The city government of Taguig is supporting the campaign of President Rodrigo Duterte to eliminate the “5-6” lending practice and other loan schemes with programs to help city hall employees properly handle their daily expenses and save money.
City Personnel Officer Jeanette Clemente said Taguig’s policy direction on the issue conforms with the recent pronouncement of the Duterte administration to eliminate “5-6” through micro-lending facilities to be set up by the national government.
Clemente observed that most employees lack skills in handling their daily expenses, saying they usually overspend and are compelled to borrow money or pawn their payroll ATM cards to pay for their living expenses.
Late last year, the city government hosted a financial literacy seminar to instill basic concepts like proper budgeting of their monthly income, investing on essential needs, and acute awareness of the need to save for its employees.
To get rid of the “sangla ATM” habit, the city government supported the formation of a private credit cooperative among its employees.
In March 2016, they formed the Taguig City Employees Credit Cooperative, and began giving out small loans worth P5,000 starting the last quarter of 2016.
The employees’ cooperative offers short-term loans of up to nine months at just one percent interest per month. The employees’ cooperative does not require the borrower to surrender their ATM salary card, and the loans are paid through automatic salary deduction.
The total volume of loans may still be small, but the cooperative hopes to gain more members to increase its capital base and the amount of loans it can offer city employees.
A Memorandum of Agreement between the city government and Land Bank of the Philippines gives Taguig City employees another loan facility—the “Land Bank Mobile Loan Saver” plan in which permanent employees may allow the government-run bank to automatically deduct a certain amount from their incomes and deposit it to their savings account.
This kind of “forced saving” scheme should help the employees master the skill of creating savings from their income, Clemente said. The employees can also avail of loans from Landbank that can be paid in 12, 24, or 36 months, with the interest rate fixed at 10 percent per annum.
The small but concrete steps taken by the city government appear to be bearing fruit, as the Taguig City Investigation Committee, which is tasked to hear complaints against city employees, has reported a decrease in protests versus some employees who have defaulted on their loans over the last six months of 2016.
The local government of Taguig plans to continue its employee financial literacy program by providing more seminars about financial wellness this year.