Archive for February, 2011
What does Lima look like?
I found myself asking that very question shortly after I started working with Microfinanzas Prisma. I arrived in Lima, Peru the end of January for my three month Kiva Fellowship and headed to my hostel in San Isidro, the financial district of Lima. I spent the few days before my fellowship touring the city.
I visited the center of the city and saw the Plaza de Armas.
And went back to take in the view at night.
I visited Miraflores, a district of Lima that is located on the water.
And I of course found some time to visit Barranco, another district of Lima, to go to the beach!
But is this what Lima looks like? Partly. This is what Central Lima looks like.
Lima, the capital of Peru, is nicknamed “El Pulpo” (The Octopus) by some, referring to the sprawling metropolis that is about the size of Rhode Island, has a population rising close to 9 million people, and is home to around a quarter of Peru’s total population. Where do they all live? The city of Lima is further divided into 43 districts. The majority of the districts pertain to Central Lima, but the rest spread into what are the Northern and Southern Cones of Peru. And this, to me, is what Lima also looks like.
Southern Cone of Peru
Northern Cone of Peru
Neighborhoods in the Northern and Southern Cones of Lima have sprung up in the sand and on the sides of mountains. In these new neighborhoods that continue expanding with the arrival of Peruvians moving inward from the outer provinces of Peru, microfinance work is abundant.
A number of services are lacking in these neighborhoods and it is a real opportunity for Prisma clients to get creative with their businesses. Today, I met with a woman who rents washing machines to her neighbors. Maria, started her business two and a half years ago. The laundry service that she used was the only laundry service in her neighborhood, and was extremely far away. Not a practical option for most families, including Maria’s. I couldn’t help but think of basic economics 101 terms my father once went over with me as Maria told her story, such as: supply and demand, market share, and new market opportunities. But Maria doesn’t have an MBA and I doubt she thought of these terms as she planned her business strategy, but she clearly had a handle on the concepts.
Shortly after she had her second child she embarked on this business of renting washing machines by the hour. And she personally transports the machines to her neighbors houses. It’s difficult, she says, but worth the money and stability it provides for her family.
To learn more about other Microfinanzas Prisma clients like Maria, or to receive regular updates from the field like these join “Friends of Microfinanzas Prisma” today!
Update from the Field: Videos, Epic Commutes + Going Beyond Microfinance
Compiled by Alexis Ditkowsky, KF14, South Africa
Another week, another incredible range of dispatches from around the world. Several Fellows told their stories with video and pictures while others took time to reflect on the state of microfinance as a global industry and in their respective countries. And what would a week in the field be without getting to know a few borrowers? Plus, scroll to the end of the post for pictures you may have missed the first time around.
Continue Reading 28 February 2011 at 00:38 Alexis Ditkowsky 10 comments
Microfinance Marketing 101: The Loan Officer
By Stephanie Sibal, KF14, Cambodia
In the last few weeks, while hopped up on caffeine from too many cups of instant coffee, when I was approached and asked to create a marketing plan for MAXIMA, the microfinance institution (MFI) hosting my Kiva Fellowship in Cambodia, I overeagerly agreed.
Prior to my fellowship, I spent some time working in public relations, so the task of creating a marketing plan wasn’t completely new to me. In order to get started, I needed to figure out how MAXIMA markets to its borrowers in the first place. I knew the first place to start was the ever-important loan officer.
“Today, we’re advertising.”
Loan officers have an unbelievably difficult and labor-intensive job. They have a long list of responsibilities: traveling long distances to meet with new or existing clients, disbursing a microloan, and collecting repayments. (Previous Kiva Fellows have written about the jobs of loan officers, in Vietnam and Ecuador)
Last week, I asked to tag along to with Vanna, one of MAXIMA’s loan officers, and found out exactly how crucial loan officers like him are to MAXIMA’s marketing program.
In short, he and other loan officers like him ARE the marketing program.
Vanna the loan officer, visiting a borrower and her grandchildren
Cindy’s Baptism by Onions
It was dark outside, and I was starting to worry. Then, I heard a soft
knock at my apartment door, I ran to open it, and there stood
Cindy, hair a mess, covered in dust, and holding a large bag of onions.
Cindy started working at MiCredito , a new Kiva field partner in Nicaragua, the day after I arrived as their Kiva Fellow. She was hired to be the Kiva
Coordinator. Before signing on, Cindy kept the books at a bakery in
the big city of Managua, so her first field experience was something of an
adventure.
We had traveled three hours north from Managua to Esteli together, to spend a few weeks training the staff at this branch office. This region of Nicaragua is all about farming and ranching, so, I suggested during the first week, that she accompany one of the credit officers, Freddy, on a client visit– for
the experience.
Turns out the client, Cruz Absalon, is an onion farmer, who lives in
another town called Jinotega, a one and a half hour trek on motor bike.
Along the way, Freddy the credit officer, was kind enough to point out sights like dead snakes and such to Cindy. 
As they neared their destination, Freddy and Cindy had to abandon the motor bike, and start walking. They crossed a stream, and climbed over rocks, that soon became boulders, until finally, they reached the home of Cruz Absalon, where he lives with his wife and four-year old daughter. Their house has no electricity, and they get their water from a well.
While there, Cindy photographed and interviewed Cruz Absalon for his Kiva update, and was rewarded for her effort with ten pounds of onions.
Way to go, Cindy! Reaching out to clients, AND feeding everyone back at the office at the same time!
Later that week, Cruz Absalon and his family came to the MiCredito Esteli office to apply for his second loan, and Cindy was able to present him with a colored-copy of his on-line Kiva profile from his first loan.
To support Cindy and MiCredito, please join her Lending Team: Amigos de MiCredito
Check out all MiCredito borrowers on Kiva! Cindy will be uploading new borrower profiles next week, including one for Cruz Absalon’s second loan on the Kiva website!
-Karen Gray, Kiva Fellow 14, in Nicaragua
The Highland Commute
by Gustavo Visalli, KF14, Guatemala
Commutes are a part of life. In college I lived in a town with more bikes than people, so I had a relaxing bike ride to class every day. Back home in San Francisco I had the pleasure of reading about my World Series Champion Giants on the train to work. Easy transport increases our range. This allows us to access more resources with little effort (even those of us without cars).
Daily travel is not so simple here in Guatemala. It is a significant barrier for many looking for access to resources such as food markets or financial services. To keep microfinance accessible to the rural communities, MFIs like ASDIR must travel to the client for visits and loan interviews. Fellow KF14 member Nila’s breakdown of one MFI expenses show that staff travel expense is second only to staff salaries. That’s a lot of client visits!
Allow me to illustrate the difficulty of car-less travel here in Guatemala by giving a taste of my evening commute:
First is the Sardine Act: the microbus to the main road. At a $0.12 fare, drivers will pack in as many passengers as is illegally allowable. In a 10 seat minivan, I have counted an estimated 22 high school kids and one full sized Gustavo. It is not uncommon for us to spill out onto the top and side steps of the van. On a road full of mostly ignored speed bumps, this makes for a very interesting ride.
Add 22 students and one Gustavo to get the full image.
Next comes the highway shoulder hike, which I briefly mention in my previous post. This is pretty self-explanatory. As you can see, there isn’t much of a shoulder. I have found that pickup trucks in particular are not shy about keeping things uncomfortably close.
After a hike through the nightly market in town, it’s time for the main event:
“El Carnicero” is the final boss. I call it the butcher because I pass the municipal slaughterhouse before facing this monster hill. Elder Guatemalan women seem to be able to conquer this beast on a daily basis without losing too much breath. My sea-level lungs are not quite at that point.
Medium distance travel is a burden for many rural residents in Guatemala. It often takes hours and is rarely as comfortable as a cushioned train seat. This limits many residents to the shops, services, and resources of their surrounding area. Limited resources equals limited development, which is something ASDIR and other social organizations are working to change here.
As for my daily commute: bring on the carnicero. I’ll be back on the train reading about the Giants soon enough.
Gustavo is a Kiva Fellow working with Asociación ASDIR in Nimasac, Guatemala. Check out the brand new ASDIR Lending Team on the Kiva website.
Mountains Beyond Mountains: The Landscape of Microfinance in Nepal
By Claudine Emeott, KF14, Nepal
Over the last several months, the microfinance industry has come under considerable fire. These criticisms largely address reports emerging from the Indian state Andhra Pradesh, where the rapid growth of microfinance led to predatory lending and overindebtedness.
In Nepal, just across the border from India, I find myself contemplating the opposite problem: the slow growth of the microfinance sector in remote mountain areas.
On a clear day in Kathmandu, you can actually see the Himalayas from the city:
When the Smog and Dust Clear: Glimpsing the Himalayas from Kathmandu
While these mountains — the highest in the world — seem so close from this vantage point, in reality they are quite far because we have to account for both horizontal and vertical distances as well as poor road networks and frequent landslides that make travel difficult.
The Langtang Range, which is directly north of Kathmandu, is only a six-hour bus ride from the city, but villages cling to mountain sides at approximately 13,000 feet in elevation. And this mountain area, compared to others, is relatively accessible. Many people from the far northeast or northwest corners of Nepal describe their journeys to their home villages like so: “Well, first you take a bus for two days. And then you walk for five more.” Let’s not forget that the five-day walk is primarily UPHILL.
It is no wonder, then, that microfinance players in Nepal struggle to penetrate these remote mountain regions. A 2007 World Bank report, “Access to Finance in Nepal,” lays out statistics that overwhelmingly reinforce the uneven geographic distribution of financial services. The Terai, which encompasses the southernmost band of Nepal, is home to 48% of the country’s population, which collects 72% of the country’s microfinance loans. The Hills, in the middle of the country, include 44% of the population and receive 22% of microfinance loans. The Mountains rank last, with 7% of Nepal’s population and only 0.02% of microfinance loans.
Commercial bank branches are not financially feasible in villages at altitudes of at least 4,000 meters and with rugged topography. The harsh reality to this truth, though, is that these same barriers to financial institutions also make for the most challenging economic conditions in the country. Although financial NGOs and cooperatives have attempted to fill in the gaps that banks cannot, the numbers above tell a compelling story: some of Nepal’s poorest people do not have access to finance.
The landscape of microfinance in Nepal may be changing soon, though. One of Nepal’s commercial banks is finalizing a microfinance subsidiary, and it aims to use its competitive edge in technology to reach remote mountain areas. This bank was the first to introduce mobile banking in 2009, and only two banks have followed suit since, so mobile banking is still a nascent concept in Nepal. That said, there is real potential for mobile banking to dramatically change the supply of microfinance in Nepal, which has a wide-reaching 3G network. In 2009, after all, 3G service came to Mount Everest. That alone gives me high hopes for this trend.
Claudine Emeott is a Kiva Fellow serving with BPW Patan in Nepal. She has an obsession with the Himalayas and in another life fancies herself a mountaineer. Want to help women entrepreneurs in Nepal? Join the BPW Patan Lending Team to make a difference in this small but beautiful mountain country.
Money, Money, Everywhere
And so it was that, clinging desperately to the back of a moto taxi dodging its way to work on my first day, two thoughts struck me:
Great, there’s an economy up and coming, this really is encouraging
But hold on, in a country with such an active micro-enterprise economy, where is the need for Kiva funding? Aren’t our borrowers trying to help the poor?
Well, as I sit here at ALIDe (Kiva’s partner MFI here in Benin) three weeks later I begin to glean some understanding…
Continue Reading 25 February 2011 at 06:00 Gareth Davies 4 comments
Kiva Field Partners: More than just microfinance
Kiva’s mission, to connect people, through lending, for the sake of alleviating poverty, is implemented in the field by partnering with microfinance institutions around the world. All of Kiva’s Field Partners have a strong mission to alleviate poverty and expertise in doing so through the use of microcredit–they are the legs of Kiva that get the money loaned into the hands of the entrepreneurs. Yet, in many cases the projects and mission of our Field Partners expand beyond microfinance–they are dedicated to enriching the lives of their clients in many ways. A few examples from Kiva Field Partners across the world:
- The Christian Rural Aid Network (CRAN) runs the Child Education Support Scheme, a child aid and development program that provides access to quality, basic education for needy children living in deprived rural communities in Ghana. CRAN also runs a program called Energy in Common that provides lighting for remote villages in Ghana, using the concepts of microfinance: it loans the equipment to villagers, who then pay back in installments.
- Fundacion Paraguaya runs a self-sufficient agricultural highschool; they focus on producing and selling organic vegetables, but also have cows and a small dairy plant. The school also own a small hotel that is rented mainly for private functions, work meetings, and seminars. All students work and live on-campus: the freshmen do most of the basic work, the juniors train the freshman and also working on specialized tasks, while the seniors serve as experts and supervisors. Depending on what each student chooses they can graduate with a single or dual-degree in agriculture and/or hotel management.
- FINCA Peru provides its members with training sessions on women’s rights and gender issues education. FINCA is part of the Women’s Empowerment Mainstreaming and Networking network (WEMAN), which aims to empower and improve vulnerable women’s lives, their families, and communities. Training is offered during weekly or biweekly bank meetings through dynamic and interactive programs that incorporate analysis, reflection and mutual learning to allow women to share their own experiences and change their attitudes and perceptions.
Here in Colombia Fundación Mario Santo Domingo’s (FMSD) work is focused not solely on microfinance, but the social development of Colombia as whole, as described by their mission statement:
To promote the common good and bring about social development on a national level through support for educational, cultural, charitable and health-related activities and programs, scientific and technological research, the creation of jobs and income, and all other activities that contribute to improving the quality of life of the general population, especially within the poorest communities.
FMSD has built a clinic, a ecological institute on Barú Island, and high schools for communities that likely would not have received any other form of help. The hold numerous workshops each week ranging for business seminars to programs designed to improve the communication of families within their homes. They have programs that offer street children better opportunities for their future, as well as programs designed to strengthen and maintain Colombian culture, such the events and costumes used as part of Barranquilla’s world famous carnival that will take place in 9 days.
Villas de San Pablo, Barranquilla, Colombia
One of FMSD’s largest and most ambitious projects is called Dreams and Opportunities, which is a program designed to construct strong communities with better housing options for poor families in Colombia. They have constructed over 14000 homes to daye, and in 2008 plans began for two large communities on the northern coast: Villas de San Pablo in Barranquilla and Ciudad del Bicentenario in Cartagena will housing 20,000 and 25,000 families respectively within the next decade. The homes receive approximately a 40% subsidy from the local and national government and require only 10% down for a family to move in; they are able to take out a 7-10 year loan at low interest rate that they would never be able to receive from a commercial lending source. FMSD does not only focus on building homes, but also a community surrounding them–playgrounds, parks, computer centers, and community areas are planned into the design from the beginning.
New, fully furnished home for the Alvarez family
Last Friday I had to opportunity to visit Villas de San Pablo for the dedication of a free house from FMSD for a family in need. The Alverez family used to live in very poor conditions and experienced a tragedy where they lost 4 of their 8 children in a fire in their previous home. FMSD worked with the national government and local Catholic church to provide a new, furnished home for the family. The family will now have an opportunity to start over in a new, safer home thanks in part to FMSD.
Belarmino "Oscar" Alvarez meets with Beatriz Uribe, Minister of Housing and Environment (equivalent to the Secretary of Housing and Urban Development in the US government) during the presentation of their new home.
Projects such as Villas de San Pablo allow organizations like FMSD to assist people in many aspects of their lives, as well as tie back to their microfinance mission; loan officers are constantly reaching out to new residents to see if they would benefit from a loan to start or improve their current business.
Kiva’s Field Partners are doing much more than just providing loans, they are helping transform their communities and change people’s lives.
Interested in learning more about Fundación Mario Santo Domingo? Visit their page on Kiva here!
John Gwillim is a Kiva Fellow currently serving with Fundación Mario Santo Domingo (FMSD) in Barranquilla, Colombia.
Participating in the Dialogue: The Role of Microfinance Critics (Part 2)
Julie Shea, KF13, Bolivia
A few months ago, I wrote a blog post that drew on my experiences as a Kiva Fellow in Bolivia to discuss two points of criticism about microfinance, specifically from Aaron Ausland’s Huffington Post article, “How Microfinance Lost its Soul”. In this second installment, I will attempt to do the same, focusing on the portrayal of microfinance put forth by Tom Heinemann’s controversial documentary, The Micro Debt.
Continue Reading 24 February 2011 at 09:00 julieshea 4 comments
A Kiva Fellow’s Photo Album: Six Months Along The Equator
By Tara Capsuto, KF12 Ecuador / KF13 Kenya
I recently concluded my Kiva Fellowship that has spanned 6.5 months, 5 of Kiva’s MFI field partners, 2 continents, countless long haul buses, and roughly 12,000 miles of travel. As a member of Kiva Fellow’s 12th class (KF12) I headed to Ecuador in July, 2010 to work with two of Kiva’s field partners, Fundación Espoir and Fundación D-MIRO. I never would have guessed that when December rolled around I’d be summitting Mt. Kilimanjaro in Tanzania and trying to pick up Swahili. That’s because KF13 landed me in Nairobi, Kenya to work with Faulu Kenya, Juhudi Kilimo, and Kenya Agency for Development of Enterprise and Technology (KADET).
From witnessing political turmoil in Ecuador to surviving a matatu crash in rural Kenya, there were definitely some harrowing moments but it’s been a truly amazing journey, a journey, that like Kiva itself, has been all about people. I’ve been out of the field for several weeks and I haven’t come up with a great way to summarize my experiences as a Kiva Fellow. Each time someone asks, “So, how was it?!” I kind of stammer, generally respond that it was fantastic (it really was), and share an anecdote or two. The truth is, it was a life-changing experience, or rather, a series of experiences, and it’s hard to know where to begin. In lieu of even attempting to be exhaustive, here are some of my favorite images from my Kiva Fellowship.
Video Blog: The Story of Lini Nanyonga
By Nila Uthayakumar, KF 14, Uganda
Nila has just arrived in Kampala, Uganda after having spent six months in Zanzibar, Tanzania last year. She considers East Africa home now, and looks forward to working with several Kiva partner microfinance institutions throughout the next few months in Uganda and Kenya.
Video Blog – The Life Of A Kiva Fellow
by Nick Hamilton, KF14
When it comes to blogging, a new pastime of mine, I often go a bit heavy on the word count. Not this time. This is a video blog and so I’ll let the video do the talking.
Continue Reading 21 February 2011 at 10:51 nickhamiltonkiva 7 comments
Last Week in the Field: “Christmas”, Trekking, Adversity + Good Company
Compiled by Alexis Ditkowsky, KF14, South Africa
Members of the 14th class of Kiva Fellows have officially hit their stride. While we never know where the next dispatch will come from or what interesting topics the Fellows will cover next, we always know we’ll be transported, entertained, and edified. This past week, topics included “Christmas”, trekking to a remote village (with video!), handling adversity (including a serious car accident and stolen electronics), and enjoying the company of loan officers, borrowers, and community members. Enjoy!
Continue Reading 21 February 2011 at 02:17 Alexis Ditkowsky 12 comments
Bolivian Kiva borrowers: buying a cow, selling food, acquiring sewing machines and constructing rooms
In this second blog of Clara Vreeken, you can meet the Bolivian borrowers of Kiva’s field partner IMPRO: Pascuala and Santos buying a good-quality dairy cow, Maria selling food and renting small accommodations, Juan Carlos and Mery buying more sewing machines and Mery’s mother Maria constructing rooms. 43% of IMPRO’s clients live from 1 dollar or less per day. IMPRO serves clients in rural areas (11%) and in two big cities (89%). 45% of IMPRO’s 2147 clients are women.
Continue Reading 20 February 2011 at 11:14 claravisser 2 comments
The Financial Donut Hole
The other day I took a shared taxi home from work in Freetown, which costs about US$0.20. The driver asked me what I was doing here in Sierra Leone. When I replied “Microcredit,” he said, “Ah, that is for women.”
He’s right – the microfinance industry has focused most of its resources on poor women because they are especially affected by poverty, and empowering women can bring about positive changes in their families and communities. At one of the organizations I’m working with over 99% of their loans are to women.
I told the taxi driver that in spite of this focus on women, some men get microloans as well. So he asked me if he could get a loan to purchase his own taxi. This presented another problem – Kiva has a limit of US$1200 for individual loans, which might buy a motorcycle, but not a car. Kiva and other microfinance organizations have limits like this to help target their efforts to the poorest of the poor.
I explained this limit to him and suggested that he might get a loan from a traditional bank. “Banks are only for rich people,” he said. In addition, he wouldn’t have the required collateral for a bank loan.
So this taxi driver is stuck in a financial donut hole – too poor for a loan from a bank, and yet too wealthy for microcredit. Clearly there are still opportunities to better serve the broader financial landscape.
By David McNeill, KF14 Sierra Leone
A shared taxi in Sierra Leone
Christmas in Managua
It’s Christmas here! The boy squealed while looking out the window as the airplane touched down at Sandino International Airport. The Christmas lights stay on year-round in Nicaragua, a decreed celebration upon Daniel Ortega’s return to power in 2006, and the thirtieth anniversary of the people’s revolution in 2009. But, 2011 is another year, and there is an election in November.
Maybe, some of the potholes will finally be filled, my co-worker said, as we drive down the road Managua-style, swerving side-to-side, as if dodging landmines.
Turning into a shantytown, we hit an unavoidable one. To our right, four emaciated cows stand on top of a pile of garbage, grazing, and there is a stench coming from an open sewer that is like a wall separating us from the corrugated metal and cinder block homes. It’s hotter than Hades, and yet, I consider rolling up the window, but what message would that send to the children staring back at me? We are calling out the name of the person we are searching for. Overhead, a jet just scrapes by; we slow down to ask directions from men working on a car engine. I am with a credit officer, on the way to meet a couple who has applied for a loan. Just as we reach the door, the husband appears, invites us inside, and then quickly arranges four plastic chairs for our meeting. I can see their home is also their business, a shop selling a few packaged snacks, half a dozen eggs, and a bag of bread rolls. The man tells us he has lost his job, uniting him with half the population of Nicaragua. Before that, it seemed things had been going well. He had earned a certificate to be an ultrasound technician, found a job, but then his contract ended abruptly. Not able to find other work, he had applied for a loan to buy his own ultrasound equipment, and a car, so he could also earn money as a taxi driver, a trade in which he has no experience. The credit officer begins by asking the couple about their costs and assets, all the while tapping the figures out on her calculator. After paying for their food, water, electricity, and school fees for their two children, they are left with $150 a month. Their loan payment would be $300 a month. I have a reliable guarantor, the husband reminds us, but when that fails to sway the credit officer, he sends his wife to bring their financial records, a folder that holds scant pages. Then, I must watch as the couple’s faces change, their anxious hands fidget, while the credit officer explains why they will not be granted the loan, and then they both turn their eyes to me, and all I can do is look down at the floor. Promptly, the credit officer and I stand up, shake their hands, get back in the car, and drive back to the office.
The hard truth is, not everyone qualifies for a loan. The borrowers must have experience in the business for which they ask a loan, the means to make the payments, and a good credit record. I understand the mission of micro-finance is not to set people up for failure and debt, but that didn’t make it any easier.
Merry Christmas, Managua
Karen Gray, Kiva Fellow 14, in Nicaragua.
Lessons from my own Country – Lecciones de mi Tierra
By Lourdes Toussaint, KF13, Mexico
As my time as a Kiva Fellow comes to an end, I would like to sum up my experiences in Monterrey, a new city for me in my native country of Mexico. Initially, I was hesitant and scared of going to Northern Mexico given the safety issues that have been felt for the last few years. Shootings, kidnappings, and other forms of violence have become an everyday concern. Still, I decided to give it a try, at the end it is my country, and I really wanted to learn all about microcredit and its impact on people and poverty.
Al acercarse el término de mi tiempo como Kiva Fellow, me gustaría concluir esta entrada con mis experiencias vividas durante este tiempo en Monterrey, una ciudad nueva para mí aquí en mi propio país. Al principio, cuando me enteré que iría al norte de México estaba dudosa y con algo de miedo debido a la situación de inseguridad que desde hace ya tiempo se vive en esta zona. Las balaceras, la violencia, las muertes, y los narcobloqueos son cosa de todos los días. Sin embargo, decidí intentarlo, finalmente, es mi país y tenía muchas ganas de aprender todo acerca de los microcréditos y su impacto en la reducción de la pobreza.
Continue Reading 18 February 2011 at 10:00 lulatoussaint 12 comments
Next Steps for Kiva’s Partner in South Africa
By Alexis Ditkowsky, KF14, South Africa
You may or may not have noticed that posts from South Africa have been on the non-specific end of the spectrum. This is because Kiva’s first partner in South Africa, Women’s Development Businesses (WDB), is currently in a “pilot” stage. Both Kiva and WDB are figuring out the best processes and procedures for working together so that WDB can keep doing what it does best and Kiva and Kiva’s users can have the reporting they crave.
If you were eagerly awaiting lots of info from South Africa, this is the post for you! And if you just want to see happy pictures of loan officers and clients, all you have to do is scroll to the bottom of the page.
Continue Reading 17 February 2011 at 04:18 Alexis Ditkowsky 13 comments
Video Blog: Trek to Kanaan Village
Are microfinance institutions (MFIs) exploiting poor borrowers by charging the excessive interest rates? Some people think so, especially after the publicity around Andhra Pradesh in India. Despite recent events, there has always been a widespread agreement that most MFIs should operate sustainably, keeping costs as low as possible, and charging interest rates high enough to cover these costs. However, even in these instances, rates hover much higher than your typical commercial bank.
One of the leading factors attributing to high MFI interest rates is administration expense. The cost to process numerous tiny loans requires a lot more legwork that cannot sustainably offset by economies of scale. Also, MFIs often operate in remote or low population density areas, were simple contact with the borrower can turn into long journey. The video below depicts this through my trek out to Kanaan Village in West Timor, Indonesia. Enjoy!
Lisa Skowron is part of the Kiva Fellow’s 14th Class and is currently working with TLM in Kupang, West Timor, Indonesia.
A Month in Armenia
As I look back, I can’t believe it’s been a month already since I left my home in Colorado to serve as a Kiva Fellow in Armenia. It has felt much longer with incredible experiences, both positive and negative, that will surely shape my future in ways that I have yet to discover.
Where in the world is Yerevan, Armenia?
When I told people that I would be going to Armenia as a Kiva Fellow, the first response was always “WHERE IS THAT?” Most mixing it up with Romania or to my Spanish speaking students back home- “Alemania”( Germany). I could understand their difficulty – as it is such a small country that it is abbreviated “Arm.” on many maps. 
I was anxious and enthusiastic as I boarded a plane after training at Kiva headquarters in San Francisco, and set out to learn all I could about this tiny country in my 3 ½ months as a fellow with SEF International in Yerevan. This excitement was only mildly lessened by the 27 hour flight + 8 hour layover in London on the way.
I had the good fortune to overlap in time with the previous fellow working with SEF- Abhishek. He was invaluable to me as he helped with everything from setting up a cell phone on my first day, showing me around the city, and introducing me to all of his wonderful friends, who quickly accepted me into their group as their newest family member.
Of course, in any new place, one discovers many trials and reasons to be grateful for what we have access to in our home countries. For example, I quickly discovered after moving to an apartment on the 11th floor why most Armenians try to live below the 6th floor. Consistent access to water is something that just doesn’t happen on the floors above this level. Pumps are inefficient in these old Soviet structures and water doesn’t always reach those of us living at higher levels. There is also a limited supply and once the water is gone, there’s nothing that can be done. To solve this issue, many people have storage tanks in their apartments and if mine wasn’t always leaking, I would have better access to water throughout the day. Electricity and gas are quite expensive and highly unreliable as well. This takes some planning, but does not deter from the awesome experience of living in Yerevan.
During my first few weeks, the wonderful and welcoming staff at SEF were very busy catching up on figures from the end of the previous year and were off to a slow start as the holidays lasted well into the second week of January. (Christmas is celebrated on January 6th here ). I learned that it is customary for borrowers to repay any loans they can and start the year off with no debt- an excellent custom, I think-and so we saw a few early repayments on loans that were not due in full for another year. SEF offers Kiva borrowers the opportunity to take either small business loans to improve their shops with inventory, air conditioning, ovens, and more, or to gain access to agricultural loans. SEF serves 6 regions in Armenia and offers a unique 36-month term on agricultural loans which allows farmers to weather the difficult seasons and take advantage of the profitable seasons before repaying. I understood quickly how organized and efficient SEF’s office and staff are. They are a growing institution and each member holds a significant workload and responsibility, but they all made time to greet me and welcome me to the team- conveying all the while how important they feel their partnership with Kiva is. Borrowers were slowly trickling back into the office to get new loans and we enjoyed some down time so I took the opportunity to get to know the city.
Walking the streets of Yerevan- with infrastructure that is obviously influenced by both Europe and Russia- you can find anything you desire from fashion, a variety of restaurants, coffee shops and beautiful parks with mini-amusement park rides. The capitol, however, does not reflect the rest of the country by any means.
With an average annual income of around $5000 per year, and a struggling economy, Armenia has suffered the loss of a quarter of its population since independence in 1991 in an exodus for better economic situations elsewhere. Armenians hold fiercely onto their national identity and make consistent efforts to unite the 3 million Armenians actually living inside these borders with the 8 million Armenian diaspora who are spread all over the world. Armenia has been conquered and carved up so many times that each generation has had to start anew. Once part of the Persian empire, then the Ottoman empire, then the Soviet Union, dealing with genocide, wars, restricted religious freedoms, and trouble along two borders, Armenians know how to handle adversity with patience and resiliency.
It is this spirit of resiliency that I most admire at the moment. I was involved in a very bad car accident this past weekend while riding home in a taxi. Three cars collided and we are still unclear as to how many people didn’t make it. One person passed away for sure and the car was on fire when I left the scene. I was lucky to walk away with only a dislocated hand and two sprained ankles. 
Aside from being shaken up, I am doing fine now thanks to my incredible new friends that have dedicated each day to bringing me food, flowers, candy, cake, cheering me up, and mostly making me feel cared for and taken care of in the same way I would be at home. My Kiva Coordinator at SEF, Rouzan, immediately dropped everything at work to pick me up and took me to the best doctor in town to get x-rays done and make sure I was ok. I don’t know what I would do without the amazing people that I have been blessed to meet in the past three weeks and am in awe of the caring nature and warmth of the Armenian people.The doctors were kind and patient and a woman even stayed with us for four hours to translate at the hospital even though it was very late and she didn’t even work there.
I have also been grateful to the staff at Kiva and my fellow Kiva Fellows around the globe for their emails, phone calls and tremendous support. Working in developing countries involves many risks. Kiva Fellows have taken time off of work and left their lives of comfort knowing the risks involved to learn first-hand what a difference microfinance can make on the ground to those that need it. While it is not always glamorous, or 100% safe, it certainly entails excitement and opportunities for growth and this is truly a wonderful network to be a part of.
I know that each day will bring me closer to full health and mobility and am grateful for the opportunity to continue my fellowship with the fantastic, caring people at SEF. Business at SEF is picking up and new loans are coming in. If you would like to make a difference in the lives of their borrowers please consider lending today. We are hoping to surpass the 100 member mark on our lending team Team Armenia, and are very close. Join today and help us to get the word out to family and friends.
Caree Edson is a Kiva Fellow (KF14) serving in Yerevan, Armenia with SEF International. She is becoming quite adept at using just her left hand for everything she needs. To find out more about becoming a fellow click here.
A Post about Nothing
What’s up with blog posts? Why do they always have to be about something? A post should be just like life. You know, nothing happens — you get up, you eat, you go shopping.
I asked myself, “John, what did you do today in Mexico City?”
My reply: “I got up and went to work.”
There’s a post!
You’re still with me? Impressive! Then on to the details, or rather, the non-details, of a day in the life of a regular everyday normal Kiva Fellow.
One thing I really like about Mexico is the food. Grasshoppers go very well with mescal!
I met up with CrediComún’s Kiva Coordinator (my KC) at the Observatorio metro station and we hopped the bus to Toluca. This smog-capped industrial city of about a million people is historically famous for producing chorizo, or Mexican sausage. It’s also surrounded by mountains — it’s beautifugly! The bus was plodding along a crowded frontage road next to a busy highway. We got off, walked under a bridge, passed a few rows of shops and found our CrediComún subsidiary.
After chatting for an hour, four of us (including two branch office managers) got into a car and drove off to visit some Kiva Entrepreneurs. First, a young woman with three small children. All have striking ojos chinos, or Asian eyes, a very photogenic family. The two year-old was sitting on a bucket on a chair eating pasta soup. I started my interview with her, asking about the soup. She was incredibly bright and cute and not shy at all. We moved on to talking about shoes — hers came from the shoes her mother sells out of their home. The line of credit her mother receives (yes, I had moved on from interviewing the little girl to the mother around this point) allow her to earn a decent living while being with her children. Before, she borrowed from another microlender. For a six-month loan, she paid 100% interest. Not 100% annualized, but over the six months she pays back twice as much as she borrowed. That’s around a 300% APR! With CrediComún she pays about 15% interest on a four-month loan, or around 70% APR. We did not want her to be late for her appointment to have her children vaccinated, so we didn’t stay too long.
Next we visited a woman in her fifties who sews out of her home and her mother’s home across the alley. The cameras were obviously making her nervous as she told us about how the loans had helped her situation. Then her eyes teared up as she spoke about her daughter who had left her baby with her a few years ago. The four-year old was crawling all over his grandmother throughout the interview. The cameras went off and we prepared to leave, and she showed us the jeans and industrial towels she makes. She waxed enthusiastic as she talked about the order for 30,000 towels she received from a nearby factory, and how she contracts another woman to help out and may be hiring others soon. If only we’d filmed that part!
The final visit was to a poor-looking house on a dead-end lane with what used to be a truck sitting out front. Chickens were clucking and a hateful dog on a short tether was barking and struggling violently to get at us. A preteen girl gave him a kick as we were invited into the house.
This client sells plates and cups and so forth out of her home. She didn’t want us to videotape the interview out of fear for her children. I explained that we would not upload photos of anyone but her, and never give her full name or her location, and that there already is a photo of her on Kiva’s site and that she had agreed to have it posted. She didn’t budge, and we proceeded with the interview. Her twelve-year old daughter had just begun sixth grade. The girl talked about how she wanted to be a doctor and planned to finish high school. I let her know she’d probably have to study a bit longer than that.
The dog barked the whole time, so it was just as well we didn’t record the interview. We had two great videos already and dozens of photos.
Next the four of us went to eat pozole (a hominy-based soup, as in “No pozole for you!”) at a successful-looking restaurant. One of the branch office managers told me that the owner is another CrediComún borrower, but because she has become so successful, the amounts she can borrow are too high to qualify as a Kiva borrower. At lunch we reviewed our amazing collection of videos and photos.
My KC and I walked back to the highway, were soon on the bus and I threw my backpack in the rack above our heads. Because she’s one of those people who have a lot to say, the time went by quickly. I told her about my late night of shooting pool and drinking mescal and eating chapulines (crunchy grasshoppers served with sliced oranges).
We looked out at the beautiful mountains and pine forests, and before I knew it we were on the subway heading back to the office. I realized something was wrong with my backpack – my flipcam was not there. Nor was my camera. We returned to the bus station to see if perhaps they had fallen out, and an hour later, the infinitesimal hope I held had gone to zero. After years of never having been a victim in Latin America (true, I’ve been overcharged!), I had finally been robbed. And the worst part by far, was the loss of all that precious data.
I felt like a jerk (in fact, the jerk store called and they are not running out of me!) because of the sheer carelessness on my part. Not only were those images perfect and meant so much to me and would have made this post so much better, but could the data in the wrong hands put those families at risk? Fortunately none gave their full names or neighborhoods and we didn’t take any outdoor shots, but the truth is, yes, it could.
So there it is. There’s a post. Just a bunch of people doing their day-to-day routines.
You can help by making a loan to a CrediComún client, joining Friends of CrediComún, or spreading the word about Kiva.
John Farmer is a Kiva Fellow working in Mexico City. He has watched way too many Seinfeld reruns in the past.
Part 4: What is the industry doing to protect borrowers?
by Jacqueline Gunn
One of the biggest challenges in the microfinance industry is oversight and regulation on a macro scale. Whilst in countries like the US there are regulations to protect borrowers, this is often not the case in many of the countries where Kiva has field partners. Kiva can’t choose not to work in countries without credit agency regulations as these are often the places where the need for enabling access to credit for the poor is greatest.
So what is the industry doing to help to borrowers now and in the future?
Continue Reading 15 February 2011 at 12:00 tinkgunn 2 comments
Hey, Soul Sisters!
By Mei-ing Cheok, KF14, Ghana
Let me boldly proclaim that everyone in the developed world should experience what Kiva Fellows are fortunate enough to live and breathe. I guarantee you there will be less whining from all of us and perhaps, just perhaps, more effort to collectively improve the lives of our fellow humans…maybe. But definitely less whining, because when you see what we get to see, all our problems suddenly seem so small.
Watresa Village
Soul Sisters: AB/Adom Ara Kwa Credit Association with CRAN Loan Officer, Dominic
In Defense of “High” MFI Interest Rates: Part II
By Nila Uthayakumar, KF 14, Uganda
On the one-year anniversary of Eva Wu’s blog post entitled In Defense of “High” MFI Interest Rates, I was inspired to write a post on this exact topic. The date of this post is a coincidence, as I was actually inspired by the concerns of a group of friends I met with last week. They inundated me with questions: Why is it that microfinance institutions (MFIs) all over the world charge interest rates between 30 to 60% or even higher in many cases? Are they all predatory organizations, profiting from the hard earned money of the world’s working poor? How are these astronomical interest rates even remotely justifiable?
As they asked me these questions, I found that I was repeating myself in answering them. It is expensive to run an MFI. There are bad roads and very high transportation costs, it is time consuming to make visits to borrowers, borrowers often do not have collateral and loans are given to solidarity groups whose members guarantee each other’s loans, and borrower default is also a problem. These are but a handful of the issues that make microlending very different from traditional banking. Still, as I explained, I was not convinced myself. I wanted to see some numbers.
First Borrower Visit (Take 350+)
By Alexis Ditkowsky, KF14, South Africa
Readers of the Kiva Fellows Blog may be familiar with this outline:
- New Fellow arrives at placement
- Fellow goes on first borrower visit which involves bumpy roads and/or novel forms of transportation, questionable directions, meeting borrowers, and some unexpected form of hijinx
- Fellow returns home after a long day in the field both exhausted and exhilarated
Continue Reading 14 February 2011 at 05:37 Alexis Ditkowsky 17 comments
Part 3: Borrower protection practices at Kiva partners
About a month ago, it seemed like all I heard about was clients’ denied loans, or who got loans significantly smaller than what they needed. At the time, I was concerned about how many people weren’t getting the finances they asked for. Then I heard about the suicides in India and was glad to know that the Kiva partner where I’m stationed carefully considers how much to lend each client.
Continue Reading 13 February 2011 at 12:00 Bridget 1 comment
The Kiva Fellows Phenomenon
“Goodbye. I love you. I’ll miss you but I know how good what you’re doing is, and I want you to be there”. Suddenly I was on through security, on the plane, and the engines whirred into life as we accelerated up the runway. And it dawned on me what I was leaving behind in London, to spend the next few months in sub-Saharan Africa.
“Why am I doing this…?”
Let me introduce you to the Fellows Phenomenon.
Continue Reading 13 February 2011 at 12:00 Gareth Davies 5 comments
Gringita in Peru
It is my second week as a Kiva Fellow at FINCA Peru and though there are many exciting events to come here in Ayacucho (Carnival, Semana Santa) for now it is still the rainy season and the town has a sleepy, lethargic feel. Since I am still getting acclimated and easing into my role at FINCA, I figured that a first blog post about a loyal and lively FINCA client that I was fortunate to visit would be a good start.
Part 2: The Issues, Players and Outcome
In the past few months, the Indian microfinance industry has learned that not all publicity is good publicity. A few Kiva Fellows wanted to learn what the issues were, and what can be done to prevent them in the future. We will present our findings in a series of blog postings over the coming days. Given the inherent complexities, the multiple viewpoints and an ever changing political and legal landscape, our work is only intended to provide a top-level summary of the situation as it stands now. If you are interested in learning more about microfinance in India, we encourage you to explore these issues beyond what is presented, and to draw your own conclusion.
Continue Reading 11 February 2011 at 11:59 abanrjee 2 comments
