Archive for December 3rd, 2008
Candles and Converters
After a few days, I felt mostly adjusted. I liked what was I doing and I had gotten used to fans only at night. I was sitting at Alide at 3pm at Friday when the electricity went out. The A/C stopped its whir, the computers had to be turned off to save battery. The water had already been off for 2 days.
We wandered outside. For the rest of the day, the young people of Alide talked in Fon, French, and faltering English. I showed them my photos, they made fun of me, they switched back to Fon to gossip to each other. When the electricity had not come back 3 hours later, Alain drove me home.
Using the light from our cell phones, Alain helped me light candles in the empty house, as Vivien was not home yet. When we had put on two candles, Alain turned to me to say good-bye. As I walked him out, I resisted the urge to ask if I could stay at his house. In the shadows, I could see the homeless people in the sandy alley, the women selling their wares with candles, unaffected by the outage. I locked the gate behind Alain, contemplating the slimness of the veil separating me from the street.
I double, triple locked the door to the house. I was shaking. Inside it was completely dark. I thought, this calls for some chocolate cookies and Audacity of Hope. The only problem was the candle did not yield enough light to see the book’s pages. I lay back, frustrated, trying to sleep, soaked in sweat. Something bumped the window. I pulled out my cell phone. No signal as usual. I would have cried, but it was much too hot. I mastered myself.
I would read outside! I threw open the doors, placed my candle on the stoop, opened Barack’s book. The tiniest wind blew, threatening to snuff it out. Not enough light to see; not enough wind to provide relief. Desperation forced me to my neighbor’s door, where I could see a light.
¨Bonsor,¨I said. “ Can I read on your stoop?”
“You can read inside,” she answered.
“Sarah,” I introduced myself.
“Honorine,” she said in return.
They must have their own generator, I thought, as she gestured me towards the couch and flicked the channel from Béninois to French without my requesting it. (As I write this later, the lights flick on and off for the second time tonight). Her three children stared at me. I think adults are too composed to stare, but if they had no inhibitions they would stare at me with the same intensity as their children.
“Salut,” (Hey) I said to them, trying to be casual.
“Bonsoir,” (Good evening) they answered, taught to be formal with strangers.
I sat on the couch for the next two hours pretending to read but smiling at the kids as the kids pretended to do their homework and stared at me. I was so happy to be there, out of the darkness. The second oldest girl was old enough not to be shy of me, too young to pretend that she was unsurprised by my presence. She brought the baby over, and I cooed at it and she played with it and I tried to talk to her, but she didn’t really understand me.
Presently Vivien (my homestay) came home. I made to go, but first walked to the back where Honorine was speaking with her sister.
“Merci,” (Thanks) I said. I really meant it. Maybe she understood how grateful I was, maybe she was just being polite, but I think we both knew how much of a stranger I was to the neighborhood.
“Come, come,” called Vivien. There was light in our apartment, and I wondered how long it had been there.
3 comments 3 December 2008
How Your Loan Affects an MFI: Behind the Scenes of Microfinance
Most people reading this blog already agree that microfinance is a promising way to help people work their way out of poverty in a dignified manner. I agree, obviously, or I wouldn’t be here in Togo. It is heartwarming, and we should be inspired by it. But we should also be critical of it, to keep ourselves honest and to make sure it’s really having the effect we hope it is. In this post I will outline one of the biggest challenges facing the world of microfinance – becoming sustainable despite high administrative costs – and how Kiva and the Kiva Fellows contribute to a solution.
It is very difficult for Microfinance Institutions (MFIs) to target the poorest of the poor while maintaining some level of sustainability, or cost-effectiveness. There are many variables that affect the sustainability equation and make lending to the poor particularly difficult – increased risk, access to lending capital, regulatory environments, and administrative costs, to name a few. Administrative costs are arguably the biggest obstacle to the microfinance movement. The poorer a client is, the smaller their loan will be, and the smaller the potential interest revenue will be for the MFI. However, no matter what the size of the loan is, an MFI employee needs to spend a certain amount of time meeting the borrower, visiting their business, checking their legitimacy, and processing paperwork – and, as we all know, time is money. So, the smaller the loan, the smaller the profit margin for the MFI. Kind of obvious, but crucial to understanding the workings of an MFI (and crucial to understanding why microfinance interest rates often range from 15%-80%).
So, where does Kiva fit in? Through the generous contributions of its lenders, Kiva provides interest-free capital to partner MFIs, thus increasing their ability to target poor clients. In my opinion, and the opinion of many experts in the field, the eventual goal of MFIs should be to end any dependence on this type of subsidized funding by covering all costs with interest income, because only sustainable, independent MFIs can provide the poor with permanent access to financial services. However, as Kiva’s partners work toward this goal, the interest-free capital provided by Kiva lenders serves as a vital stepping-stone toward financial self-sufficiency.
Unfortunately, there is an additional administrative expense associated with the Kiva relationship. As you might imagine, it takes a good deal of time to gather all the necessary information for new business posts and journal updates, then to send the information to the Kiva site and report repayments. This process needs to be as streamlined as possible to maximize the MFI’s returns on their – and your – investment.
Enter the Kiva Fellow.
A Kiva Fellow, entering. This could be any of us, in our natural habitat (on the back of a loan officer's moto).
When a Fellow arrives on the job, there are a few specific things he is supposed to accomplish during his 1 to 3 month stint at a partner MFI. These things are:
- Verify borrower data. The most basic and essential function of a Kiva Fellow is to ensure that an MFI and its borrowers exist, and that the loans posted on the Kiva site are accurate in every way.
- Write journal updates and new business descriptions. Kiva Fellows help with the general workload of managing the Kiva relationship.
- Blog and spread the word. Kiva Fellows are meeting lenders and getting their hands dirty, and are able to share a more visceral experience of what it means to be Kiva.
- Help with process improvements and templates. Though this step is often less visible, it is the only “sustainable” mark a Kiva Fellow can leave on an MFI, and ties directly into the cost-effectiveness equation.
At our week-long training at the Kiva headquarters in San Francisco, we become experts on the Kiva/partner process. Upon arrival in-country, we learn how our MFI carries out this process, and we look for opportunities to make things more efficient. Sometimes we might train loan officers on how to take better photos of their borrowers, thus improving the quality of new business posts and hopefully getting their loans funded faster. Or, we might see that the work is being split between 10 different field offices in an inefficient way, and help our MFI centralize the process. I’m currently trying to convince my MFI to implement a sort of mini-commission plan for journal updates per loan officer, since they’re having trouble meeting their deadlines right now (in my previous life, I was a compensation consultant). These are just examples of the types of changes a Fellow might try to implement at their MFI. It can be a frustrating process, and one that takes a lot of initiative, but in my opinion it represents a Kiva Fellow’s greatest opportunity to truly instigate progress.
Microfinance is more than just promising – it already has changed the lives of many poor people. But, there is still a great need for innovation to improve the efficiency of the sector and its ability to empower the poor, and I am humbled by the opportunity to contribute to that goal.
***
I apologize that this post has been quite dry – no heartwarming stories or funny anecdotes – but I think understanding this subject is crucial to understanding how Kiva, the MFIs, the Kiva Fellows, and YOU, the Kiva lenders, contribute to the success of small business owners in a sustainable way.
I’m going to get that word tattooed on my forehead.
In case anyone made it all the way through, here’s a funny anecdote and a picture to boot.
I went into the kitchen the other day and opened the freezer to look for a bottle of water. Instead, I found a wild animal, jumping out at my face! Well, it didn’t really jump, because it was frozen (since it was in the freezer). But it was a wild animal, and it was gross. I ran and got Abozu (see my previous post – Why I Can’t Give Abozu My Camera) to ask him what it was. “Un renard.” He said. I ran to my French-English dictionary (I was doing a lot of running – it’s not every day you get attacked by a mysterious frozen animal) and found that “renard” means “fox.” If you take a look at this picture, you’ll understand why I was a bit skeptical:
"Fox"
Hm…that doesn’t look like a fox.
The next night, as my homestay sisters were roasting the ENTIRE ANIMAL over the fire, I asked again what it was, and they explained that it was an “agouti.” I ran (again) for my dictionary, but “agouti” is apparently not important enough to be included in the 300,000 words in my dictionary. Thanks to Wikipedia, I found out the next day that an agouti (same word in English!) is a relative of the guinea pig, and sometimes called a “bush rat.” How delicious-sounding!
I ate it that night, and it wasn’t bad – kind of like a weird mix between beef and chicken, if you can imagine that. (But it wasn’t that good, either.)
At least I’ve managed to avoid trying dog meat so far. (Yes, I’ve been offered.)
***
I am a Kiva Fellow, Class of KF6, serving three months in Lome, Togo, and three more in Dakar, Senegal. Please check out my current MFI, WAGES, and see all of their fundraising loans here!
4 comments 3 December 2008
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