Micro Finance To Augment Business Capital

Discussion in 'Self Employment' started by Corie Henson, Jul 12, 2016.

  1. Corie Henson

    Corie Henson Very Well-Known Member
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    Small business particularly vendors fall prey to micro finance that we call 5-6 where the lenders are usually Indians riding in motorcycle. They have established a sort of culture that small people here run to them all the time not realizing the heavy interest they have to pay.

    Like a vegetable vendor who would borrow 5,000 pesos to be used as capital for her small business. She has to pay 100 pesos every day for 60 days to the Indian. So the total she would pay is 6,000 pesos for the borrowed 5,000 hence the name five-six to mean you borrow 5 and you pay 6. But the net interest rate is definitely more than 20% for the 2 months, clearly usury rates.

    The new president of our country said that he would ban those 5-6 lenders. Let us see.
     
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  2. Amie Ar

    Amie Ar Active Member
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    '5-6' for easy money.
    In the Philippines these so-called '5-6' scheme popularized by mostly Indian and Chinese businessmen currently residing here in the Philippines and have made Philippines the home were an easy money alternatives for most poor Filipinos never realizing that the scheme will further put them into deep debt.
    But i see a more deep issue why most people are grabbing these usurious financial scheme rather than going to legitimate financial institutions like the bank and other lending institutions. Below are some of the things that most Filipino borrowers find annoying and complicated:
    • too much paper works
    • hard to understand legal terms and schemes.
    • collateralized and lien intensive packages
    • offered mostly to people employed and with regular source of income
    Deep-rooted poverty.
    The Philippines being a third world country was one of the poorest in the world. Minimum daily wage in the major cities was barely $10.50 for a fixed work of 8 hours. In suburban areas for which much of the population and the poorest were concentrated, the $1 pay per day are still happening. Fishing and agriculture are 2 of the major industry work of most Filipinos. A simple farmer who was said to be the one responsible for growing crops and plants to feed the population could not even afford to buy a kilo($1 per kilo) of the staple food - rice or the fishes they have caught. The families of farmers and the fishermen are the poorest in the society.

    Slave for debt.

    Although most people would think that these poor people have instant access to the food crops they were raising or catching, the fact that the land they are planting with and the sea craft they're using to catch the bounty of the ocean were not fully theirs and that those were owned by capitalists in their locality.
    Nowadays, the '5-6' scheme were no longer just for the Indians and Chinese who are among the capitalists. Some Filipinos have learned and master the financial trade that it now applied even on crops and other bounty exploited from nature. Thus before anything can be harvested or catch, the capitalists have already financed them ahead to the poor Filipinos who will toil for it until their backs break working just to pay off those debts.

    A new hope.
    People must be taught on how to finance their businesses the right way by the right institutions. Greed must be exterminated from greedy capitalists and compassion and the lessons of sustainability and self reliance must be taught and accorded for the poor to alleviate themselves. Like every new government elected to govern, all hopes are high. But these things do not happen overnight. It greatly need the consensus effort of both the people and the government.

    I am one with you Corie and the new administration that this '5-6 schemes be stopped and let the poor have wide access to affordable financial schemes fit especially to the poorest of the poor in our society.
     
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