Impediments to Microfinancing of Smallholder Forestry on Leyte Island, The Philippines

Abstract

This paper discusses the status, impediments and prospects for microfinancing of smallholder forestry on Leyte Island, the Philippines. Surveys were conducted to determine the availability of microfinancing as well as the interest of landlords and finance providers in microfinancing. Representatives from the Department of Environment and Natural Resources (DENR) and Department of Agriculture (DA) were also interviewed with regard to their views regarding the prospects of microfinancing. The study was designed to provide information to support policy-makers and planners in devising incentive packages for smallholder forestry. It was found that there is limited microfinancing available for forestry on Leyte Island. The arrangement is generally for projects of DENR whereby participants are given financial support to develop a particular area or carry out a particular forestry activity. The majority of the respondents who established their own tree farms did not receive any external support from the government or any other private donors. A few, however, benefited from the seedlings distributed free by DENR and DA. On the other hand, 53% of the respondents (most with relatively low incomes) signified interest in microfinancing for forestry if ever it becomes available, subject to the acceptability of loan arrangements. According to banks, they make loans available to any borrower regardless of the intended use of the money as long as borrowers provide collateral or a guarantor.