It is said that sharks abound in the Philippines, even on land. They evolve into two-legged creatures, largely unnoticed until somebody in the neighborhood gets financially desperate and falls into their trap called “five-six”.

Notorious for being home to Asia’s poor savers, the Philippines is naturally loan shark-infested. Crippling poverty that leads to lack of access to formal financial channels is at the heart of the problem.

In the city of Pasay, more than half of the population live in slum areas, are uneducated and have a mendicant mentality. No bank wanted to lend for livelihood programs. When capital does not flow, the economic stream stagnates. To survive, the poor turn to loan sharks that welcome them with open arms.

The urgency of cutting this vicious cycle led to the Bayanihan Banking Program in Pasay City. Launched during the term of former Mayor Jovito Claudio in 1999, the program aims to empower the poor by enabling them to save and gain access to credit.

The formula is not new. It is based on the microfinance model popularized in Bangladesh by Dr. Mohammad Yunus who organized women belonging to the poorest of the poor. The success of the “Grameen Bank” model, as it is called, inspired many nations to set up their own versions of microcredit.

Despite being a political rival of his predecessor and winning through a recall election, Mayor Peewee Trinidad continued with the program. “It’s incumbent upon any mayor to continue a good program, irrespective of who’s in charge,” he says.

With a P1.5-million assistance, the Bayanihan Banking Program was revived and given a new lease on life. It involves helping beneficiaries manage their own livelihood programs through weekly meetings.

Adopting the Grameen Bank approach, more women than men are chosen beneficiaries as they are proven to be more responsible in honoring their financial obligations. Women are also more responsive to values education, which is greatly emphasized in the weekly meetings.

Under Bayanihan Banking, little groups made up of 26 to 30 beneficiaries set up their “Financial Center”. Each has its own system and policy on savings and loans. Financial Centers create their own emergency fund out of savings pledged during the weekly meetings. Aside from credit lines, members also have access to accident insurance. They cannot borrow if they do not save as their savings record serves as their credit record. And they have passbooks to show for it.

Individual members save from P3,000 to P18,000. Around 21 Financial Centers have so far raised at least P20,000, with one generating as much as P400,000 in savings.

Since members own the program, they are made more accountable and responsible for their actions. So far, there are already 35 barangays in the city which play host to 73 Financial Centers, benefiting 1,080 members.

Barely two years in operation, the 73 Financial Centers have already grown their resources to P2 million, of which P1.2 million are deposited in their choice of bank or cooperative. Loans amount to P700,000.

The Pasay City government has high hopes for the program. By 2005, it expects to have already reached 13,500 households in 201 barangays. To attain this goal, Bayanihan Banking replicators need to establish 450 new Financial Centers in five years, or at the rate of 90 centers a year. The program is targeting P10.5 million worth of savings by the end of the period.

“This is our little answer to the gargantuan problem of poverty alleviation in our country,” says Mayor Trinidad.

This program is recognized as one of the Ten Outstanding Programs in the 2002 Galing Pook Awards.