Adapting to Covid-19: Lessons from the Philippines

A survey by the national regulator showed the country's co-ops have coped well with the pandemic

In July, the Philippines’ Cooperative Development Authority (CDA) conducted an online survey to find out how the country’s 18,000 co-ops have been affected by Covid-19.

A total of 1,245 co-ops responded to the survey, which looked at the effect of Covid-19 pandemic on their business operation and their provision of services to their members and communities. Around 72% of respondents came from the financial sector, with 23% from the consumer sector and 11% from the agricultural sector. The rest came from healthcare, tourism, housing and marketing.

The survey found that 91.7% had their business operation affected by the pandemic. Most co-ops avoided problems such as a reduction in the number of employees, a decline in productivity due to working from home, a decrease in production or a business closure. But they did face challenges such as a decline in marketing transactions of co-operative products and a reduction of working hours, which moderately affected their operations.

In response the co-ops took several measures, such as adopting a flexible working schedules (39%), opening only partially (37%), and providing online (27.6%) and home delivery services (12.5%). Around 10% of co-ops shortened their working hours.

The survey also looked at specific measures taken by co-ops in the financial sector. Around 27% of co-ops gave a three-month grace period to help members using their services to adjust to the impact of the pandemic, with 24.9% giving a two-month grace period and 15.7% a one-month period. Another 24.2% offered more than a three-month moratorium.

In terms of strategies adopted to ensure continuity, the majority of co-ops opted for continuing their business operation (60.1%), with 35.2% partially opening and 19% using their reserves, 8% asking for loans and 3.5% resorting to online transactions.

Co-ops proved resilient, with 49% choosing not to make any workforce reductions. Of those who had to make redundancies, 21% laid off less than 50% of their staff; 18.6% laid off between 50% and 75% of staff; and 10.9% lost more than 75% of staff. Around 49% of these co-ops said they had helped employees access unemployment benefits from the government.

Ensuring the health and safety of employees became the main priority for most co-ops surveyed. Around 85% said they had not accessed any government assistance to cope with Covid-19.

The survey also showed that 48.4% of co-ops questioned had implemented their business continuity plan to cope with the pandemic – 11.8% said they had not implemented it while 39.8% did not have one.

The majority of respondents were also positive about the future – 51% of co-ops predict they will be able to recover within 6-12 months, 26% within 3-6 months and 19% within the next two months. Only 3.2% of co-ops said they were considering shutting down temporarily.

As to their contribution to their local communities, 48.5 % of co-ops said they had provided relief to members and non-members, 24.3% offered PPE to frontline workers and 22.5% volunteered to help local causes. Around 39% of co-ops offered financial assistance to members and 22% offered donations to local authorities. This support was mostly funded through the co-ops’ Community Development Fund.

While the survey showed that co-ops had coped well with the crisis and shown resilience, the survey revealed the sector remained wary of potential loss in operation and decrease in sales, reduced efficiency, decrease in loan collection and difficulties in transportation and communication. Staff members remain worried about potential health and safety implications and risk of exposure through work travel and a reduction in manpower. Another concern for most co-ops has to respond to the needs of an increasingly digital market.

As the country’s regulator and government department focused on co-ops, CDA plans to re-emphasise and mandate the presence of Business Continuity Plan in every co-operative.

Another policy recommendation coming out of the survey is prescribing and authorising the appropriate use of statutory funds of co-operatives to serve the needs of their members and the community in cases of declared disasters or emergencies.

The regulator promises to expand and enhance its frontline service so that they could provide immediate information, assistance and guidance to co-operatives for them to operate and cope under the new normal. In addition, CDA says it intends to provide assistance through grants and/or loans with no interest or minimal interest (soft loans) to co-operatives.

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