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PH Informal Workers Find Financial Relief on their Smartphones

Tala

In the dynamic landscape of the Philippine economy, a substantial portion consists of vulnerable, self-employed workers, lacking formal employment protections, and with little or no access to traditional financial services. 

In fact, World Economics estimates that 34.1% of the country’s current GDP is from the informal sector. With limited to no access to traditional financial institutions because they often cannot produce payslips or certificates of employment, informal workers typically rely on friends and family or even predatory lenders for financial help.

However, online lending platforms like Tala are in a position to change the trend as they offer a legitimate, and government regulated alternative to informal, and potentially predatory lenders.

Among those in the informal earning sector is Jean Villar, who previously held a cashier position in a grocery store. However, when her husband was sidelined due to an accident, their financial situation became strained with growing unpaid bills and unexpected expenses. In response, Jean Villar sought a quick and reliable solution in Tala.

Previously a minimum-wage earner Jean now runs a junk shop business, ice candy business, and an ukay-ukay (2nd hand clothing business), all of which started out with minimal capital. Because of her limited capital and the unpredictable nature of her income, Tala has become Villar's financial lifeline, enabling her to consistently settle monthly utility bills and set aside funds for groceries, all while keeping her businesses profitable.

The digital lending market is projected to grow from USD 405.11 billion in 2023 to USD 710.76 billion by 2028, at a compound annual growth rate of 11.9%. These platforms offer informal workers a responsible and convenient way to access credit, reducing their reliance on personal connections and predatory lending, while also improving their credit score.
“When I got approved for a (Tala) loan it was like a huge weight had been lifted off my shoulders because I don't need to worry about my water and electricity bills. As time went by my credit limit increased so I was also able to use it for my groceries as well.” Villar said. Using Tala’s gradual credit limit system, Jean has learned how to better
manage the highs and lows in her revenue, enabling her to schedule and pay regular expenses despite receiving earnings irregularly. And she isn’t alone. 69% of Tala customers experience reduced financial stress, with 89% reporting improved money management skills.

Tala, a leading financial platform for the unbanked and underbanked with a reach of more than eight million customers globally, employs data-driven technology to help informal workers address their financial needs. With Tala's services, these workers can readily safeguard themselves from financial shocks and build their financial security. The all-in-one app provides credit access, money transfers, and bill payments without needing prior credit history, unlocking important financial services in a matter of minutes.

Tala employs innovative credit scoring algorithms that analyze an individual's financial behavior and transactions, allowing them to assess creditworthiness based on factors like timely bill payments, responsible borrowing, and financial discipline, instead of relying solely on traditional credit history.

Informal workers thus have increasingly turned to Tala loans as a vital tool for managing their financial responsibilities, bridging the gap between financial relief and sustainable independence. By granting access to credit and promoting responsible financial practices, Tala empowers individuals to achieve financial independence and security.
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