Author Archive
How much is too much?
A lot of Kiva blogs have discussed the issue of interest rates and how much interest should be paid on a microfinance loan. But what about the size of the loan itself? It’s actually not that easy for an MFI to decide how much to lend to a client – if they lend too much, they fear the client won’t be able to pay back the loan, but if they lend too little, the client may not be able to achieve their business goals. For CrediComun, my MFI in Mexico, ensuring that their clients are not over-indebted is a major priority – they want to help their clients, not make their lives harder, and so they take loan size very seriously.
While visiting CrediComun clients this week, I met two that I think show how tricky this issue can be…
Healthy Lending
By Julia Kastner, KF10 Mexico
Mexico shares a major problem with its northern neighbor. No, I’m not referring to the drug trade, which has left 18,000 Mexicans dead since 2006 (see http://news.bbc.co.uk/2/hi/americas/8582497.stm for more), although this is obviously Mexico’s biggest problem both socially and economically. In this case, I’m referring to obesity. According to a study by the OECD, 24.2% of Mexico’s population is obese, which makes Mexico the second-most obese country in the world, second only to the United States at 30.6%.
Training the trainers
When I got back to my MFI, CrediComun, here in Mexico City after a one-week trip home to Boston last week, I asked if they needed any help training their loan officers. “Absolutely not!” responded my MFI contact “we’ve got it under control!”
An MFI run by computer programmers?
By Julia Kastner, KF10 Mexico
I knew this placement was going to be different when I walked into CrediComún’s headquarters and saw a 4 foot by 4 foot poster depicting the company’s technology infrastructure. It was as sophisticated if not more so as the infrastructure I’d seen at my last job in New York City. As I was shown around the organization, I was introduced to many computer programmers and IT specialists, even at the highest level of the organization, and I realized CrediComún wasn’t going to need my help with Excel – I was probably the one who was going to learn something about technology!
What happens when you combine microfinance methodology with sophisticated IT systems? Well, processes take less time and cost less money! While other MFIs have to wait for signed documents to travel through the mail from the branch offices in other parts of the countries, CrediComún receives its documents instantly in scanned format through their Management Information System (MIS). Because of this, CrediComún can guarantee its clients that their loans will be processed in three days! By saving money on postage and other transaction costs, CrediComún can also make more loans and help more clients!
Micro-business on the mind
By Julia Kastner, KF10 Mexico
Feliz Navidad and Feliz Año Nuevo from Mexico!
Yesterday was the first day of my second Kiva placement at a brand new MFI called CrediComun. I completed my first placement with Fundacion Realidad in mid-December (make a loan to them here!) so I had a couple weeks of vacation to travel! I went to the city of Oaxaca, a city famous for history and art, and to Zihuatenejo, a fishing village turned beach. Let’s just say it was a really tough couple of weeks! But I must admit, I couldn’t quite clear the microfinance perspective from my eyes…
Mexico s full of micro-businesses. Everywhere I went, I ran into people who reminded me of the clients I had worked with over the last couple of months, whether it was women selling tamales (a regional dumpling-like food) on the street or the taxi drivers who helped me get around.
Families still spin their own yarn in Teotitlan del Valle, outside of Oaxaca
In Oaxaca, I spent my time sipping coffee in chic, alternative cafes, visiting ancient ruins, and visiting natural wonders, but I also decided to go on tours of carpet-weaving and sculpture workshops to learn about local crafts. I just couldn’t stop myself from asking “what are your hopes for the business? How has your business changed the lives of you and your family?” The answer was always that owning a business had made a difference.
- Snacks for sale, by the beach.
Even in Zihuatenejo, I spent a lot of time chatting with the owner of the small hotel I stayed at about the history of his business and his hopes for the future. And everywhere I went, people were selling crafts, snacks, and drinks. Some people spend hours walking up and down the beaches with necklaces, baskets, or carved toys for sale.
Observing and talking with all these small businesses made me all the more excited to get back to Mexico City to start my second placement with an MFI called CrediComun. Monday was my first day, and I can already tell they’re going to be a great contribution to the Kiva network and will allow me to have some great new experiences! I’ll be sure to keep you all posted!
The top 5 reasons why microloan repayments are more than a “micro” pain
By Julia Kastner, KF9 Mexico
What does it take for you to repay your credit card? A click of a button? A check in the mail?
Yesterday marked my last day at Fundacion Realidad A.C., a microlender based in Mexico City. Over the three months of my first Kiva placement, I’ve visited a lot of clients and witnessed a lot of repayment sessions (when groups gather weekly or bi-weekly to gather funds to pay back their loans). You, the lender, just get a nice email saying the loan’s been repaid, but I wanted to share with you some of the issues the MFI and the borrowers face in getting that money back to you. (more…)
The borrower’s side of the controversy: no time to wait!
A borrower making handicrafts while waiting for her loan.
By Julia Kastner, KF9 Mexico
Often while out interviewing borrowers for a new Kiva profile, the first question is “WILL THIS SLOW DOWN MY LOAN??”
Fortunately, my answer is “No, don’t worry! Kiva will repay your MFI, not make you wait!” This is only true, however, because of Kiva’s controversial policy of allowing its MFI partners, like my partner, Fundacion Realidad (FRAC) to make loans before receiving Kiva funding. So, why are borrowers so afraid of delays? (more…)
So, what is a “community bank”?
By Julia Kastner, KF9 Mexico
When Kiva first started, all of its loans were to individuals. Borrower A asked for X dollars and voila! Person A got a Kiva loan. Over time, however, Kiva’s been working with more and more MFIs, and the number of different types of loans and lending models has been increasing.
Watch a meeting of a community bank (a.k.a. UDE):
As Kiva explains:
“In a group loan, each member of the group receives an individual loan but is part of a group of individuals bound by a group guarantee. Under this arrangement, each member of the group supports one another and is responsible for paying back the loans of their fellow group members if someone is delinquent or defaults.”
So, how is an UDE different from other group loans? Why is an UDE helpful? And how does it work?
These are the questions I’ve been asking folks here at FRAC for the last two months, and this is what I’ve learned…
Making a mountain…
By Julia Kastner, KF9 Mexico
This week, I visited a Kiva group loan called Peña Blanca at the top of a mountain. Sometimes you can drive up to the top, but when it rains, the stones that make up the path can come loose and it can be dangerous. So the Fundación Realidad loan officer and I climbed the four hours up the hill to see how the loan was going.
I documented some of our journey so you can get an idea of what it was like!
Babies and Banking
For many of us, going to the bank (or the doctor, the post office, etc.) is a quiet, adult activity, but for many recipients of micro-loans, they have responsibilities like children that can’t get left behind.
How to turn on an oven in Chiapas
Watch a video about how to light a stove in Coapilla, Chiapas, Mexico.
Mexican Markets and Microentrepreneurs
By Julia Kastner, KF9
Hello!
I start my placement with Fundación Realidad on Monday, but I’ve been in Mexico a few days now and I wanted to share with you some footage of some of my favorite Mexican microentrepreneurs – the market venders. This footage is taken from the Condesa marketplace in Mexico City, one of the nicest markets I’ve seen (almost like a farmer’s market in the States), which I think shows how skilled the venders are at their work. More to come!
New York City to Mexico City – Pre-Fellowship Musings
Pre-fellowship musings.
