The Case for Nicaragua
12 January 2010 at 08:35 Victoria 28 comments
By Victoria Kabak, KF9, Nicaragua
As I finish up my placement as a Kiva Fellow in Nicaragua, there is one question that I didn’t know the answer to when I arrived and that still confounds me three months later. Why isn’t Nicaragua a more “popular” country to lend to on Kiva?
The average time to fund a loan on Kiva to a borrower from AFODENIC, the microfinance institution where I’ve been a Kiva Fellow here in Nicaragua, is 5.65 days, almost 2.5 times the overall average (this information can be found on any partner page, under the “Loan Characteristics on Kiva” heading). Of the first 14 loans to expire without being fully funded in the history of Kiva, six of them were to Nicaraguan borrowers.
Nicaragua is the #1 poorest country in Latin America, with the second lowest per capita income in the entire Western Hemisphere, after Haiti (and a 2009 article in Latin Business Chronicle declared Nicaragua worse-off than Haiti based on figures released by the IMF). Despite its proximity to the happiest country in the world and the similarities the two countries share in terms of tropical climate and natural beauty, a history of political strife and fairly recent revolution – only 30 years ago – has kept Nicaragua (very far away) from enjoying the relative prosperity of its neighbor Costa Rica. As of 2005, the poverty rate in Nicaragua was 48 percent.
On a daily basis in Managua I pass by houses constructed of a combination of metal sheets and cardboard, and I have visited borrowers in houses like this too—homes where curtains are hung to separate rooms because they can’t afford walls. Right outside of the capital many of the roads that Kiva borrowers live on are pure dirt, no gravel (not even what I’d usually refer to at home as a “dirt road”), comprised of rut after rut and strewn with garbage, making them virtually impassable in anything but a pick-up truck. I have met borrowers who work all day making tortillas, which they sell for 1 córdoba each, less than five cents, and borrowers who had to start selling Avon products because their other two jobs weren’t bringing in enough money. I’ve met 13-year-old girls who spend their summer vacation (November-February) trying to sell bracelets for less than $1.50 each at beaches where there isn’t anyone to sell bracelets to.
A house I passed in Managua
And I think this has been only the tip of the iceberg. Much of the entire eastern part of the country has such poor infrastructure that is virtually unreachable.
Nicaraguans have to contend with the added obstacle of their country being somewhat prone to natural disasters. Managua, the capital city, experiences a major earthquake every 40 years or so (the last one was 37 years ago last month–I’ve been holding my breath the whole time I’ve been here). Just two months ago, in early November, Hurricane Ida ravaged Nicaragua’s Caribbean coast, and Hurricane Felix back in 2007 did the same. And farmers, especially in the northern part of the country, have been plagued by an ongoing drought that devastated many of their crops. Overcoming poverty becomes an even greater hurdle when nature is working against you.
Yet despite this level of poverty, the staff at AFODENIC wonders what they can do to improve their borrower profiles on Kiva so that their loans get funded faster, because they know some other Kiva partners have all or almost all their loans funded within a day of being listed. As I said earlier, I don’t have a real answer for why this is. Perhaps it’s because the first places that come to mind when you think about poor countries are places like Haiti and countries in Africa and not Nicaragua. I think Nicaragua is a fairly low-profile country in that it hasn’t made many appearances in the news in recent years (when was the last time you heard about it since the Iran-Contra affair?) and really isn’t on people’s radars very much.
But this is a country where the fact that nearly all homes in the capital city are without hot water in the year 2010 pales in comparison to the fact that a third of the country’s citizens did not have access to “sustainable sources of drinking water” as of three years ago. It is a country where shockingly large portions of the population are both malnourished and cut off from access to health services, and these percentages rise when you look only at indigenous populations or those living in the autonomous regions in the eastern part of the country: the rate of malnutrition is higher than 50 percent in the parts of the country where most of the indigenous population lives, and only 25 percent of that population has access to health services. (Statistics from UNICEF report.)
While Nicaragua needs to invest in education, in health, in the tourism industry – Nicaragua has a lot of the same things to offer tourists that Costa Rica does yet has been unable to capture this market – the percentages of the national budget set aside for social spending and poverty eradication decreased between the 2009 and 2010 budgets.
In light of everything I’ve seen, heard, and read while I’ve been here, I still don’t know the answer to my question about Nicaragua’s standing on Kiva. But as social spending is cut and the country slides from being the second-poorest to the first-poorest country in the western hemisphere, the good news is that Kiva continues to help struggling Nicaraguans and that you too can invest in Nicaragua on Kiva.
As of the end of today, Victoria Kabak will have completed her Kiva Fellowship at AFODENIC in Managua, Nicaragua. Check out AFODENIC’s currently fundraising loans on Kiva.org, or show your support by joining the “Amigos de AFODENIC” lending team. Thanks for reading!
Entry filed under: AFODENIC, Americas, blogsherpa, KF9 (Kiva Fellows 9th Class), Nicaragua. Tags: Kiva, Kiva Fellows, Managua, poverty, Victoria Kabak.
1. What Makes a Vittana Student? | Vittana | 19 July 2010 at 15:31
[...] you would like to read more about Nicaragua, Victoria Kabak, a former Kiva fellow, wrote a great post about its history and current [...]
2. Collin | 3 February 2010 at 10:26
Great post Victoria , I feel some curiosity about Nicaragua and spent a bit of time there. if you want the presentation of the poverty that do Francisco shoot me a email to the embassy of United States here in Buenos Aires . Public relations offices
We sponsored him .
Thanks you ,
Collin
3. Eileen | 31 January 2010 at 17:09
Thank you, Victoria, for an informative and thought-provoking post. I admire your work with AFODENIC.
I have also noticed that loans in Nicaragua take longer than average to fund, and I think it may be because many of them are housing loans, and so they don’t fit people’s preconceived ideas of the type of loan they expect on Kiva. Decent, livable shelter is a necessity. But people expect that the loans will enable the borrower to increase his or her income, and may feel that the interest rate is too high if it is a housing loan which will have to be repaid out of the borrower’s existing income.
4. Angela | 29 January 2010 at 22:51
Hola ,este articulo esta buenisimo me va ayudar muchisimo para mi tesis ,gracias victoria .
Niñas ,este tipo sabe como exponer ,increible todo el mundo estaba callado y atento ,era como un artista ,osea la forma de vestir y expresar con elocuencia ,no veia las diapositivas solo hablaba era espectacular y entre mas hablaba mas te daba ganas de oir .Las expresiones que el hizo fueran de tristesa y perdida al referirse a victoria
5. jenny | 29 January 2010 at 22:45
I need to go to Nicaragua and just finish to did my loan to afodenic’s clients .Thank victoria amazing article.
Ps : Girls ,the presentation of this guy was amazing ,he speaks with passion and accurately facts of the industry, actually when he mention victoria ,he close his cute brown eyes with sadness .I was in the first row.!!!!!!
6. Maya | 29 January 2010 at 22:28
interesting article Victoria .I just already did my loan to afodenic ,These peolple needs helps.
Ps Sofia ,the presentation no tiene palabra was magnifica ,that guy is very clever and actually he do a cute smile,deep breath and close his cute eyes took the wood with a adorable expression when mention Victoria .
7. Michelle | 29 January 2010 at 22:20
Great article Victoria ,KF9 rocks !!!
Ps Sofia ,the presentation was actually amazing ,He didnt do a cute smile ,he close his eyes and take a deep breath.
8. Kelly | 29 January 2010 at 22:11
Thanks Victoria ,you give me a idea that what happen in Nicaragua ,already did my loan to Afodenic .
Ps Sofia ,great post .In fact ,he actually refers to victoria like marvelous and do a cute smile and what a great lecture ,he do a lesson about microfinance to the audience.
9. Sofia | 29 January 2010 at 21:35
Gracias Victoria ,
I am an economics student from Switzerland and I have some passion for microfinance, I came to Buenos Aires, Argentina on vacations to visit my mother, who is the ambassador of Switzerland in Argentina and we had the opportunity to hear one of the most impressive talks about poverty and microfinance given today here in Buenos Aires. I am not say quirky, eccentric or lunatic young man ,however ,he catch too much attention ,because of his passion to talk about microfinance in Nicaragua, and explained a sustainable economic model for microfinance in the region, far from seem an academic or a director of a Imf. Everyone,in the audience seemed to him like a tourist who just came back from summer like beaches of Uruguay, Chile ,Argentina ,Dominicana for their own unique skin tone and the audience was captivated for his look and comfortable outfit. The most interesting was when Australia’s ambassador in Paraguay asked, one can have a tan like yours and work 5 days in microfinance and make a model that allows us to invest in Microfinance in developed countries . You can tell us how to get to this remote country on the Caribbean, where dramatically, the young men scream Caribbean!!!!!! And makes a leap that particularly delighted the audience and he very elegantly tells the Caribbean, my beautiful country is in middle of America and changes .His slides in the presentation of stunning and beautiful photos of beaches and lakes, volcanoes and says this is my country. One person says that’s not a country that live in poverty and with a peculiar gesture closes his eyes, my country needs lots of help from you and the world. But with a nice smile says,he says I’m not told anything. I will give the opportunity that you read an article that was written by splendid young lady ,he said ,who I had the pleasure to work with her. She was a volunteer to organization called Kiva and he dramatic put Victoria the link of your blog, and his last words in the audio was read it this is the reality of my country, I’m just a person with the romantic idea of working against poverty. Given the unleashed a solemn silence and applause that deserve for a great presentation ,after that he with a shy smile grab his computer and left the audience and said I have to take a flight to Santiago, Chile que esten bien !!!!. After that the audience stayed to read your blog and we were surprised of this country, as like my mother today, we made our first loan to Nicaragua through kiva to AFODENIC’ clients, Thanks Victoria for showing the true of Nicaragua, and thanks to the young director Francisco for talk on the best presentation of economic model I ever attended.
Sofia
10. Jordan | 17 January 2010 at 16:21
I think for me, it’s to do with my shaky knowledge of geography. If I thought about it at all, I thought Nicaragua was in Africa (!) – so thank you for the educational post and I will consider more loans to this region in future.
11. Consider Microfinance Ancillary Effects « Kiva Stories from the Field | 16 January 2010 at 21:37
[...] January 2010 Before continuing, please take time to read colleague Victoria Kabak’s post on Nicaragua. I’d like her courageous efforts to be recognized. And if you are out to make a loan [...]
12. claudia | 26 January 2010 at 14:42
check your sources VICTORIA ,as a worker of afodenic ,you dont have the right data .
Thanks
13. Victoria | 29 January 2010 at 16:06
Hi Claudia,
Thanks for your comment. I’m not entirely sure what data you’re referring to. Since you said “as a worker of AFODENIC,” I assume you are talking about data that is specific to AFODENIC. I took that data right from Kiva’s site, and it was accurate at the time. Now, the average time it takes for an AFODENIC loan to fund is about 5.43 days, a bit faster than the average on Jan. 12. Of course this data will change over time, as more AFODENIC loans get posted and funded on Kiva, and I could only make it accurate for the moment at which I published this blog post.
If you’re referring to other data in the post, such as the more general statistics about Nicaragua, could you let me know why you think they are wrong? I got them from the UNICEF report that I cited, and I thought that was a reliable source, but if you have some other statistics, I would love to see them.
Thanks again,
Victoria
14. Raf Manji | 16 January 2010 at 15:25
Thank you Victoria for such an eye opening story. I rushed to check my portfolio and saw Nicaragua was 2% of mine so that’s not too bad as I have lent to 40 countries.
But you spurred me to go and make a loan to Nicaragua so I did. A couple of points to think about: of the 15 or so loans available all were to men and nearly all for personal housing expenses. I know my lending breaks down around 80/20 in favour of women and of that 70% is to food, retail and agriculture sectors.
I’m not sure if the current loans are a reflection of the usual borrowers/sectors but I’m sure that plays a big part in people’s selection criteria.
Thanks again and I’ll keep an eye out for Nicaragua for my next round.
Go well.
Raf
15. Marsha | 18 January 2010 at 14:12
Recent available loans for Nicaragua do not reflect the usual loans on the Kiva website. I prefer agriculture/food loans and I have made a number of those in Nicaragua, including a pineapple grower and others in the farming industry. Obviously, the holiday giving season has caused a decrease in the usual diversity of Kiva loans.
16. Victoria | 24 January 2010 at 09:35
Thanks, that’s exactly right. I agree, recently I’ve noticed that a lot of AFODENIC’s loans have been for housing and construction, but overall loans from Nicaragua are just as diverse as from anyone else. I met borrowers who had loans for general stores, beauty salons, restaurants, selling produce or seafood in a market, and much more.
You’re right too that AFODENIC has a slightly lower percentage of women borrowers than the overall percentage on Kiva – 64.32% versus 78.16%. I definitely think this could be a part of the longer-than-normal time it takes to fund loans, but they do still have many female borrowers on the site!
17. francisco Montoya | 16 January 2010 at 09:42
I read this article and my tears came out of the eyes, I have known Victoria, because we were colleagues at Afodenic and I’ve read is absolutely true, after 2 ½ years traveling and living in South America, Europe and USA one forgets these things that overwhelms my Nicaragua, is a pleasure to know that someone ,from another country who was with us takes this idea and display . IF is true that in Nicaragua we need help, but it is IMPORTANT that Nicaragua has economic resources .But the politics and governments ,presidents who have no interest in solving problems. This article must be published in international journals.In order to the government of Nicaragua do more for nicaraguan , because from the private part is difficult to solve it. And the staff of afodenic is committed to continue making to reduced poverty.
thank you for this article and very pleased for your work in Afodenic.
Francisco
18. Francisco | 22 January 2010 at 20:33
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19. Sofia | 26 January 2010 at 14:48
Buen comentario Francisco ,si todo los que viven en paises en desarrollo tuvieran tu filosofia ,ya se hubiera hecho mucho .
Great Comment ,francisco ,if everyone that lives, in countries like nicaragua has your philosophy ,probably things will be better .
I look forward to see the work of afodenic .
20. dave oglaza | 14 January 2010 at 12:08
I think its because people know very little about the country although I have made a number of loans to this country to have a diverse portflio of loans.
Wasnt there a coup here led by the USA in the 60s?
21. Emma Yorra | 14 January 2010 at 08:32
Hi Victoria, I know you’re just finishing up and probably getting ready to leave, but I’m also working on microfinance in Nicaragua and I would really love the opportunity to sit down and chat with you a little about your experience at AFODENIC. Are you in Managua?
Thanks!!
22. Kelly | 13 January 2010 at 19:53
Thank you for writing this post Victoria. As we end our time in Nicaragua, I am so taken with this country and its people. I am grateful that Kiva and Kiva lenders are able to play a role in providing resources to such an incredible people.
23. Nick Cain | 13 January 2010 at 09:40
Great post Victoria, and congratulations on all your hard work with AFODENIC!
24. Goodbye, Nica « My Blog While I'm In Nicaragua And Argentina | 12 January 2010 at 19:06
[...] is going to pull itself out of the extreme poverty it’s mired in, which I discussed in my final post today on the Kiva Fellows blog (until/unless I do a second placement in New York, pending what [...]
25. Jan & John, KivaFriends | 12 January 2010 at 15:56
Good post, Victoria.
I can’t speak for others, but I like to connect in some way with the borrower. For instance, I like María Luisa Flores… she looks about my age – but it says nothing about age or children or whether she is a widow with no other income. I only have money for 2 loans today so I continue to look. I will lend to Martha Josefa Picado Manzanares – the photo speaks to the poverty in that home. I will lend to Leonardo Lorio Barahona, I like his smile and the fact that he continues with a job and tries to improve his home even with a low income. I stop there because I sort in repayment term order and I don’t like the longer terms.
The biggest problem, I think, is loans being buried under newer loans on the Kiva website. There is right now only one from Nicaragua on the first page… probably because your post has made some people lend today. I try to diversify… but because of your post… these people win today (even tho Nicaragua is already 3.5% of my portfolio)..
Ok, so for me, I search for shorter terms, am drawn in by the photo, convinced by something in the profile that connects me.
Be well, Victoria, we lenders thank all the Kiva Fellows for their dedication to being our eyes and ears on the ground.
jan
26. sidetrips | 16 January 2010 at 09:48
… as for shorter-term loans, a Kiva Fellow (Josh W. in the Phillipines) recently wrote in his blog posting “Who is Poor?” and offers some food-for-though that opened my eyes:
“Shorter loan cycles – let’s say three months – mean higher weekly payments. For poorer clients, these higher payments can be onerous and difficult to make, increasing the likelihood of default. If the MFI can [...] set a minimum loan cycle of 6 months for those clients specifically. This helps the MFI to lower its default rate, decreases the likelihood of the poorer clients dropping out of the program, and makes it more attractive to potential investors.”
27. Wayne"s World | 12 January 2010 at 13:58
This is a very powerful and probing commentary. I’m not being sarcastic when I say that the country needs a publicist to get the word out. I don’t know anything about politics in that country, but the buck stops somewhere. So, who has the money?
28. Marsha | 12 January 2010 at 11:18
This informative post is a sad comment on the state of affairs in Nicaragua. As a recent visitor, I can confirm that the country does indeed have similar attractions that make Costa Rica a tourist destination (beautiful beaches, active and inactive volcanoes, rain forests, zip lines, wildlife, etc.) yet lacks the funds to draw those same visitors let alone cure all the national ills mentioned in this post. My next Kiva loan will be to a borrower from Nicaragua.