ARDCI: A 180-Degree Microfinance Story

At first glance, Agricultural and Rural Development for Catanduanes, Inc. (ARDCI) seemed to have what it takes to be a successful microfinance institution. First, it was a spin-off of the European Union’s official development assistance to the Philippine Government. Second, it envisions itself as a sustainable development institution harnessing the strengths of its stakeholders to empower the poor in Bicol and Eastern Visayas. Third, as an organization governed by members from the grassroots level, it strives to achieve financial sustainability and to diligently keep its social mission on track. Finally, it has considerable presence in four provinces in the Bicol region—Albay, Camarines Sur, Sorsogon, and Catanduanes.

Structured like a cooperative, ARDCI grew to become one of Bicol’s major microfinance players, reaching out to approximately 20,000 clients at its peak in 2005. But ARDCI underwent governance and management hurdles that led to a series of revamps in management composition and prompted nearly all its funding institutions to reconsider extending further loans to it. From 2000 to 2005, three different persons assumed the executive director position due to disagreements between each executive director and the board. By end-2006, the MFI faced financial problems as it recorded its fourth consecutive year of net losses adding up to Php20 million. The financial situation was so bad, it was on the brink of collapse.

Looking for someone within ARDCI to head the organization, the board installed Danilo Tiburcio as the new chief executive officer (CEO). Mr. Tiburcio started his career as a community development officer (CDO), and then rose through the ranks to eventually become branch manager and training manager. Though not part of the management team, he volunteered to become the new chief because no one wanted the job. Being one of the older employees gained him moral ascendancy, but his ability was likewise questioned by employees.

Later in the year, when its donors and funders ceased releasing funds and its portfolio-at-risk ratio skyrocketed to 36%, ARDCI sought to recuperate by forging a partnership with Social Enterprise Development Partnerships, Inc. (SEDPI), which gave an extensive Technical and Mentoring Assistance (TAMA) in January 2007. First, ARDCI fixed its information system and designed a bookkeeping system. From producing unreliable, two-month old reports, ARDCI was now able to draft its portfolio report every end of the day at the branch and account officer levels. Second, a performance-based incentive scheme drastically reduced the portfolio-at-risk ratio.

In just 11 months, ARDCI turned around its operations and, for the first time in five years, posted positive net income for the year. As of December 2008, ARDCI had less than 2 percent portfolio at risk, a rate it has maintained consistently.

The road to ARDCI’s recovery entailed a raft of sacrifices and constructive changes. Thanks to its committed top management and front liners, everyone willingly participated in bringing back the glory of ARDCI. The organization experienced outstanding progress in operations as evidenced by the (1) drastic improvement of the portfolio-at-risk ratio while maintaining the original value of loans outstanding; (2) increase in collection efficiency as shown by the increase in revenues; and (3) decrease in personnel costs in spite of introducing staff incentive schemes. All these were achieved as each member of the organization practiced discipline, excellence, and passion to serve the poor.

The pendulum swing to positive returns and professionalism attracted once more the donors and funders that previously deserted ARDCI. They returned to support ARDCI’s financial needs. More importantly, other organizations started to look up to ARDCI as a model in improving microfinance operations. And ARDCI credits its partnership with SEDPI for its reversal of fortune. Danilo Tiburcio, ARDCI CEO, considers SEDPI the Coach Freddie Roach to its Manny Pacquiao. “SEDPI is the playmaker that rerouted our visions for our members,” he stated.

After braving inevitable change in the organization, ARDCI is now enjoying the fruits of its labor. The table below shows the drastic improvement in its performance.

Financial Performance

Dec 2006

Dec 2007

Nov 2008


Portfolio at Risk





Adequacy of Loan Loss Prov.





Administrative Efficiency





Operational Efficiency





Operational Self Sufficiency





Loan Officer Productivity





Financial Self Sufficiency





Return on Assets




> Inf

Return on Equity





PESO Rating