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Typhoon hampers bounce back of nanoenterprises in CARAGA

Update 11 of SEDPI’s Rapid Community Assessment

SEDPI provides microfinance services to approximately 9,000 low income households in Agusan del Sur, Davao de Oro and Surigao del Sur. Nanoenterprise is a SEDPI-coined term that refers to unregistered livelihoods of self-employed individuals. They typically operate informal businesses alone or with the help of unpaid family members targeting their own immediate local communities.

The vast majority of the entrepreneurial poor in the Philippines are nanoenterprises estimated to be about 8 million. They typically borrow PhP5,000 to PhP10,000 from cooperatives, rural banks, microfinance NGOs, pawnshops and informal sector for working capital.

Rapid community assessment conducted on January 2021 to cover the second half of 2020 with 6,936 respondents. The following are the findings:

  • 32% of nanoenterprises have recovered and 30% hope to recover in the next two months. Previous period was 40% and 60% respectively
  • Recovery was hampered by flooding due to Typhoon Vicky.
  • 97% resumed their livelihood activities
  • 21% reported strong demand while 75% reported weak demand 
  • 90% have steady access to inputs needed to operate
  • 50% changed their livelihoods
  • 100% said grace period without accrual and compounding of interest helped their livelihood to bounce back
  • 100% said membership fee paid for damayan system for calamity relief help in external risks such as fire, typhoon, flood as well as sickness and death of family member

 Typhoon Vicky, caused heavy flooding in the CARAGA region and hampered recovery of nanoenterprises on December 2020. As of July 2020, 40% reported to have bounced back to pre-pandemic levels. This dipped to 32% by the end of the year. As a result of the disaster, those who said it will take them longer (3-6 months) to recover increased from 5% to 38%.


Nanoenterprise (NE) is a SEDPI-coined term that refers to unregistered livelihoods of self-employed individuals. They typically operate informal businesses alone or with the help of unpaid family members targeting their own immediate local communities. 

Status of nanoenterprises

Those that bounced back report that they are already able to earn about the same income; and experience normal demand to their products and services in pre-pandemic levels. 

Since the lockdown in April until the end of 2020, demand for nanoenterprise products remain weak. Access to supply on inputs needed to operate their livelihoods remain stable with 90% of them able to source from suppliers with little or no issues.

In response to the pandemic, half of nanoenterprises changed their livelihood as of December 2020. This increased from 37% in June. This is one of the effective coping mechanisms they identified to adopt to the new normal. Most relied on selling local agricultural produce, processing these a little bit, and sold in their local communities.

Collection moratorium and grace periods helped nanoenterprises cope with lockdowns

Nanoenterprises typically access loans from informal sources which make them vulnerable to predatory financing practices. Aside from informal sources, most of them also borrow money from cooperatives, rural banks, microfinance NGOs and pawnshops.

On average, nanoenterprises borrow a small sum of money ranging from PhP3,000 to PhP10,000 to finance their livelihoods such as sari-sari stores, carinderia, farming, fishing, dressmaking and vending. Microfinance institutions offer collateral-free loans to them payable in three to six months with interest rates ranging from 2% to 5% per month. 

With microenterprises cautious on demand, they opted to access smaller amount of capital from SEDPI. As a response to granular lockdowns due to local surge in COVID cases, SEDPI instituted a policy to immediately suspend collections in areas that local government units declare as locked down. It also provided up to 2 weeks of grace period from the time of lifting of lockdowns for repayments to resume. During these moratorium and grace period, interest were not accrued nor compounded.

All SEDPI members appreciated the policy. Having the poor absorb external risks, such as disasters and the pandemic, translates to cost they bear. On top of this, following conventional finance, interest continues to be accrued or compounded. SEDPI deems this unjust and perpetrates poverty. It protects the lender, who are in a better financial position to absorb these costs and risks. As a social enterprise, SEDPI does not pass on this additional accrued and compounding interest to lighten the burden of low-income households, especially in times of emergencies and disasters.

Social Welfare Protection Program (SWEPP)

The Social Welfare Protection Program (SWEPP) is a consolidated microinsurance and social security program of SEDPI. SWEPP aims to provide security and financial safety net to members through adoption of various insurance schemes.

These insurance schemes are (1) indigenous insurance practices locally known as damayan, saranay, dayung and takaful; (2) regulated commercial insurance products in partnership with CLIMBS, a licensed cooperative insurance provider; and (3) government social insurance programs such as SSS and Pag-IBIG. 

Active members enjoy the benefits of SWEPP through payment of an annual membership fee of PhP720. Benefits include up to PhP80,000 life insurance coverage from CLIMBS; medical assistance of up to PhP5,000 that covers three additional family members; PhP5,000 fire assistance and relief operations during calamities.

When Typhoon Vicky hit communities where SEDPI operates, a total of 1,399 members were given relief goods enough to cover 5 days of food for a family of 5. These were given the day after the typhoon hit.

As of yearend, almost 55,000 individuals are covered under SWEPP. All members appreciate the benefits they get from the program and are particularly impressed that help is extended within 24 hours unlike in traditional insurance companies that takes months. All members surveyed also expressed that SWEPP is “sulit” or value for money.

Prioritizing nanoenterprises

The negative impact of COVID-19 to nanoenterprises is undeniable. The research shows that nanoenterprises are showing positive signs of bouncing back faster through quick adaptation with the current economic environment.

The government has already launched credit programs through its various national government agencies but they reach only thousands which is a far cry from the estimated 8 million nanoenterprises in the country.

Government programs such as those under the Department of Trade and Industry and the Department of Agriculture offer 0% to near-zero interest loans, which is a step towards the right directions. However, challenges still remain in terms of ease of application as well as information dissemination of these programs.

Emphasis on loan repayments appear to be lacking in these government programs since marketing materials focus on releasing the funds. Very little information and explanation is available on the importance of repayments. This may be counterproductive in the long run since nanoenterprises might construe this as doleouts, which in turn may have negative effect in the microfinance industry.

The private sector, government and civil society should work together to come up with a concerted effort to address the needs of nanoenterprises. Preferential option to those at the bottom of the pyramid should be extended first since these groups can bounce back quickly; only need a small amount of stimulus; will reduce need for cash dole outs; and will reach millions of Filipino low income households.


The research is part of a series of rapid community assessments that determines the economic impact of COVID-19 to microenterprises and the informal sector. SEDPI, a microfinance institution (MFI), conducted the survey from January 4-15, 2021 with 6,936 respondents located in Agusan del Sur and Surigao del Sur.

It is not a representative sample of the entire Philippines, highly localized, but should be a good case study that reflects the situation in the countryside. SEDPI believes that the nationwide experience is not be far from the research results above.

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