Posts filed under 'Costa Rica'
Coffee: A Love Affair
By Karl Baumgarten, KF9, Costa Rica
4,000,0000 cups per year. 10,958,904 cups per day. 42 beans per cup. 460,273,968 beans per day. And they all have to be picked one by one by one. My fingers hurt just thinking about it. Every cup we make is the culmination of an incredibly involved process that we all should appreciate.
Below is a video of the coffee process at AsoProLa, an organic coffee company which processes coffee from small scale farmers in Altamira, many of whom have micro-loans with FUDECOSUR
7 comments 18 November 2009
I might be falling for microfinance.
Alana Solimeo, KF9, Costa Rica
I realized after letting the excitement of Kiva, Costa Rica, and research topics (exhibited in previous post Rice, Beans and an Inspired Hypothesis) settle that I might want to take a step back. The thing is I hit the ground running here, thanks to the great work of my predecessor Kiva Fellow, the fact that EDESA really is on top of their game, and the enthusiastic charge with which I like to begin things that earned me my nickname Eager Beaver.
As ready as I think I am to lay it down as to why I think EDESA’s model is so successful it will be prudent to spend a blog post proving that it is indeed, successful. So here I give myself one shot to make you a believer, and then maybe we can jump on Kiva Fellow Suzy’s “What if microfinance really does work?” bandwagon! (more…)
7 comments 4 November 2009
Farmers playing Wall Street
By Karl Baumgarten, KF9, Costa Rica
In the last 5 years, financial innovation has spread rapidly to the field of microfinance. What previously was better coined micro-credit is starting to live up to its name, with more and more MFIs starting to offer a full gambit of financial services: microinsurance, microsavings, remittances and others. Technology is enabling these products to spread faster and further. But just what are the impacts of these products and how can we be sure that microfinance is really doing all that its rosy image implies? One increasingly popular method is a randomized control trial, where individuals are randomly divided into treatment and control groups to evaluate the impacts of various development interventions. The participants are surveyed at the beginning of the experiment and again at the end. As the treatment and control groups are randomly chosen, the differences between them at the end of the period can be attributed to that treatment/intervention.
Below are a few interesting products and findings I have come across recently: (more…)
7 comments 16 October 2009
Rice, Beans, and an Inspired Hypothesis
By Alana Solimeo, KF9 Costa Rica
After six months of subsisting on rice and beans while living in Boulder, Colorado, in order to save scrupulously in hopes of being invited to the Kiva Fellows Program, where do I stand? In San Jose, Costa Rica…eating nothing but rice and beans. I am finally here and don’t let that intro fool you; I’m exactly where I want to be. Three days into the fellowship and I already have my two favorite things planned: a weekend beach trip and a research topic! (No, I’m not a student just a serial nerd.)
I have been placed with EDESA, an MFI that was formed as a response to an increasing demand for loans to the Community Credit Enterprises (ECCs) that are all throughout Costa Rica, primarily in under-targeted rural areas. ECCs are legal businesses, member/shareholder/borrower-owned and run that, after their lending capacity expands past that which can be funded by the initial “IPO,” seek more formal funding. EDESA loops back into the story rather seamlessly at this point. After the ECCs have been well-established, trained, experienced, demonstrated success and increased capacity, EDESA becomes a source of funding and the ECC becomes a member/shareholder/borrower of EDESA!
Needless to say, their microfinance model is unique, and it’s setting off my dorky, academic-research-paper-writing inclinations like mad. Young like Kiva, with a far reach, a unique model, and great ambitions, EDESA is a slight anomaly. This makes me wonder, if Kiva’s explanations for low cost delivery method are technology and partnerships, what’s EDESA’s explanation?
Tempted at this point to present my hypothesis, I think I’ll give myself a full week on the job first. Check back in to the Kiva Fellows Blog to see how my perspective on success at the MFI level develops and evolves. Join EDESA’s lending team to stay up to date with my journeys visiting ECCs and their borrowers throughout Costa Rica.
For more detailed descriptions of both EDESA and the ECC’s microfinance models please refer back to Kiva Fellow Megan Montgomery’s blog from her time here in San Jose.
12 comments 10 October 2009
A Tico Welcome
By Karl Baumgarten, KF9 Costa Rica
After a rainy welcome to San Isidro del General yesterday, I was pleasantly surprised by sunshine and smiles for my first day at FUDECOSUR, an MFI working in the impoverished districts of Southern Costa Rica. With my Spanish struggling but my effort appreciated, the staff welcomed the new face around the office that promised to bring more work to their already hectic schedules. FUDECOSUR is currently poised at an interesting time during their pilot partnership with Kiva. They are perhaps days away from posting their first loans to Kiva, geared up to use Kiva’s 0% capital to expand to new, more remote regions of southern Costa Rica.
In the past, Costa Rican MFIs have struggled to obtain commercial funding as many microfinance funds bypass Costa Rica, lending instead to MFIs located in countries more often associated with poverty. Still Costa Rica is not all white sand beaches and towering high-rise resorts. Much of the country still lives in poverty, especially those small-scale farmers reliant on the large plantations to provide their supplementary though transient income. Here village banks can help. FUDECOSUR sets up credit committees that dole out agriculture loans on a demand driven basis. As these committees have an intimate knowledge of market conditions on the ground, they are better prepared to assess risk and respond accordingly. It will be exciting to watch these village banks in action; tomorrow I will get my feet wet with a visit to one of these village banks where we will be performing the first borrower profile surveys.
As for an introduction, my name is Karl Baumgarten and I am a member of the ninth class of Kiva Fellows. I am humbled to be part of this diverse, passionate group and I look forward to keeping you updated with all the happenings in Costa Rican microfinance along with my Tica Kiva comrade in San Jose, Alana Solimeo. Look out for FUDECOSUR´s loans to be coming online this week and please join our lending team, Friends of FUDECOSUR to be updated when their first agricultural loans hit the site.
8 comments 5 October 2009
Meet Kiva’s Field Partner: EDESA
By Megan Tatman Montgomery, KF8 Costa Rica
Microfinance involves a tremendous amount of legwork. While Kiva is all about facilitating connections between borrowers and lenders, it’s important to recognize the hard work of those in the field that make sure your money gets to microentrepreneurs that need it the most. Here is a brief glimpse into EDESA, Kiva’s field partner in Costa Rica, with a little more about how the organization works and the people that are working hard to alleviate poverty in Costa Rica.
If you’d like to learn more about microfinance in Costa Rica, join the EDESA lending team, Pura Vida Costa Rica. Also, be sure to visit this link regularly to see any currently fundraising loans for Costa Rican microentrepreneurs.
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Megan Tatman Montgomery is wrapping up her fourth and, sadly, final placement as a Kiva Fellow. Prior to EDESA, she served at Friendship Bridge and FAPE in Guatemala and ADEPHCA in Nicaragua. Feel free to email her at megan.montgomery@fellows.kiva.org with any questions, comments, or requests for future blog posts.
4 comments 12 July 2009
The Power of Education and Collaboration
As I described in a previous blog post, EDESA (Kiva’s field partner in Costa Rica) works with a network of Community Credit Enterprises (ECCs by their Spanish acronym). To reiterate a bit, the ECCs are small, grassroots microfinance organizations formed by rural community members. FINCA Costa Rica provides extensive training in these communities to teach members how to work together to create and run a profitable business that provides financial services among other things. I recently visited one of the oldest and largest ECCs, La Asociación de Productores de El Sauce (The Association of Producers of El Sauce – El Sauce for short).
This ECC is a phenomenal example of what people can do with just a little money, a little training, and a lot of motivation. The El Sauce ECC started about 17 years ago with only 13 members and no money. They quickly grew to 23 members and Finca provided them with their first loan: just over US$1,100 to invest in farming projects across all the members. Over the years they have grown steadily and currently have 136 members holding 531 shares and have given a total of 2,062 microloans.
The beauty of the El Sauce ECC, however, is not just the manner in which it has provided financial services to the community, but how it has used the foundation of the ECC to expand in many ways. (more…)
1 comment 19 June 2009
An Innovative & Effective Microfinance Model
Intro to EDESA and their network of Empresas de Crédito Comunal
Kiva’s field partner in Costa Rica, EDESA, provides credit services to a network of “Empresas de Crédito Comunal” (Community Credit Enterprises), or ECCs, established by FINCA Costa Rica. The ECCs are small, grassroots microfinance organizations formed by rural community members. The objective of each ECC is to provide financial services to individuals within the community for the development of economic activities that allow them to move out of poverty. FINCA Costa Rica works to establish ECCs to serve as the financial engines of the neediest communities across the country. To form the ECCs, FINCA provides comprehensive training to rural community members that includes financial and business elements and culminates in the formal establishment of the ECC as a legal autonomous business.
The capital of each ECC is generated by the investment of its members through the sale and purchase of shares in the organization. These purchases provide the loan capital that the ECCs then use to issue loans to their members and to invest in other community development projects. As shareholders, individuals in the community become owners of the ECC, earning dividends on the shares when the business is profitable and fully determining the rules, policies, and projects of the organization. Not only do ECCs provide financial benefits, but many of them also work with other organizations in sectors such as health, education, and sports and often provide other programs such as investment education for children and youth. While each ECC governs its own policies, the average price for a share across the network of ECCs is 2,000 Costa Rica Colones (approximately US$3.50) so becoming a partial owner of the business is fairly accessible, even in the poorest of communities.
Over the years, as the ECCs grew and their members’ businesses expanded, some members began requesting loans that exceeded the ECCs’ lending capacity. The ECCs started looking for other sources of financing. EDESA was established by FINCA Costa Rica, the ECCs and some individual investors in February of 2005 in response to the ECCs’ growing need for external financing. EDESA serves as the ECCs’ national financing institution, with the mission of bringing credit services to the ECCs. EDESA is a firm operated just like an ECC, but on a national level. The ECCs are the shareholders and receive profits (dividends) if positive financial results are achieved.
This model of community members becoming partial owners of the ECCs and the ECCs being partial owners of EDESA has proven remarkably effective. Not only does the sale and purchase of shares at the grassroots level facilitate the capital needed to run these organizations, but the fact that the borrowers are receiving loans from an enterprise they partially own creates an additional vested interest in paying back the loans and ensuring future success of the organizations. As evidence of how effective this strategy is, EDESA maintained a zero percent (0%) delinquency rate in its first four years of lending! In addition to being effective in terms of loan repayment, this model is also extremely empowering to the individuals and the communities investing in the ECCs and EDESA. By being participants and owners of these organizations, the beneficiaries also educate themselves on financial and business issues and shape how the businesses grow and what they do within their own communities.
offices of one of the oldest and most developed ECCs, El Sauce
ECC El Sauce sign
ECC El Sauce even has internet and bike rental services
To lend to EDESA’s borrowers, please click here.
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Megan Tatman Montgomery is in her fourth and final placement as a Kiva Fellow. Prior to EDESA, she served at Friendship Bridge and FAPE in Guatemala and ADEPHCA in Nicaragua. Please feel free to contact her at megan.montgomery@fellows.kiva.org with any questions, comments, or requests for future blog posts.
2 comments 15 May 2009
Adios ADEPHCA, Hola EDESA
I’ve just arrived at my fourth and final placement as a Kiva Fellow. Less than two weeks ago I was wrapping up work with ADEPHCA in Nicaragua and, following a week of whirlwind travel through southwestern Nicaragua, I arrived to start my first week with EDESA in Costa Rica. Based on initial impressions, ADEPHCA and EDESA have very little in common other than the fact they are both identified by somewhat confusing acronyms and are both quite small organizations in the world of microfinance. But that is where the similarities end. ADEPHCA is based out of Bluefields, Nicaragua: a town of less than 50,000 where the tallest building in town is the 3-story discotheque and many people haven’t even heard of Diet Coke. EDESA is based out of San Jose, Costa Rica, a bustling metropolis of over 1.5 million people that feels more like the United States than any other place I’ve ever been in Latin America. ADEPHCA’s clients live in tin and clapboard houses that may or may not have a real floor. The EDESA clients I’ve seen so far live in cement houses and may even have tile covering the concrete floors.
The working poor in Bluefields have very few options in terms of starting up microenterprises. Accordingly, nearly all of ADEPHCA’s loans are invested in daily consumption items such as rice, beans, and soap for little stores or in the purchase of clothing for resale. That’s it. The kinds of businesses EDESA’s clients are investing in run the gamut from agriculture and livestock, to fishing and restaurants, to sewing, bakeries, traditional handicrafts and more. One community they work with used to be dominated by coffee cultivation. Several years back coffee prices dropped dramatically, and many in the community used microloans to invest in other agricultural endeavors, a bakery, a tailor shop, etc.
While I’ve only been in Costa Rica for a week, my initial visits into the field (the rural areas where microfinance is most utilized) have shown that the levels of poverty and challenges to development are markedly less severe than in Nicaragua. To some extent, this is to be expected. Nicaragua is the second poorest country in the western hemisphere, while Costa Rica is among the most developed countries in all of Latin America. Costa Ricans take great pride in the fact that their country has not been torn apart by civil war and government corruption like much of the rest of Central America. While other countries were embroiled in internal conflict, Costa Rica was able to focus on things like infrastructure and education. In addition to investments such as this, Costa Rica is blessed with fertile lands conducive to agricultural production of all kinds and incredible biodiversity that attracts tourists from all over the world. They are so far ahead of Nicaragua in almost every way that it’s hard to believe that these tiny Central American countries share a border.
As a longer-term Kiva Fellow, it has been extremely valuable to see microfinance in action in a variety of regions and contexts. The thing I am most excited about regarding my time in Costa Rica is getting a feel for how levels of poverty here really compare with elsewhere I’ve been in Latin America. Are the poorest of the poor in Costa Rica still way ahead of Nicaragua’s poor? Or is there still extreme poverty in some parts of the country? Because Nicaragua and Costa Rica share a border, and because Costa Rica has so many more work opportunities than Nicaragua, nearly one million Nicaraguans have immigrated to Costa Rica. One million Nicaraguans in a country with just over four million Costa Ricans. It’s my understanding that Nicaraguans actually comprise much of the poorest of the poor in Costa Rica. But is their quality of life in Costa Rica still better than their life in Nicaragua? I look forward to seeing just how well Costa Rica has done in terms of development and poverty alleviation. In such a small country, have all corners benefited from the growth and prosperity I see in San Jose and nearby rural communities? Or have some still been left way behind? Hopefully I’ll be able to provide some answers in the coming months.
An EDESA borrower's chive fields in beautiful Costa Rica
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Megan Tatman Montgomery is in her fourth and final placement as a Kiva Fellow. Prior to EDESA, she served at Friendship Bridge and FAPE in Guatemala and ADEPHCA in Nicaragua. Please feel free to contact her at megan.montgomery@fellows.kiva.org with any questions, comments, or requests for future blog posts.
Add comment 1 May 2009
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