IMPACT OF THE PROGRAM SELF EMPLOYMENT ASSISTANCE KAUNLARAN (SEA-K) ON FINANCIAL PERFORMANCE OF MICROENTERPRISES OF SELECTED TOWNS CAVITE

Aizel L. Taagras

An Undergraduate Thesis proposal submitted to the faculty of the Department of Management, College of Economics, Management and Development Studies, Cavite State University, Indang Cavite in partial fulfillment of the requirements in BMGT200 Undergraduate Thesis. Prepared under the supervision of Prof. Estrellita Corpuz

INTRODUCTION Since the 1960s, the governments of developing countries have been concerned in promoting small-scale enterprises (SSEs). The rationale for helping those enterprises could be summed up neatly in the often heard saying small is beautiful. (Roger strange,2002). SSEs offer greater opportunities for employment, it can be the seed bed out of which larger enterprises grow. There has been a revival of interest on the role of small-scale business enterprises in national and international economic and social development. This is consistent with the overall shift of development strategies in many countries toward a more decentralized, even localized, approach. The term microenterprise connotes different entities and sectors depending on the country. Generally speaking, in developed countries, microenterprises comprise the smallest end by size of the small business sector, whereas in developing countries like the Philippines, microenterprises comprise the majority of the small business sector, a result of the relative lack of formal sector jobs available for the poor. These micro

entrepreneurs operate microenterprises not by choice, but out of necessity. Typical examples include: sari-sari stores, buying and selling. A microenterprise is any type of small business that has fewer than five employees. Microenterprises typically do not meet the credit and/or collateral requirements necessary to access conventional financial services. This could be due to business type, a short length of time in business, or an insufficient credit history. (The Southwest Florida Micro Enterprise Project) The Self employment Assistance Kaunlaran program of DSWD in financing is timely. Through its services, microenterprises can avail of financing for the improvement of their capital base and operations. In most towns in Cavite, SEA-K program is not seen. Most of their clients are needy family heads, disadvantaged women, out-of-school youth and persons with disabilities. the program will enable them to uplift their socioeconomic status and encourage them to build small businesses. The level 1 of the program is on Micro-enterprise. The SEA Kaunlaran

Associations (SKAs) are organized and assisted to establish community-based, selfmanaged credit facilities and access community social services. Each association composed of an average of 25 members are provided technical assistance and an average seed capital of P150,000.00 for capital of micro-enterprises of members at P4,000.00 to P5,000.00 each. Level II is on the expansion of Micro-enterprise and Shelter Construction or Home Improvement. Level II is an expansion of Level I where seed capital has been expanded to cover shelter needs of members in addition to microenterprise. Successful 2-5 SKAs are transformed into genuine grassroots NGOs known as KABAYANs (Kabuhayan and Kabahayan - Livelihood and Shelter) and are then

providing with seed capital for expansion of micro-enterprise projects of memberfamilies at P 10,000.00 and shelter construction/home improvement at P 25,000.00 each. The researcher selected the program Self employment assistance Kaunlaram (SEA-K) in the study because it is an integrated program of livelihood and livelihoodrelated projects. In general, the objective of the program is to build the capability of the economically active poor to access credit resources and to sustain and maximize its use for their empowerment and development. It is in this context of the financial problem confronted by the micro entrepreneurs motivated the researchers to investigate the impact if the program to financial performance of microenterprises in selected towns of Cavite particularly Maragondon, Indang, and Gen. Emilio Aguinaldo.

Statement of the Problem The main problem of the study is to determine impact of the program Self Employment Assistance Kaunlaran (SEA-K) on financial performance of

microenterprises. It will further seek the answer to the following specific questions. 1. What are the services offered by the program Self employment assistance Kaunlaram (SEA-K) to its member/beneficiaries? 1.1 What is the business characteristics of micro-entrepreneurial projects put up by the beneficiaries of SEA-K? 1.2 Capitalization 1.3 Nature of the business

2. What is the liquidity of the micro-entrepreneurial projects: 2.1 quick ratio; 2.2 Current ratio 3. What is the profitability of the micro-entrepreneurial projects: 3.1 Gross Profit Margin 3.2 Net Profit Margin 3.3 Return on Investment 4. What are the problems encountered by the beneficiaries of SEA-K program?

Objective of the Study The main objective of the study is to determine the impact and level of satisfaction of the members on the services provided by the Self employment assistance Kaunlaram (SEA-K) to micro enterprises in Maragondon, Indang, and Alfonso Cavite. Specifically, the study will 1. Determine the services offered by the program Self employment assistance Kaunlaram (SEA-K) to its member/beneficiaries? 2. What is the business characteristics of micro-entrepreneurial projects put up by the beneficiaries of SEA-K? a. Capitalization b. Nature of the business

3. Determine the liquidity of the micro-entrepreneurial projects: a. quick ratio;

b. Current ratio 4. Determine the profitability of the micro-entrepreneurial projects: a. Gross Profit Margin b. Net Profit Margin c. Return on Investment 5. Determine the problems encountered by the beneficiaries of SEA-K program?

Importance of the Study

The findings of the study is important to different person depending on the nature of profession, in this particular study is important to: To the small business operators who are microcredit finance or loan recipient of the SEA-K program of different association of Gen. Emilio Aguinaldo, Maragondon and Indang Cavite, this study will provide information of the financing capabilities of the SEA-K program and the services they provide. They will become more aware of the provision of technical assistance for their business management and productivity. For the program Self employment assistance Kaunlaram (SEA-K) implementors, the study will provide them information they can use for the improvement of their services. The information will serve as an eye-opener to the management of their weak and strong points. It will provide them an assessment and feedback on their operation and services.

To the community, this study will provide awareness about the program offered by the goverment through DSWD with regard to the financing assistance extended to the poor. It will provide information on the services vested on the Department of Social Welfare and development with the responsibility of caring, protecting and rehabilitating the least in life.

Time and Place of the Study The study will be conducted from December 2011 to February 2012 in selected areas of Cavite, namely: Maragondon, Indang, and Gen. Emilio Aguinaldo, Cavite. The municipalities were selected through convenience sampling.

Scope and Limitation of the Study The study is limited to the impact on the percieved financial performance of the member/beneficiaries of the program Self employment assistance Kaunlaram (SEA-K) for the years 2010 and 2011. The researcher will use questionnaires, supplemented with personal interview and observation. Data collection will be done for a duration of at least three months. The respondents will be the owners of the micro enterprises who are beneficiaries of the SEA-K program Operational Definition of Terms Microenterprises in developed countries, comprise the smallest end (by size) of the small business sector; whereas in developing countries, microenterprises comprise the vast majority of the small business sector as a result of the relative lack of formal

sector jobs available for the poor. These micro entrepreneurs operate microenterprises not by choice, but out of necessity. Impact refers to the strong effect on something. In this particular study, it refers to a strong effect of the program Self employment assistance Kaunlaram (SEA-K) on the financial performance of microenterprises in selected towns of Cavite managed and operated by members/beneficiaries. Members/beneficiaries refer to members of the Self Employment Assistance Kaunlaram (SEA-K) program living in Maragondon, Gen. Emilio Aguinaldo and Indang Cavite who are recipients of capital assistance and other services provided by the said program. Self Employment Assistance Kaunlaram (SEA-K) refer to an integrated program of all livelihood and livelihood-related projects of the DSWD. The objective of the program is to build the capability of the economically active poor to access credit resources and to sustain and maximize its use for their empowerment and development. Self Employment Assistance Kaunlaran Assciations refer to associations or groups built up by the beneficiaries of SEAK program. An associations consists maximum of 30 membersor six groups, with five members in each groups and a

Chairman for each group. The President, Secretary and Treasurer will be considered as representatives of an association. Liquidity refers to the degree to which an asset or security can be bought or sold in the market without affecting the asset's price. Liquidity is characterized by a high level of trading activity.

Current Ratio refers to primary test of solvency to meet current obligations from current assets Quick Ratio refers to a more severe test of immediate solvency; test of ability to meet demands from current assets Profitability refers to the state or condition of yielding a financial profit or gain. Gross Profit Margin measures profit generated after consideration of cost of product sold Net profit Margin measures profit generated after consideration of all expenses and revenues Return on Investments measures overall efficiency of the business in managing assets and generate profits

Conceptual Framework The conceptual framework of the study is presented in the diagram nelow.

SEA-K Program and services rendered Business characteristics of microentrepreneurial projects

Financial Performance of micro enterprises Liquidity Profitability