philippines” (Cloete et al., 2021) in The International Journal of Community and Social Development.
Solutions to human suffering almost always require systemic change. With over four decades of evidence, we believe community-led development to be the necessary catalyst in driving that change.