Author Archive
Kiva Lenders Have Needs, Too
By Abby Gray, KF6 Togo and KF7 Senegal
Jacques, WAGES' Kiva Coordinator, and a colleague taking a boat to visit a Kiva client in a rural area.
Meet Jacques. He’s the Kiva Coordinator at WAGES, a microfinance institution (MFI) based in Togo, West Africa. Every day, a loan officer hand-delivers a stack of borrower information forms and a USB chip full of photos. Jacques has trained the officers how to fill out the forms, use digital cameras, and get borrowers to smile and display their merchandise proudly for pictures.
Jacques formats the pictures, writes the information into paragraphs, and uploads everything to Kiva’s website. Then, during the loan cycle, he reports repayments manually and visits borrowers to collect a progress update and take yet another picture.
The work is inefficient, tedious, and time-consuming.
But it’s worth it. (more…)
Power to the People
By Abby Gray, KF6 Togo and KF7 Senegal
How a Kiva Fellow Alumna’s non-profit organization, SunPower Afrique, is shedding light on MFIs in West Africa
“Beep,” complained my laptop, unhappy about its sudden switch to battery power. The fan above me whirred gently to a stop, no longer drying the beads of sweat incessantly forming on my forehead. “Page can not be displayed,” grumbled Firefox. My internet connection was gone, along with any hope I had of uploading my stack of borrower profiles to the Kiva website.
I walked out into the hallway and found the employees of my Senegalese microfinance institution slowly leaking out of their offices as well. We pulled up chairs in a circle, sat down, and prepared to sweatily twiddle our thumbs until the power gods had mercy on us, whether in ten minutes or ten hours.
An employee at FECECAV, a Togolese MFI, tracking loan repayments by hand. Many of FECECAV's branches operate without electicity.
Power cuts are a regular occurrence in West Africa, as in most parts of the developing world. Production and distribution of electricity are unable to meet demand, causing frequent rolling blackouts and interrupted service. For MFIs (and many other businesses), this means countless manpower hours lost, high overhead costs, low employee morale, a short shelf-life for office equipment and other low efficiencies in daily operations. These consequences are even more debilitating for MFIs who work with Kiva – the Kiva partnership depends on technology and internet connectivity to successfully fund loans for enterprising clients. Gasoline-powered generators, the obvious alternative, represent a significant up-front investment and are extremely costly to run and maintain.
So, what can be done to provide MFIs with a reliable source of power??
Enter Kira Costanza, the courageous Kiva Fellow Alumna, galloping in on her trusty steed named Solar Power!
Microfinance through New-York-Colored Glasses
By Abby Gray, KF6/7, Togo & Senegal (now in New York)
In Dakar, this ad provoked vandals to rebel against the culturally inappropriate image. In New York, it wouldn't get a second glance.
If you have to deal with culture shock after 8 months of living in West Africa, New York is one of the most dramatic places to do it. On one hand, the vibrancy and energy of pedestrian-filled, trafficky New York streets isn’t all that different from the dusty “rues” of Dakar. Colorful fruit carts still grace the sidewalks, and overhearing conversations in foreign languages is a daily occurrence. On the other hand, skyscrapers and giant billboards of half-naked models are everywhere, as are exorbitant price tags on everything from purses to sushi dinners.
Having completed my official Kiva duties, I am now doing research at the Financial Access Initiative (FAI), a microfinance think-tank of sorts. It’s a consortium of researchers from NYU, Harvard, Yale, and Innovations for Poverty Action, focused on expanding access to quality financial services for low-income individuals. (more…)
Signing Off from Senegal
My memories of the last eight months away from home are a jumbled mass of color, freedom, fear, patience, frustration, and energy – raw, shifting memories that have not yet arranged themselves into neat, packageable stories that I can pull from the shelf at parties when I get home.
Watching Obama's Inauguration Speech on the Togolese Roadside
I have tested my sense of self against new backgrounds, ripped away the familiar context of home to hold my idea of “Abby” up to bright new lights. I have sometimes been ashamed of my reactions to new stimuli, and sometimes proud. Catching myself swearing under my breath at street children who asked a little too aggressively for money was not my finest moment; insisting that the Kiva Coordinator not fudge the dates to make loans eligible for Kiva’s website redeemed me.
I have learned about how microfinance operates on a day-to-day basis and about the difficulty of managing work and relationships across distances and cultures. Telling an MFI employee she did not have the IT competency necessary to be the Kiva Coordinator and watching her eyes tear up was my first real introduction to the uncomfortable realities of managing people. These challenges of human nature, of judgment, failure and success, cross all cultural boundaries.
Sunset Behind a Baobab, the National Symbol of Senegal
I have changed in many ways. After struggling for months with my pocket French dictionary, and then, this morning, listening to myself rattle off yet another training in French on sending journal updates to Kiva lenders, I felt like I had tangible proof of how I’ve grown since September. Other ways I’ve grown are less easy to put a finger on, and most will continue to be elusive for many months to come.
Won’t You Be My Neighbor…And Give Me a Good Credit Rating
"Tea"
Over tiny cups of scalding, frothy sugar water that Senegalese people call “tea,” I have a chance daily to sit around with my fellow MFI employees and talk microfinance. The other day, I was sipping my tea with Moussa, a loan officer, and he told me about how credit is established in Senegal. Now, in America, a credit rating is a logical thing, based on the percent of your total credit you’re using, the type, duration and size of your credits, and your delinquent payments. In Senegal, it’s done a bit differently…
Kiva Fellow: So, Moussa, in America, every person has a credit rating, which is based on a formula and makes it easy to estimate how likely it is that they will repay a loan. Does that kind of thing exist here?
Moussa: (Laughing.) No…Your country is a lot more advanced than ours. We don’t have the ability to do that kind of thing here.
KF: Ok, so how do you decide whether or not to give someone a loan? I know the person has to have a savings account with IMCEC, and they have to provide certain things as collateral or have another person to pledge to back them up if they don’t repay. But is there anything that helps establish credit-worthiness? [This conversation was in French, and I’m being very kind to myself in the eloquence of my translations. I sound a lot more like a 5-year-old.]
Moussa: Well, first of all, we can look at their history with IMCEC. Sometimes we start by giving a smaller loan, and if they repay it well, their second and third loans can be larger. Then we look at the business plan to see if it looks profitable. But, we also talk to people who know the client to see what they have to say.
Moussa, IMCEC Loan Officer, with a Kiva Borrower
KF: You mean, you go to their neighbor’s house and ask them if the client is a good guy?
Moussa: Yeah, basically. I mean, we wait until the client isn’t around before we talk about him.
KF: That’s nice of you. And what if the neighbor just happens not to like the guy? What if the neighbor is actually the one who isn’t a good guy?
Moussa: Yeah, that can happen. Which is why we talk to more than one person. For example, say there is a store in the neighborhood where everyone goes to buy basic items like soap and sugar. The owner of that store usually sells things on credit at the end of the month when people are running out of money. We can ask the store owner for some information on the client – does he repay these purchases on time? We also try to have at least one person on the Loan Committee from each neighborhood to get another perspective on the clients.
KF: Wow. So it really pays to be nice to your neighbors! And you loan officers really need to know everyone in town!
Moussa: Yep!
***
It’s pretty incredible to me that the system works this way, or, more specifically, that the system actually does seem to work this way. With a write-off ratio of less than 1% of all loans, IMCEC seems to be doing pretty well. Maybe American banks should have considered the “neighborhood” aspect of credit – for all its imperfections, the Senegalese way of evaluating creditworthiness might provide a more meaningful and accurate perspective than the impartial, formulaic system we use.
Furthermore, in conclusion, next time you live in Thies, Senegal, and you feel tempted to throw a wild party and annoy all your neighbors with the noise, think twice. Afterwards, you may mysteriously be rejected for every microloan you apply for.
That is, of course, unless you invite them all to your party and give them free food and drink. Just imagine how the credit will flow then!
***
I am a Kiva Fellow, Class of KF6/7, serving three months in Lome, Togo, and three more in Thies, Senegal. Please check out my current MFI, IMCEC, and see all of their fundraising loans here!
Another Way Microfinance is Changing the World
Imagine that you’re a young West African woman. You live in a small village, and you had to quit school at a young age to help your parents take care of your brothers and sisters, so employment prospects are slim.
Your grandmother approaches you with a job offer. She tells you that, with the career that she has in mind, you could make up to $200 a day, along with gifts of palm oil, yams, and chickens. You would be carrying on a family tradition, a religious tradition, and a cultural tradition, and the people in your town would respect you and your work.
Sounds good, right?
So, it’s no wonder that many African women still take up work in the practice of female genital mutilation, despite the fact that it is illegal in many countries.
According to the World Health Organization:
- Female genital mutilation (FGM) includes procedures that intentionally alter or injure female genital organs for non-medical reasons.
- An estimated 100 to 140 million girls and women worldwide are currently living with the consequences of FGM.
- In Africa, about three million girls are at risk for FGM annually.
- The procedure has no health benefits for girls and women.
- Procedures can cause severe bleeding and problems urinating, and later, potential childbirth complications and newborn deaths.
Senegalese babies in a rural village. FGM procedures are mostly carried out on young girls sometime between infancy and age 15, and occasionally on adult women. (Photo courtesy of Liz O'Donnell, KF7)
Many women who work as “excisors” are unaware of the medical complications caused by FGM. Furthermore, the tradition of FGM is often believed to be a part of Islam, but actually has no religious basis. Often, once the excisors learn the truth about FGM, they decide to change their careers.
Ouraye Sall, from Senegal, is one of these women. “Ten years ago I could never have imagined that I would be a leader in a movement to end the ‘tradition’ that most women in my community have undergone. Not only did I believe it was a religious obligation, but I myself was the one who operated on girls in all the surrounding communities.” Oureye is now an advocate for ending FGM in Senegal. “Ever since I learned that FGM is not required by Islam and that it is a violation of girls’ and women’s rights, I stopped practicing.”(1)
But, what options do these former excisors have, once they decide to renounce their lucrative careers?
Here’s where microfinance comes in! There is a growing movement to link anti-FGM health education campaigns with microlending programs that help provide alternative income-generating activities for former excisors. These women receive microloans to start new businesses, and agree to attend informational sessions on the dangers of FGM.
According to the advisor of one of these programs in Togo, the former excisors are not the only ones to receive the FGM-linked microloans. She says, “if you attack the supply of practitioners, but you don’t reduce the demand, then FGM will continue. Only some of the women who get loans are cutters. The others live nearby. We must work with the entire community.”(2)
In Gambia, a tiny sliver of a country situated on the West African coast, the Gambia Committee on Traditional Practices affecting the health of women and children offered $200 microloans to 19 former excisors last year in a public ceremony as a part of the Alternative Employment Opportunities Project. The recipients vowed to discontinue their former work and to help protect female children from FGM. The loans were followed by training on microfinance and management of small scale business enterprises. The women planned to use the money to enter into a variety of income-generating activities, including animal rearing, petty trading, and pottery.(3)
While microloans provide an alternative for the former excisors, it is up to the women themselves to make the difficult decision to renounce their former careers, and to stick with their decisions. According to the president of the Benin-based Women in Law and Development in Africa, “I cannot tell you how many public declaration ceremonies we have had with women swearing ‘never again’. When we do follow up, we find they are back at it.”(4)
As the saying goes, “you can lead a horse to water, but you can’t make him drink.” And it becomes even more complicated if the water is a microloan with 20% annual interest. And if the horse has to work in the hot sun selling peanuts for 5 cents a bag in order to pay back the water/microloan.
Nonetheless, the rate of FGM is declining, and microfinance provides a key component that enables the change.
Just one more way microfinance is changing the world.
***
(1) “Ending female genital mutilation and cutting in Senegal.” UNICEF.
(2) “Can microcredit turn FGM/C cutters to new trades?” IRIN.
(3) “D100,000 Award For Female Circumcisers.” FOROYAA.
(4) “Can microcredit turn FGM/C cutters to new trades?” IRIN.
***
I am a Kiva Fellow, Class of KF6/7, serving three months in Lome, Togo, and three more in Thies, Senegal. Please check out my current MFI, IMCEC, and see all of their fundraising loans here!
Why I Can Buy Maimouna a Sprite
Today was my first day of work at IMCEC, a Senegalese MFI based in Dakar. I’m working out of their offices in Thies, a smaller, hotter, dustier, and boringer city about an hour and a half from Dakar. IMCEC currently manages the Kiva partnership in a very decentralized way, and is having a lot of trouble meeting their $80,000 a month fundraising limit – in January they only posted $7,500-worth of loans on the Kiva site. What a waste of free capital!
Happily, they just hired a woman to manage the Kiva process. It’ll be my job to train her and to help IMCEC set up a system that takes advantage of the interest-free capital provided by Kiva in the most efficient way possible. What a fun challenge!
Me with Madame Mbaye, the new Kiva Coordinator
In the meantime, I’m living with one of the IMCEC employees, Marie. After work today, I decided to go for a walk and explore the neighborhood a little bit.
It’s easy to forget that you’re white when you walk around with your African friends and coworkers. This is not the case, however, when you walk around alone.
Every male between the ages of 8 and 28 feels it is necessary to yell things at me that I don’t understand. It’s even more frustrating because some of them are legitimately nice, and if I don’t respond, it’s ME who is being rude. So, I do my best to choose between complete ignorance, a slight smile, or a polite “Bon soir.”
During the short two-minute walk from my house to the little soda shop, one guy earned a response by addressing me with a polite, “Bon soir, mademoiselle.”
“How nice,” I thought.
“Bon soir,” I said.
“Mademoiselle, ou madame?” he asked, as we passed each other (i.e., am I married?).
Sigh. I turned my head behind me to look him directly in the eyes and said, “Madame.”
Then we both laughed, and I felt ok about life. As I turned onto the main road, a little girl started walking next to me, maybe 9 years old. I said hi, asked her what her name was (Maimouna), and kept walking. At the store, she stood next to me the whole time. She was very polite, not asking for anything, and I think not expecting anything. I chose a Sprite for myself, two for my homestay family, and an extra one.
Now, after being in Africa for four months, I am tired of constantly being torn about whether to give or not to give. I’ve seen various philosophies that my friends and acquaintances have adopted. Some give constantly, always buying gifts of food or alcohol or n’importe quoi, and, surprisingly, earning the genuine love and respect of people around them. Some never give, complaining about the annoyance kids who “guard” their cars while they are in the parking lot and then ask for a bit of money afterwards. My Togolese friends used to give regularly to the people begging on the sides of the road, literally throwing change at them as we passed.
The other day I was in a pick-up truck in the absolute middle of nowhere with a Senegalese friend. We passed two women and two children on the side of the road. I have to admit – I didn’t even see them there. My friend did, however, and he stopped the car. “Can we take them?” he asked me in French.
“Of course,” I said.
We drove them to the nearest town, which is where we were going anyway. It was far – maybe half an hour or more. As they got out of the car, the sun was setting. If we hadn’t helped them, I have no idea how they ever would have gotten where they needed to go.
As the last woman got out of the car, she said something in Wolof, the local language.
“What did she say?” I asked, as we started on our way.
“She said that we will never know what we just did for them,” my friend told me.
***
Back to the soda shop. I considered all the reasons not to give my little friend a soda – I don’t want her to think that every time she sees a white person, she might get something from them. That is a real, real concern for me. I also don’t want to make myself feel good just because I do something that involves literally no sacrifice and that I am able to do just because of where I happen to have been born.
So, I can’t give Abozu my camera. But sometimes you just want to buy a little girl a soda. So I handed Maimouna the Sprite and told her to study hard in school.
I haven’t figured out my life philosophy on giving or not giving. But there are lines we all have to draw, and when you’re drawing those lines, it doesn’t hurt to remember that you might never know what you are really doing for someone else.
***
I am a Kiva Fellow, Class of KF6/7, serving three months in Lome, Togo, and three more in Thies, Senegal. Please check out my current MFI, IMCEC, and see all of their fundraising loans here!
Le Colonel
Three years ago, the streets I drive on today in downtown Lomé were ablaze with burning tires and barricades, as civilians protested the contested results of the presidential election. Gnassingbé Eyadéma, the longest ruling leader in Africa (second in the world only to Fidel Castro) had died on February 5, 2005. Two months later, an election pronounced his son, Faure Gnassingbé, the winner, defeating an opposition coalition of six parties.
More than 100 people were wounded in the violence after Faure Gnassingbé was declared the victor of Togo's presidential elections in 2005. (Photo: NYT)
Though the elections were monitored by an outside organization and proclaimed legitimate, some “abnormalities” were cited. According to the New York Times: “In one discrepancy, in the northern prefecture of Kozah, 218,786 people were shown to have voted for Mr. Gnassingbé. Government statistics show the entire population of Kozah as being 156,000.”
A 6-year-old boy killed by stray bullets as the militia raided houses, looking for opposition supporters. (Photo: NYT)
Protesters were shot by the military, innocent bystanders were caught in the crossfire, and nothing ever changed with the election results.
Now, almost four years later, aside from the occasional garbage fire and petty crime, the streets are generally peaceful. The evidence of the period of human rights violations has been reduced to the occasional passing remark, and international sanctions have recently been lifted.
Due to my living situation, however, I personally have a constant, subtle, and morally unsettling reminder of the atrocities.
Before coming to Togo, I met a nice Togolese guy who was volunteering at a soup kitchen with me in New York. We became friends, and when I found out that Kiva was sending me to Togo, he offered to let me stay with his family in Lomé.
I didn’t know that living with his family would make my time in Togo the most rewarding, comfortable and fulfilling travel experience I’ve ever had.
I also didn’t know that his father was the head of the branch of the Togolese military that protects President Gnassingbé.
This is the same President Gnassingbé who is accused of rigging elections, brazenly disrespecting the sanctity of democracy, and commanding a military that allegedly murdered opposition supporters in their own homes in one of the worst human rights violations in modern West African history.
“Le Colonel,” as everyone calls my homestay father, is a strong, serious and often stern man, yet it is clear that the universal respect that the entire household (and neighborhood) has for him goes deeper than his rank. He is strict with his two teenage daughters – they are never allowed to go out, except to go to school or buy something in the neighborhood – but he has explained to me that it is because he wants them to finish their education successfully, without distractions.
His niece, Brenam, lives with us as well. She is 24 (like me), and she has a one-year-old daughter that is the cutest child alive. When she found out she was pregnant two years ago, her father kicked her out of the house. With nowhere to go, she turned to the Colonel, and he took her in. He now pays for Brenam’s continuing education – she is studying finance – for her food and shelter, and for a maid to look after her daughter. Without the Colonel’s generosity, what could Brenam have done as a single mother with no family support? I shudder to think.
It was not easy to decide to write this blog post. With everything the Colonel has done for me, and all the time I have spent in his household, I must admit that I feel an allegiance to him and his family. I love them, and I feel as though I am betraying them in some way by writing this post. However, in the end I have more of an allegiance to the truth, to the dissemination of information and cross-cultural understanding, than to most other things.
I don’t know what the Colonel’s role was in the violence of 2005. Perhaps he was a leading perpetrator, confidently and without hesitation ordering the deaths of innocent people in the same way he orders another bottle of water from the boys who work at the house. But maybe he was a rock that kept the waves of violence from washing away the entire country. Maybe he felt the same compassion for the victims of the clash, the children killed by stray bullets, as he did for his young pregnant niece, and maybe he did his best to protect them amidst extreme political pressure and military commitments.
In the spirit of the American justice system, I ask you all please to reserve judgment on the Colonel. The generosity he has shown me and the way his family has welcomed me as one of their own has allowed me to focus my energy and attention on my work for Kiva, knowing that I have a safe, comfortable place to come home to at night.
I will never know what kind of man the Colonel was in the tragedy of 2005. All I can know for sure is that he loves his daughters enough to be strict with them, he loved Brenam enough to take her in when she had nothing, and he was kind enough to share his home and his family with a helpless American stranger. And for those things he has earned my respect and gratitude.
***
I am a Kiva Fellow, Class of KF6/7, serving three months in Lome, Togo, and three more in Thies, Senegal. Please check out my current MFI, IMCEC, and see all of their fundraising loans here!
Finding a Gray Area
By now, the living room with blue velvet couches really does feel like home. My Togolese family members who welcome me when I walk in the house are happy to see me. They call me ta-ta, then we slap hands with a finger-snap at the end (the Togolese really love that snap – I wonder who did it first, us or them?). The adorable 1-year old, Leona, runs up with her nose crinkled in a big smile, no longer wide-eyed in fear as she was when she first saw this bizarre-looking stranger. Then I drop off my bag in my room and they either come and visit me or I go hang out with them in the kitchen.
Meheza, my homestay sister, in the kitchen with a crab
By now, I’m used to the food, I’m used to the heat, I’m used to the dusty streets and the backs of motorcycles, to cars breaking down, and police with white gloves directing masses of lawless traffic. I’m used to children staring and waving, I’m used to the loud R Kelly music blasted all over the place, to beautiful sunsets, endless summer, and the sound of palm trees blowing outside my window. I’m also used to people asking me to buy things at stoplights; I’m used to asking people to repeat every single thing they say, I’m used to the smell of urine and rotting something-or-other. Life in Togo is no longer a huge chaotic spectacle for me – it has become the quotidian reality, it has become what is normal.
(Well, relatively normal. The other day a huge crowd was gathered around a lake because someone had been murdered and thrown in the water to give the murderers good fortune in the New Year. No matter how long I live in Africa, that will not be normal.)
One of the hardest things for me to get used to was having white friends here. For the first two weeks, I was “alone.” I saw only Togolese people, ate only Togolese food, spoke only French. Then, one Sunday, I met up with some friends that the last Kiva Fellow put me in touch with. My driver dropped me off at their house, and suddenly I was with three white people, speaking English. One good thing is that you make fast friends when you’re in a place like Togo, because there are an extremely limited number of white people. We’re all essentially automatic friends (whether we like it or not…it’s a very small little world here).
So, off we went in a junky jeep to the beach. We walked into a resort kind of place – nothing fancy by normal standards, but just to see more than 2 white people in one place was literally shocking to me. We got a little cabana with lounge chairs and sat down with some beers. I was very conflicted. I was so relieved to be comfortable in that way again, but I also felt like a traitor to the reality of Togo, pampering myself in this elite beach spot full of people who probably each have more money than like fifty average Togolese people combined. We ate lobster and swam, and it felt wonderful, but also like cheating.
I’ve had many days and nights like that since then – house parties, poolside wine afternoons, nights dancing and drinking like we’re in New York. It’s hard to explain how it makes me feel, but I’ll try. I think humans can cope with a lot of things that are very difficult – being in wars, climbing mountains, raising children as a single parent, whatever the challenge may be. I do think it’s important to take breaks when doing these things, but sometimes taking a break makes the challenge more difficult. You’re climbing up the mountain, eyes on the goal, in the zone, coping with what comes, and all of a sudden someone offers you an ice cream cone and a nap in the shade. After your treat, you wake up and remember where you are – in the middle of climbing a mountain. Crap. Gotta finish climbing this mountain.
Beers and spaghetti with coworkers
Make sense? That was what it was like every single time I came back from hanging out with white people and was plunged back into the French-speaking, yam-paste-eating Togolese world. And it was equally difficult to adjust when I was plunged into the white person world. For example, one night I went out with four Togolese coworkers to a bar after work. We had a hilarious time – sat outside and drank big beers, ate big plates of spaghetti, told big jokes in French and had big laughs. They went home, dropping me off at a wine and cheese bar with white friends. As I walked inside the quiet, expensive wine and cheese bar, I thought, with a little spike of anger, “Why the hell are we pretending we aren’t in Togo? Why are we pretending this wine and cheese and soft music crap is real life??” My friends started making fun of the stupid things that uneducated Togolese people believe. These friends love Togolese people, but they’ve been here long enough to get jaded. So anyway, I was annoyed, but kept my mouth shut and drank wine, and gradually slipped into white-people-mentality, and then I was completely fine.
Leona, the Cutest Child in Togo
Thankfully, I think I’ve found my rhythm here, and come to love both the white people and the Togolese people that I am so lucky to have around me. When I leave the house to see my ex-pat friends, I’m excited to see them. When I get home, I am proud to live with such a wonderful Togolese family and to feel so comfortable with them. It is incredible how much this house and the people in it feel like home.
I got to bring some of my Togolese friends to a party at an American friend’s house last weekend. They had an awesome time, and as we danced and drank and laughed, the black and white merged to form a big, happy, multi-colored, multi-cultural party, and I felt like a wall within me had been painlessly dissolved.
Both sides of my life here in Togo – the black side and the white side – bring out different aspects of me, present different challenges and different opportunities to learn and grow. I think there is at least one time every single day here that I am struck by how incredibly blessed I am – to be here, to be this happy, to have food, clothing, comfort, and to be surrounded by so many wonderful people, both white and black. When this feeling comes, I often look to the clear, blue, palm tree-lined sky and think about the big earth that it surrounds, the places I’ve been and the people I love, and the miracle of everything.
What a wonderful world!
***
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!
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.
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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.)
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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!
Why I Can’t Give Abozu My Camera
This is my first post from the field, and, unfortunately, I’m not writing to share an inspiring microfinance success story or even a heartwarming cross-cultural anecdote, as I was hoping I would be. I am writing to tell about a conversation that threw an uncomfortably bright spotlight directly on the basis of my being here in Africa, and the basis of Kiva’s mission itself.
I am stationed in Togo, a tiny West African country that ranks the 13th poorest in the world, with a GDP per capita in 2007 of $167. I am living with a Togolese family, and there is a 26-year old guy named Abozu who works in the house, cleaning, bringing me my breakfast, and doing lots of other things. He works very hard and we’ve gotten to know each other over the week that I’ve been here.
We were sitting on a bench outside the house this afternoon, and I had my camera with me. Here’s a picture of the two of us:
So, after showing him how to use the camera, he asked me if I was going to buy him one when I got back to the United States. I said no, it’s too expensive. What followed was a long discussion about the difference between charity and microfinance, and why I am not willing to give him things that could help his life even though I say I want to help people in poor countries. He said, “Isn’t Togo a poor country?”
I said yes, then tried to explain why I don’t think charity is the real solution to poverty. I said, “First of all, if I give someone money, he will spend it, and nothing in his life will really change.” (Keep in mind, this entire conversation is in French, which I am nowhere near fluent in.)
He replied, “But if you give me this camera, I can take pictures of people and sell them their pictures, and make money.”
He had a point – this was, after all, one of the first microfinance projects – Muhammed Yunus gave some Bangladeshi villagers a cell phone, and they charged their neighbors money to use it. So I said, “Yes, that would work. But you would have to repay me for the camera once you earned enough money.”
He asked me how much the camera cost, and I told him $200. He said, “What if I paid you $100?”
Aggh. At this point I was a bit frustrated by the bluntness of his questions, but we were getting to the core of the debate that has been raging in my heart and mind for years. I said, “No, $100 wouldn’t be enough, because it has to be based on capitalism, not charity.” I tried other arguments, too – that I want to help create change on a grander scale, not just for him; that I want poor people to be independent, not reliant on people who have more money; that I could give away all my money and the world wouldn’t really be much different; that if I give him my computer, I’ll have nothing to give to the Senegalese people during my next Kiva Fellowship; but, mostly, that capitalism is the world, and the only foundation on which one can erect any type of change that won’t blow away in the wind. (All in French…not easy.)
I suppose it’s not surprising that he persisted. He pointed out that the Togolese family I’m living with has given me lots of things – housing, food, a cell phone, transportation. It’s true. I tried to respond that they gave me those things because I’m here trying to help their country. But it made me think – even though I’m not giving money to people directly, I’ve spent a ton of money to come here, and I’ve also given up a lot in my life: my very well-paying job in New York, my apartment, my comfort, my family and friends. All of that is charity…how is it different from me giving Abozu my camera?
To be honest, I’m not totally sure. I feel deep down that it is different – I’m trying to plant the seeds of something that I hope will grow to be bigger than anything I could accomplish by giving away my money. It all comes back to our favorite word, sustainability. But try explaining that to a 26-year old Togolese man who makes $700 a year and just wants to be able to provide for the family that he doesn’t have yet – and in French.
So, he kept pressing, asking what I was going to give him as a souvenir when I left – a motorbike? A computer? A bicycle? “Why can’t you give me a loan?” he asked.
“You don’t have a business,” I said.
“What if I put a little table out and start selling things, like them?” he asked, pointing at two women across the street.
“I’m not a microfinance organization,” I tried to explain. “I don’t have everything that’s necessary to give a loan – but that’s why I’m working with an organization that does.”
I started to get kind of upset, but he didn’t notice. If only he understood that the question he kept asking me, face-to-face, over and over, was a question that has made me cry many times, that keeps me up at night, and that I am hoping to God that microfinance can at least attempt to answer:
“How can you help me?”
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Post-note: I left the conversation kind of abruptly, because I thought I might start to cry. While I was writing this in my room, Abozu came and found me and apologized, said that it was just curiosity that made him ask all those questions. Then I really did start crying, and I asked him if he understood the difference between charity and microfinance. He said that he understands now…but, then again, guys will say anything to make a girl stop crying.
Then he promised to make me an omelet for breakfast tomorrow.
Is that charity?
I guess, according to my philosophy, I owe him an omelet. Plus interest.
A Healthy Dose of Optimism
From the first time I happened across the Kiva Fellows website, I knew I had to apply. Here was an opportunity to witness first-hand the successes and challenges of microfinance (the most promising poverty alleviation strategy I’ve come across), become fluent in French, and be a part of the cross-cultural, astonishingly successful microlending revolution that is Kiva!! I generally tend to be somewhat pessimistic – my personal motto is “Expect the worst, and you’ll never be disappointed.” This time, however, against my better judgment, I let myself get excited.
A year and a half later, that excitement has paid off. I am now at the Kiva Fellows training in San Francisco, spending hours showering Matt and Premal, Kiva’s Founder and President, with every question I’ve ever had about the organization. At the week-long training, 29 other Fellows-to-be and I are cramming our heads with everything there is to know about Kiva before jumping on planes to work with Field Partners all across the globe.
As I said, my high expectations coming into the training conflicted with my standard self-preserving pessimistic attitude. But this time, counter to my personal motto, high expectations left me far from disappointed. On the contrary, learning more about Kiva and meeting the staff has reinforced my enthusiasm for Kiva’s mission and potential. These days, it’s hard to believe in anything for fear of being naive, but the entire staff at Kiva seems to have conquered that fear – along with the 300,000-plus people who lend on Kiva’s site!
On November 3rd, I will leave the US to serve Kiva for 3 months in Togo and 3 months in Senegal. Inevitably, no matter how many questions we Fellows ask and how much training we receive, we won’t be prepared for what we are about to experience in the coming months. All we can do is pack our bags and – dare I say it – hope for the best.
