Author Archive
Kiva Farmers: A Tale of Irony and Woe in Nicaragua
Onions and more onions.
It has been a phenomenal summer harvest here in Estelí, Nicaragua. Everywhere you look; there are fields filled with onions, sweet peppers, tomatoes, and cabbage, thanks to just the right amount of rainfall and sunshine, and access to financing through micro-credit. With loans from Kiva, borrowers bought plants, fertilizer, pesticide, gasoline for irrigation pumps, and also paid the salaries of workers, and rent for the land and use of a tractor.
So why then, are all the farmers struggling to make their loan payments? Why is a Kiva borrower delinquent 40 days in paying back his loan?
We have to go back to the last three years, before 2010. Harvests were not good. There was too much rain during the summer (Oct – April) which brought pests and rot. The farmers lost part of their crops, and couldn’t meet the demand in the market. Consequentially, prices for their produce shot up, and then did very well.
Then in 2010, the farmers, expecting the same conditions, all sowed their crops in October. However, this year, conditions were perfect. Come March, harvests exceeded expectations, and all the produce came to market at the same time, driving down the price. So instead of $6 for a box of tomatoes, the farmers were receiving $1.50. Now many farmers are forced to rely on an intermediary to broker a deal for their crop. The intermediary takes only three cents on the dollar for selling their harvest, but he is selling it at a cut-rate price, leaving the farmers with little to no earnings.
Tomatoes left to rot in the field.
With no help from the government, the farmers are on their own to solve this dilemma. Many are letting their crops rot in the field, because it costs more to pick, bag, and ship the produce to market, than what they can expect to receive from a buyer. As a Kiva Fellow, seeing the poverty and hunger here in Nicaragua first-hand, and knowing that this is the second poorest country in Central America after Haiti, letting food go to waste is an outrage.
Imported tomatoes can be found in supermarkets in Managua.
To understand how bad the situation is, Nicaraguans normally consume 60,000 lbs of tomatoes, and this year the farmers produced double that amount. And it is not only tomatoes that exceeded expectations, but onions, cabbage, and sweet peppers too. Onion farmers have told me their earnings this year are 80% less than in previous years.
Only a few lucky farmers were able to export their produce to neighboring El Salvador and Costa Rica, where the governments restrict imports to protect their own farmers.
Meanwhile, I have heard one heartbreaking story after another as farmers sit on produce they can’t sell, and are forced to sell off their assets, including livestock, to cover their debts, or face going into delinquency. To help the farmers, Kiva Field Partner MiCredito has begun to restructure the loans of the farmers to help them through this, but they cannot stop the downward spiral as the farmers are unable to take any new loans, which means they will not have the financing needed to sow their next crop, and so on.
A Kiva borrower's home filled with onions, waiting for a buyer.
As for the Kiva borrower who is already 40 days late in paying off his loan, his case weighs heavy on my mind as he tries daily to find a buyer for his onions. He and his wife have two young boys in primary school. They live in a one room house with a dirt floor and no running water. They own a horse and a few cattle, that the farmer may have to sell to keep from defaulting on his loan. The last news I received on his situation, was that he was restructuring his loan with Kiva Field Partner, MiCredito, to give him more time.
To avoid this adversity in the future, the farmers’ association has decided that next summer, starting in October 2011, the farmers will stagger their plantings in the three agricultural regions of Sebaco, Colita, and Estelí.
- Karen Gray, Kiva Fellow 14, Nicaragua
Nicaraguan Coffee Odyssey – Lend To Growers Now!
Cappuccino at Cafe Barista in Matagalpa, Nicaragua.
The coffee harvest takes place from December to February each year, but the coffee growers are applying for Kiva loans now, to cover the cost of fertilizer, salaries for workers, and other supplies.
As a Kiva Fellow with MiCredito in Esteli, Nicaragua, I decided to learn as much as I could about coffee. To do that, I followed three different paths:
- One was to visit Leonardo, a coffee grower, who lives up in the mountains near Yali.
- The other was to take a tour of PRODECOOP, a cooperative of 2,000 coffee growing families, in the town of Palacaguina.
- And lastly, I attended a Coffee Fair in Ocotal, the last town before the Honduran border.
It all starts with the coffee berries, which will eventually ripen to red and yellow, then be harvested by hand and de-pulped.
The coffee beans are laid out in the sun on concrete to dry, and raked to keep from burning.
To reach Leonardo's farm, I spent two hours on a motorcycle, and then changed to a horse, in order to reach his coffee plantation, shaded by banana trees, and grown on the steep mountain-side.
To reach PRODECOOP, all of us at MiCredito, piled into our truck, three in front, and three of us in the bed, for the hour drive.
Leonardo's coffee processing facility.
PRODECOOP's coffee processing facility. They handle conventional, organic, and fair trade coffee.
Leonardo sifts his coffee beans by hand to remove broken ones.
PRODECOOP has a machine that shakes out the broken beans.
Leonardo sorts his coffee beans; black ones are the lowest quality, white ones are the best.
PRODECOOP has a machine that sorts coffee beans using fiber optics to identify the color.
Leonardo's "cupping room" for tasting coffee (also his family's kitchen).
PRODECOOP's cupping room. MiCredito Kiva Coordinator, Cindy, giving it a try.
Kiva Fellow, Karen, enjoying a cup of Leonardo's coffee.
In April, MiCredito had a booth at the Feria de Cafe or Coffee Fair in Ocotal, to promote loans for small coffee growers.
At the fair, I met Carlos, the 2011 Nicaraguan Barista Champion, and his students from the Escuela de Cafe or School of Coffee. The students are baristas-in-training, and were excited to serve me something special on a very hot day; a cold banana, chocolate, espresso rum drink. Ahhh
Facts:
Sales of Nicaraguan coffee beans to the U.S., Europe and Venezuela generated $154 million dollars in the first five months of 2010-2011 (October – February). That is double last year’s earnings. Nicaragua exported 753 mil quintales (quintal = 100 lbs) of cafe. The average price received for a quintal of coffee was $204 dollars, or $2 a pound.
Lend Now to Nicaraguan Coffee Growers!
Here is a list of Kiva MiCredito borrowers who are coffee growers.
Danilo, Manuel, Salomon, Jesus, Maryuri, Jose
If these loans are already funded, keep checking back, Cindy at MiCredito will be uploading more. You can find them here.
A Movement called No Pago/Un Movimiento se llama No Pago
A Brief History
In 2008, a movement began in Jalapa, Nicaragua by a man who was over-indebted. This man was able to convince other debtors facing economic hardship, to join him in relinquishing their responsibility to pay back their loans. President Ortega supported them. Then, the movement turned violent, there was fear that investors would avoid Nicaragua, and the micro-finance institutions united. A moratorium was passed favoring the debtors in the movement, along with a low interest rate and extended term. Still, some debtors did not make payments. Ultimately, an announcement appeared on Kiva’s website warning lenders of the increased risk in making loans to borrowers in Nicaragua.
A Face of the No Pago Movement
Before the 2009 economic crisis, Maribel received a loan from MíCrédito, a micro-finance institution. She owned a shop that sold ladies clothes, shoes, and cosmetics. Since she was successful, Maribel was asked to act as the guarantor on other loans, including one for her son.
Then, her son defaulted on his loan, leaving Maribel responsible to make his payments, and he took off. She lost her business, and faced $13,000 of debt.
Maribel joined the No Pago Movement, believing that the government would forgive her debt. That has not happened.
Although Mirabel was a client in good standing with MíCrédito, as was her son, there are situations that one cannot foretell. MíCrédito is working to restructure the loan payments of Mirabel.
My Perspective
As a Kiva Fellow in Nicaragua, I believe the micro-finance institution that I am working with, MíCrédito, has moved passed the No Pago crisis with a vigilant loan application process to avoid over-indebtedness:
- Every borrower is checked against a credit bureau, TransUnion and SinRiesgo, for outstanding debt including loans taken out for cars, store merchandise, and any loans from other microfinance institutions.
- Every guarantor is also checked for debt.
- If a borrower becomes delinquent in paying back their loan, the credit officer then checks the credit records of their spouse and children to see if the family is over-indebted, in order to ascertain the root cause.
- No Pago clients have been identified at each branch office of MíCrédito.
- No Pago clients are not allowed to default on their loans, while other clients are expected to make payments:
- First, the credit officer restructures the loan.
- Second, the credit officer contacts the guarantor of the loan.
- Third, the case is brought to a judge.
MíCrédito has six offices. I am currently at the branch in Estelí, in the north of Nicaragua, where the No Pago movement began, and where MíCrédito felt its impact the most.
MíCrédito Estelí has 28 clients still on their books, who are members of the No Pago movement. None of these clients are Kiva borrowers.
No Pago Today
The latest development is that the No Pago movement has offered the names of seventy-five thousand members who have promised to vote for President Daniel Ortega in the November election, if he forgives their combined debt of twenty-five million dollars. Ortega has not accepted the offer.
The movement No Pago continues to pressure other borrowers to join their cause with promises that the government will take care of their debt.
In March 2011, ASOMIF or the Association of Nicaraguan Microfinance Institutions published a Code of Ethics in a national newspaper, in order to re-affirm the integrity of their practices in regards to borrowers, society, and between member microfinance institutions.
-Karen Gray, Kiva Fellow 14, in Nicaragua
In depth information on this topic:
The Micro-Financing Institutions Are Politically Very Attractive by Patricia Padilla.
Una Historia Breve
En 2008, un movimiento empezó en Jalapa, Nicaragua por un hombre que estaba sobre endeudado. Este hombre fue capaz de convencer otras personas que tenia deudo, y ante un crisis económico, juntarse y renunciar sus responsabilidades pagar sus prestamos. Presidente Ortega los apoyo. Entonces, el movimiento se hizo violento, había un miedo que los inversionistas evitarían Nicaragua, y las instituciones de microfinanzas unieron. Un moratoria estuvo promulgado a favor de los deudores del movimiento con una tasa de interés bajo y plazo mas largo. Todavía, algunos deudores no hicieron pagos. Ultimadamente, un anuncio apareció en el sitio de Web de Kiva, prevenía las prestamistas del riesgo subido prestando a los que pedir un préstamo en Nicaragua.
Una Cara del Movimiento No Pago
Antes del crisis económico de 2009, Maribel recibió un préstamo de MíCrédito, una institución de microfinanza. Ella tenia su propia tienda que vende ropas, zapatos, y cosméticos para mujeres. Ella estaba exitosa, y por lo tanto los otras les pidieron que sea una fiadora por sus prestamos, incluyendo uno de su hijo.
Entonces, su hijo se hizo moroso, le dio a Maribel en carga de todos sus pagos, y se fue. Elle perdió su negocio y tenia que enfrentarse a deuda de $13,000.
Maribel junto el movimiento de No Pago, creyendo que el gobierno perdonaría su deuda. Pero, ya esta no sucedió.
Aunque Maribel estaba una cliente buena de MíCrédito, y su hijo también, hay situaciones que no se puede evitar. MíCrédito esta trabajando para reestructurar los pagos de Maribel.
Mi Perspectivo
Como una Kiva Fellow en Nicaragua, creo que la institución de microfinaza que asigno, MíCrédito, ha superado el crisis de No Pago con un proceso estricto en respecto de las aplicaciones de prestamos para evitar sobre endeudado.
- MíCrédito comprueba todos que piden un préstamo contra un departamento de crédito; TransUnion o SinRiesgo, para determinar deuda actual incluyendo prestamos para coches, mercancías, y cualquier préstamo de otra instituciónes de microfinanzas.
- MíCrédito comprueba todos de los fiadores también para determinar si tienen deuda.
- Si un cliente de MíCrédito es moroso, el oficial de crédito comprueba los perfiles de crédito de su esposo o esposa y sus hijos para determinar si la familia esta sobre endeudada.
- MíCrédito identifico los clientes que juntaron el movimiento de No Pago a cada sucursal.
- Los clientes que juntaron el movimiento de No Pago, MíCrédito no les permite a los de No Pago no pagar, mientras los otros clientes tienen que hacer sus pagos
- Primero, el oficial de crédito hace una reestructuración del préstamo.
- Segundo, el oficial de crédito contacta el fiador del préstamo.
- Tercero, el caso esta traído al juez.
MíCrédito tiene seis sucursales. Actualmente estoy en la oficina en Estelí, en el norte de Nicaragua, donde el movimiento No Pago empezó, y donde MíCrédito se sintió el mas impacto del movimiento.
MíCrédito Estelí tiene vente ocho clientes quien son miembros del movimiento. Ningunos de esos clientes son los que piden un préstamo en el sitio de Kiva.
No Pago en Hoy Día
Las noticia ultima es que el movimiento No Pago ofrecieron los nombres de setenta y cinco mil miembros que prometieron votar por Presidente Daniel Ortega en la elección en Noviembre si el perdona sus deudos en total de vente cinco millón dólares. Ortega ya no acepta la oferta.
El movimiento No Pago continua presionando a otras clientes para juntarse a su causa con promesas que el gobierno perdonara sus deudas.
En marzo 2011, ASOMIF o la Asociación Nicaragüense de Instituciones de Microfinanzas publico un código de ética en un diario nacional, para reafirmar la integridad de sus trabajos en respecto de sus clientes, sociedad, y entre instituciones de microfinanza que son socios de ASOMIF.
-Karen Gray, Kiva Fellow 14, in Nicaragua
What are they smoking in Nicaragua?
Every morning in Esteli, Nicaragua, a siren goes off at 6am, calling hundreds of factory workers to start their day, making some of the finest cigars in the world.
Juan Carlos is a Kiva borrower. He grows tobacco for making cigars.
First, the tobacco leaves are fluffed during drying to release heat and moisture.
Then, the leaves are flattened, cleaned, and misted to make them malleable.
Next, the leaves are rolled into a cigar by hand.
The cigars are checked on the "Drawmaster" which is a vacuum, that tests ease of inhalation.
There are over 40 types of cigars, "Torpedoes" being the most formidable, in my opinion.
Cigars are sorted by size, color, and quality.
Boxes are made. Cedar-lined being the best.
The finished product.
To support MiCredito, please join our Lending Team: Amigos de MiCredito
Check out all MiCredito Borrowers on Kiva!
Learn more about MiCredito, a new Kiva Field Partner in Nicaragua, serving urban and rural clients from six branch offices.
-Karen Gray, Kiva Fellow 14, in Nicaragua
Say Cheese For Kiva Student Loans
Outside the town of Esteli in Nicaragua, you can find the Catholic University of Dry Tropic Farming and Livestock (UCATSE). In October 2010, MíCrédito and Kiva disbursed their first student loans there.
These loans allowed the students to put into practice, what they had learned in the classroom. One group of students used their loans ($75 per student at 1.5% interest per month) to make cheese which was sold on campus.
As a Kiva Fellow, I decided to visit the university, meet the students, see the process firsthand, and offer my services as an official taster.
Students in the AgroIndustry Lab, ready to make cheese.
Cheese or queso fresco made at the university.
Cindy, the MiCredito Kiva Coordinator, lent a hand in the cheese-making process by stirring the milk to cool it, before adding the enzyme that would thicken the milk.
Next step, the curdled milk was strained to remove the liquid.
Salt was added, and the cheese mixed until crumbled, then formed into balls.
The finished product is called cuajada.
A slice of cheese is served with rice, beans, and tortillas.
Future student loans are being considered for projects to raise pigs, and to cultivate a high-quality tomato.
To support MiCredito, please join their Lending Team: Amigos de MiCredito
Check out all MiCredito Borrowers on Kiva!
More about MiCredito, a new Kiva Field Partner in Nicaragua, serving urban and rural clients from six branch offices.
-Karen Gray, Kiva Fellow 14, in Nicaragua
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
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.
