Philippines: Strengthening Risk-Based Supervision in the Cooperative Sector

Modernizing Oversight for a Growing Sector

In the Philippines, cooperatives play a central role in promoting inclusive finance and supporting livelihoods across both urban and rural areas, particularly those engaged in lending. However, as these cooperatives grow and become more complex so do the challenges of ensuring financial stability, good governance, and regulatory compliance. 

The Cooperative Development Authority (CDA) of the Philippines is aware of these challenges and intends to improve the ongoing practice. This opens a new field for cooperation with DGRV and our project in the Philippines. Together, we launched an ambitious initiative at the start of 2024 to modernize the supervision of financial cooperatives. At the heart of this effort is the revision and operationalization of the Risk-Based Supervision and Examination Manual for Cooperatives Engaged in Lending (RBSEM-CEL). 

From Theory to Practice: Testing a New Approach

In February 2025, a national stakeholder workshop was held to finalize the RBSEM-CEL. Participants included actors from the cooperative sector as well as representatives from the public and private sectors, such as the Bangko Sentral Ng Pilipinas (BSP) and private auditing firms. The goal of the workshop was to introduce a more structured, risk-sensitive framework that includes a practical “toolbox” of methodologies to guide cooperative supervision. 

Following the workshop, the CDA trained 14 specialists in the use of the manual, who then conducted pilot examinations in three savings and credit cooperatives. These on-site assessments tested the manual under real-world conditions, providing valuable feedback on both its practicality and effectiveness. 

One key finding from the pilot phase was the estimated time requirement of around 20 working days per cooperative examination. Given that there are over 20,000 registered cooperatives in the Philippines, this finding highlights the scale of what lies ahead: at least 700 supervision specialists will need to be selected and trained in order to implement the manual nationwide. This represents a major collective effort for the entire cooperative sector. 

Based on insights from the pilot examinations, the manual was further refined by a Technical Working Group (TWG) in July 2025. The next steps include the continued development of the supervision toolbox, and the official presentation of the revised manual to the cooperative sector. 

A Step Toward Sustainable Growth

The upcoming nationwide rollout of the RBSEM-CEL will be accompanied by strategic capacity building, development of supervisory systems, and policy alignment within CDA’s legal framework. 

“Risk-based supervision is more than a technical upgrade. It is a cultural shift in how cooperatives position themselves and act about governance and sustainability.

We are proud to support CDA in making this vision a reality.”

says Reinhold Hörnle, DGRV Country Director in the Philippines.

This initiative also contributes directly to UN Sustainable Development Goal (SDG) 8 – Decent Work and Economic Growth by strengthening financial institutions and promoting sustainable, inclusive economic growth. By empowering both regulators and cooperatives to proactively manage risks, the approach enhances sector-wide resilience in the face of economic and social uncertainty. 

The strong partnership between CDA and DGRV demonstrates the value of local ownership combined with international technical support. Both partners also greatly appreciate the substantial support of the German Government (BMZ) through the DGRV project, which makes this cooperation possible and sustainable. Altogether, the collaboration reflects the core of the cooperative idea: working together for shared responsibility, resilience, and development.