Ice cream wrappers, dirty diapers, plastic bags and rotting fruit have a tendency of stewing together into one the most truly foul concoctions known to man.  This, unfortunately, is the recipe I find on most patches of green alongside roads and in the cities of Totonicapan, Guatemala.

The beautiful landscape of the highlands is ruined for me when I ride a bus into town. I have yet to see a cow grazing on a patch of grass that is not littered with candy wrappers and plastic bags. I doubt the cows appreciate the bits of plastic among their graminoids. Littering has even turned into a sport for some of the younger kids. I have seen young children no more than five years old playing “who can throw the empty bottle furthest into the street?” It breaks my heart.

How do you reverse this behavior when there is no immediate alternative? Check out these statistics from the Pan American Health Organization (italics mine):

“Nowhere in Guatemala is there a system for the final disposal of solid waste. In the urban areas it is estimated that 47 % of the population has the benefit of solid waste collection. The rest of the people burn, bury, or toss out their trash. In rural areas only 4% of the population has the benefit of trash collection services.”

Don

You can imagine how burning trash must smell, not to mention the damage to the environment. But is there even an alternative? Trash cans are a rarity, and home trash pickup services are non-existent in these rural highlands. With the constant influx of snack foods and beverages wrapped in plastic packaging, there is simply no place for it all to go. I live in a country with an efficient solid waste disposal system, but the people of Toto are not so lucky. With no place for trash but in the street, I can’t blame Guatemala’s youth for establishing littering as a routine.

One of the trash bins set up by the "Jóvenes Emprendedores" (Youth Entrepreneurs) Program at ASDIR

Fortunately, Asociación ASDIR, a microfinance institution in the area, has taken matters into its own hands. In 2008 it started a youth entrepreneur program which placed trash bins throughout the small village of Nimasac. The community now runs its own collections services which take the solid waste to a landfill. The walls of the local school have the words (in Spanish) “Throw all trash into the bins”. Once again, community organization has responded to a lack of government action – similar to the neighborhood’s response to crime. The effect is a relatively clean community in a region littered with pollution. Without government help, the town and ASDIR have organized against the trash problem.

It is difficult to reverse a learned behavior. I, for example, will never in my life be capable of rooting for the Los Angeles Dodgers. My Guatemalan housemates will never accept eating eggs and beans without tortillas. The damage caused by learning to litter, however, should be enough to change the region of Toto from its own trash bin to its own source of pride and joy.

Gustavo is a Kiva Fellow working with Asociación ASDIR in Totonicapán, Guatemala.

Join the Amigos de ASDIR lending team on Kiva today!

Gustavo’s previous posts:

Corn People: A Staple Food and the Key to Human Creation

The Microcredit Saleswoman

Community Vigilantism Keeps Toto Tranquil

The Highland Commute

If there is one common denominator for the rural homes in the Guatemalan highlands it is the cornfield. Sitting adjacent to most homes, the fields can be seen for miles from any high point overlooking a rural populated region. As we approach the end of the dry season, I watch workers routinely till the soil in preparation for the rains that will help sprout this precious crop.

A common sight in Totonicapan

My Guatemalan housemate is absolutely shocked watching me eat my breakfast of eggs and black beans. “How can you eat that without tortillas?!” he routinely asks, completely perplexed.  Corn is a staple here, and I have yet to meet anyone who would have it any other way.

The crop is more than just a food source; it is a key component to the creation myth in the Popol Vuh. This sacred book is a collection of mytho-historical narratives surrounding the creation of Quiché Mayan people. The first creators, Tepeu and Gucumatz, were attempting to create a species which would honor and worship their creators. Man was first created from mud and earth, but he spoke only nonsense and could not multiply.  They then tried wood, but there was nothing in the minds of these creatures and they accomplished nothing. They were banished to live in the forest as monkeys. Corn was the secret ingredient that created a complete human race. Created from corn flour, they were intelligent and showed promise as a species.

photo credit: Wolfgang Sauber

Corn is also a staple food in the U.S.A., but it is processed and broken down to the point where we would never know we were eating it unless we decipher the code of nutrition labels (HFCS, Xanthan Gum, the list goes on longer than you think). In a U.S. supermarket we can expect most products to contain some type of corn ingredient. It seems that in the states we are also a nation of corn (or rather, a nation of corn derived products). Check out Michael Pollan’s The Omnivore’s Dilemma for much more on this topic…

The crop is more than that here in the highlands. Households grow it on their own property and dry it for use throughout the year. It is also a requisite for every meal. Even if you are served a plate of pasta, rice and beans, you can expect a plate of steaming tortillas in any traditional eatery. The low carb thing doesn’t quite work here.

photo credit: Hannes Grobe

Corn is also conveniently delicious. I’m look forward to my next plate of chicken with sides of rice, pasta salad, and of course, a healthy heap of handmade corn tortillas.

Gustavo is a Kiva Fellow working with Asociación ASDIR in Totonicapán, Guatemala.

Join the Amigos de ASDIR lending team on Kiva today!

Gustavo’s previous posts:

The Microcredit Saleswoman

Community Vigilantism Keeps Toto Tranquil

The Highland Commute

A loan officer (center) meets with her clients

One key challenge to spreading microcredit in rural Guatemalan communities is actually finding entrepreneurs who are looking for a loan. In the rural highlands borrowers are not exactly surfing Google in their search for a way to expand their businesses. This makes monthly promotions crucial to finding new clients and keeping the Microfinance Institution (MFI) afloat. (It has also proved challenging to keep up with Kiva lenders; at the end of February all loans were fully funded at one point on Kiva!)

Yolanda, a loan officer in one of ASDIRs rural branch offices, let me tag along one day to experience firsthand how challenging this can be.

ASDIR loan officers must rely on word of mouth and make themselves as accessible as possible to prospective borrowers. We rode a microbus (Yolanda is not a fan of riding on motorbikes) for an hour up and down a rough dirt road. Our goal was to reach and meet with previous clients and inquire about any possible new prospects.

We forgot that we were travelling on the Tuesday before Ash Wednesday here in Guatemala. This day involves groups of young boys running around throwing rotten eggs and handfuls of flour at teachers, young girls, and apparently, loan officers and Kiva Fellows:

I was initially surprised that Yolanda offered to take me along on one of these promotional visits (I imagined a loan officer knocking on every door in the neighborhood and dishing out the same sales pitch). However, Yolanda had a very casual and respectful approach with her contacts. Watching her interact with members of Las Canasteras Group was like watching old friends catch up after months of absence. This could be why ASDIR has so many repeat borrowers.

Las Canasteras Group has three previous loans with ASDIR. One group member, Doña Loida Isabel, used her portion of the loan to develop her general goods store and chicken raising business. Her previous loan is 100% repaid, and we spoke about the possibility of the group’s next loan and its use.

Back home in the U.S., door to door salespeople lose their credibility with me the moment they ring my doorbell. If your product is so amazing, why does it require you to travel to my doorstep for me to hear about it? Rural microloans obviously do not apply to this reasoning because of accessibility. An MFI requires loan officers with the drive of a salesperson in order to stay sustainable. This drive combined with an honest approach to new and existing clients is an art which Yolanda has clearly mastered.

ASDIR’s partnership with Kiva makes ASDIR loans even more accessible to the rural community. It’s the hard work in the field at the beginning of the month that keeps new profiles popping up on Kiva.org.

Gustavo is a Kiva Fellow working with Asociación ASDIR in Totonicapán, Guatemala. He forgot about being covered in flour after a few hours and wondered why he was getting so many strange looks and laughs for the rest of the day.

Take 20 seconds to join the Amigos de ASDIR lending team on Kiva today!

Gustavo’s previous posts:

Community Vigilantism Keeps Toto Tranquil

The Highland Commute

Finished Collecting. Terminando de Cobrar.

One of my local friends came to me one day… “Mr. Montano I need to talk to you”. Later that day he told me he had to send money to his mother and had other expenses but payday which was still a few days away. We agreed on the terms, half with the current month’s pay and the other half with the following month’s pay; both at the end of the month since that’s when he receives his pay. No big deal, I thought.The first paydate came and went – no payment. He had an explanation and reasoning of how he had agreed to pay on the 14th of the month – to his credit he did pay back the first half on that day but this simple incident finally made me understand what three directors at different microfinance institutions (MFIs) had been telling me in one way or another, sometimes borrowers simply do not understand the terms of the loan.
When each client signs or stamps a fingerprint in a loan contract they are legally bound by the terms in the document. This may sound simple or common sense to me and you but also consider that MFIs work in different environments and your baseline is not the same as the borrowers’ or the loan officers’ or the MFI’s management. If you’re reading this most likely you went to school and probably grew up or lived in areas that were developed to a certain extent. In my experience, many borrowers grew up in completely different environments where their parents were poor and/or had no education and were more focused on providing basic sustenance and immediate needs than thinking about their children’s future. Last year while in Guatemala, the parents of my landlord (around their early fifties) had to deal with civil war and his step mother was not even allowed to go to school; now in Liberia where the country is recovering from years of misrule and civil war, a loan officer and friend was able to finally get her first formal job at the age of 24.

Collecting Repayments in Monrovia. Cobrando en Monrovia.

Socially responsible MFIs have to spend a significant amount of time and resources to educate their borrowers about the contract they will sign and also about the compromise they have with each group members. At Fundación Paraguaya, groups have to meet four times before getting a loan and also have one training session on different topics with each following loan cycle for up to twelve cycles. BRAC borrowers have to attend four training meetings before getting a loan and their passbook has unique compromises that the branch manager explains during training; the whole list has eighteen, these are just a few: “We will send our children to school regularly”, “we will always help each other” and “we will give equal opportunity to the girl as well as boy”.

Even with hours of training and repetition some borrowers still do not get it. In Guatemala I went along for a collection visit and several delinquent clients had the money but just were reluctant to pay or didn’t feel like going to the MFI office to pay. In one of my last field trips, the loan officer was trying to collect delinquent payments. Again, one had the money but wouldn’t show up to meetings to repay and another would argue her baby got sick the week before, but that wouldn’t excuse being behind three weeks.

The point is very simple, knowing is not the same as understanding. In my case I have seen the environment microfinance institutions work in, but it took a personal experience to fully understand the point of view of the microfinance directors: despite efforts, explanations and time invested sometimes borrowers simply do not get it. As far as my friend is concerned, he just finished repaying his microloan but within his own schedule.

Carlos is a Kiva Fellow currently working in Liberia with LEAP and BRAC Liberia. He had previous placements with ASDIR in Guatemala and Fundación Paraguaya in Paraguay.

La Diferencia Entre Saber y Entender

Uno de mis amigos de la oficina se me acercó muy sonriente y me dijo Señor Montano, necesito hablar con usted. Un rato después me explicó que tenía una pequeña emergencia y debía mandar un poco de dinero a su mamá pero todavía faltaban varios días para el fin de mes (que es cuando recibe su sueldo mensual).  Después de platicar llegamos a un acuerdo, yo le iba a prestar el dinero y el me pagaría la primera mitad el último día del mes y un mes más tarde la segunda. Pasó el último día del mes como si nada, cuando lo volví a ver le pregunte que había pasado. El me salió con una historia que el había acordado pagarme a mitad de mes. Al final si me pagó pero este pequeño incidente finalmente me hizo enteder lo que tres directores de instituciones de microfinanzas (IMFs) me habian comentado: a veces los clientes simplemente no entienden los términos del contrato.

Talking to Delinquent Borrower (Not Pictured). Hablando con Cliente Moroso (no aparece en la foto).

Al firmar o poner la huella digital los clientes se comprometen a cumplir con las clausulas del contrato de crédito. Aunque suene sencillo y hasta de sentido común las IMFs operan en un ambiente muy diferente y los puntos de referencia para un cliente, un oficial de crédito o la gerencia no son los mismos. Seguramente tu has tenido la oportunidad de ir a la escuela y haber crecido o vivido en un lugar con cierto nivel de desarrollo. En cambio, muchos de los clientes con los que he platicado y visitado vienen de familias muy pobres con muy poca o ninguna educación; sus padres estaban más preocupados en proveer sustento más que en mandarlos a la escuela. Por ejemplo: los padres en la casa donde estuve en Guatemala vivieron la guerra civil y a la señora ni siquiera la dejaron ir a la escuela; ahora en Liberia los recuerdos de la guerra civil estan muy frescos todavia y una amiga y oficial de crédito apenas pudo conseguir su primer trabajo formal a los 24 años.

Las IMFs responsables invierten tiempo y recursos para explicar el crédito y educar a sus clientes acerca del contrato, de la garantía grupal y de la promesa de pagar a tiempo. Fundación Paraguaya realiza cuatro sesiones para integrar a cada grupo por grupo antes de dar un crédito y además ofrece hasta doce capacitaciones adicionales, una por ciclo de crédito. En BRAC, los miembros de cada grupo también tienen que asistir a cuatro capacitaciones antes de poder solicitar un crédito. Su libreta de pagos tiene una sección de compromisos muy particulares; la lista completa tiene 18, aquí solo menciono unos como ejemplo: “Mandaremos a nuestros niños a la escuela”, “siempre nos ayudaremos unas a otras” y “daremos las mismas oportunidades a las niñas tanto como a los niños”.

Accepting a Contract. Aceptando el Contrato.

Aun con todas estas capacitaciones y repetición hay clientes que siguen sin entender sus obligaciones. En Guatemala visite clientes morosos junto con otros oficiales y hubo varios que aunque tenían el dinero para cancelar sus créditos no querían ir a las oficinas ni pagar. En una de mis últimas salidas, una cliente tenía el dinero pero no quería asistir a las reuniones del grupo; otra cliente decía que su bebe se había enfermado la semana pasada, pero no pudo justificar su retraso de tres semanas.

La idea es muy simple, saber no es lo mismo que entender. A pesar de estar trabajando con IMFs por varios meses me hizo falta una experiencia personal para realmente enteder el punto de vista de los directores de microfinanzas: a pesar de los esfuerzos y tiempo invertido hay veces los clientes simplemente no entienden. En cuanto a mi amigo, ya acabó de pagar su micropréstamo pero de acuerdo a su propio calendario.

Carlos es un Kiva Fellow trabajando con LEAP y BRAC en Liberia. Previamente estuvo trabajando con ASDIR en Guatemala y Fundación Paraguaya en Paraguay.

Kiva's microfinance partners often provide services beyond finance, including housing (pictured above in Colombia), education, energy, agriculture, hospitality, business, women's rights, community, and culture.

Another week, another incredible range of dispatches from around the world. Several Fellows told their stories with video and pictures while others took time to reflect on the state of microfinance as a global industry and in their respective countries. And what would a week in the field be without getting to know a few borrowers? Plus, scroll to the end of the post for pictures you may have missed the first time around.

Video Blog – The Life Of A Kiva Fellow
Country: Dominican Republic, Haiti, Colombia / Fellow: Nick Hamilton (KF13, KF14)
Need a break from reading about what Kiva Fellows do? Then watch Nick’s video for a fun yet informative overview. (Don’t let the opening scenes on the beach fool you – being a Kiva Fellow is a lot of work.)

Video Blog: The Story of Lini Nanyonga
Country: Uganda / Fellow: Nila Uthayakumar (KF14)
Nila introduces us to Lini Nanyonga, a microfinance client in Uganda. Learn more about her business, how she used her loan, and her hopes for the future in this short video.

A Kiva Fellow’s Photo Album: Six Months Along The Equator
Country: Ecuador, Kenya / Fellow: Tara Capsuto (KF12, KF13)
Tara tries to find the words to describe her Kiva Fellowships but ends up letting photos of local foods, finding borrowers, hanging with Kiva Coordinators, and much more speak for themselves.

Ten interviews with Mongolian entrepreneurs
Country: Mongolia / Fellow: Amber Barger (KF14)
Be sure to click on each picture in Amber’s post for business updates from a meat saleswoman, a painter, a cook, a car repairman/builder of low-income housing, and five other borrowers.

Participating in the Dialogue: The Role of Microfinance Critics (Part 2)
Country: Bolivia / Fellow: Julie Shea (KF13)
Julie responds to some of the controversial statements being made about microfinance with the story of CIDRE, the microfinance institution she’s been working with in Bolivia, and a round-up of related links.

Kiva Field Partners: More than just microfinance
Country: Colombia / Fellow: John Gwillim (KF14)
As John details in his post, Kiva’s partners often provide services well outside the scope of traditional microfinance. In addition to examples from Colombia, read more about programs in Ghana, Paraguay, and Peru.

Money, Money, Everywhere
Country: Benin / Fellow: Gareth Davies (KF14)
Gareth makes thoughtful and stirring connections between Samuel Coleridge’s “Rime of the Ancient Mariner” and economic activity in Benin.

Mountains Beyond Mountains: The Landscape of Microfinance in Nepal
Country: Nepal / Fellow: Claudine Emeott (KF14)
Access to finance and microfinance in Nepal is directly related to geography – the higher you climb, the fewer the options. Claudine lays out the current situation while pointing to some promising developments.

The Highland Commute
Country: Guatemala / Fellow: Gustavo Visalli (KF14)
Gustavo gives us a taste of his daily commute in Guatemala. Find out how he survives “The Sardine Act”, “The Highway Shoulder Hike”, and “El Carnicero” (aka “The Butcher”).

Cindy’s Baptism by Onions
Country: Nicaragua / Fellow: Karen Gray (KF14)
The first visit to the field is just as exciting for new microfinance staff as it is for Kiva Fellows. While there are always challenges (often related to transportation), there can be unexpected surprises, too.

Microfinance Marketing 101: The Loan Officer
Country: Cambodia / Fellow: Stephanie Sibal (KF14)
As Stephanie writes, loan officers not only tackle on-the-ground PR for a microfinance organization, they also play an essential role in marketing, customer service, product feedback, and, of course, loan administration.

~
Previous updates from the field:
“Christmas”, Trekking, Adversity + Good Company
~

Plus more pictures from this past week:

Nicaragua (by Karen Gray)

Guatemala (by Gustavo Visalli)

Kenya (by Tara Capsuto)

Bolivia (by Julie Shea)

Mongolia (by Amber Barger)

Nepal (by Claudine Emeott)

Commutes are a part of life. In college I lived in a town with more bikes than people, so I had a relaxing bike ride to class every day. Back home in San Francisco I had the pleasure of reading about my World Series Champion Giants on the train to work. Easy transport increases our range. This allows us to access more resources with little effort (even those of us without cars).

Daily travel is not so simple here in Guatemala. It is a significant barrier for many looking for access to resources such as food markets or financial services. To keep microfinance accessible to the rural communities, MFIs like ASDIR must travel to the client for visits and loan interviews. Fellow KF14 member Nila’s breakdown of one MFI expenses show that staff travel expense is second only to staff salaries. That’s a lot of client visits!

Allow me to illustrate the difficulty of car-less travel here in Guatemala by giving a taste of my evening commute:

First is the Sardine Act: the microbus to the main road. At a $0.12 fare, drivers will pack in as many passengers as is illegally allowable. In a 10 seat minivan, I have counted an estimated 22 high school kids and one full sized Gustavo. It is not uncommon for us to spill out onto the top and side steps of the van. On a road full of mostly ignored speed bumps, this makes for a very interesting ride.

Add 22 students and one Gustavo to get the full image.

Next comes the highway shoulder hike, which I briefly mention in my previous post. This is pretty self-explanatory. As you can see, there isn’t much of a shoulder. I have found that pickup trucks in particular are not shy about keeping things uncomfortably close.

After a hike through the nightly market in town, it’s time for the main event:

“El Carnicero” is the final boss. I call it the butcher because I pass the municipal slaughterhouse before facing this monster hill. Elder Guatemalan women seem to be able to conquer this beast on a daily basis without losing  too much breath. My sea-level lungs are not quite at that point.

Medium distance travel is a burden for many rural residents in Guatemala. It often takes hours and is rarely as comfortable as a cushioned train seat. This limits many residents to the shops, services, and resources of their surrounding area. Limited resources equals limited development, which is something ASDIR and other social organizations are working to change here.

As for my daily commute: bring on the carnicero. I’ll be back on the train reading about the Giants soon enough.

Gustavo is a Kiva Fellow working with Asociación ASDIR in Nimasac, Guatemala. Check out the brand new ASDIR Lending Team on the Kiva website.

“Esto no es Guate, ni Xela. Aquí las calles son seguras. (This is not like Guatemala City, or even Xela. The streets here are safe).”  My wonderful host in the village of Cojxac is reassuring me of the safety of the streets at night. It is my first month as a Kiva Fellow in the region of Totonicapán (aka Toto), Guatemala.  I secretly doubt my host’s words as I nod, since the ominous streets outside seem like the perfect place for a good old fashioned mugging. These prejudicial thoughts first came up as my chicken bus screeched into town. I then planned to spend many long nights safe at home re-reading my copy of The Hobbit. Ah, the crazy nightlife of a Kiva Fellow.

However, my host continued to explain that the community has a strong presence in the region. A thief, he recounted, recently stole an old woman’s bag on the main road. Alert neighbors blew their whistles and the thief was quickly apprehended. They shaved his head, displayed him to the town and warned him that he had 12 hours to gather his belongings and leave, never to return.

A lack of police presence sparked this community vigilantism. Of course, the question arises: How far can or should these community groups take this street justice? Is the victim of vigilantism always guilty of a crime? These are questions beyond the scope of this post. However we look at it, the intensely tight knit community identity fascinates me. This small scale organization has minimized criminal activity in the streets, and this group mentality is widespread throughout the region. Can most of us say the same for the communities in which we live?

Asociación ASDIR, a Kiva field partner in the region, is built upon this cohesion. Rural communal banks of 4-20 members are regular ASDIR borrowers. Utilizing the strength and financial security of cooperating group members, these entrepreneurs join together for loans which support their various developing working projects. Las Mujeres Emprendedoras Santa Ana (The Enterprising Women’s Group of Santa Ana) is a wonderful example.

If a neighborhood can come together to protect one another from criminals, it can certainly develop strong projects which help develop the community as a whole. ASDIR and Kiva help make this happen.  With such a strong community identity, working together out of poverty is a goal that Kiva, ASDIR, and Kiva lenders are happy to support (want to lend?). Toto is a community built on respect for your fellow compañero, and I look forward to becoming a part of it in the coming months.

Gustavo is a Kiva Fellow working with Asociación ASDIR in Nimasac, Guatemala. He has become an expert in a new extreme sport: highway shoulder hiking, and is excited to live and work in the Guatemala highlands.

At first glance, most of these services don´t mean anything to us here in the U.S. In California, I can pay all my bills through my online banking account.  If I want to transfer money, I do it with a click of a button, and I have a plethora of offers for new credit cards and saving accounts at different banks. (Personally, I have four different accounts which I all access from the comfort of my laptop).  But in Guatemala, it is services like these that set ASDIR apart from the competition.

Recently, I accompanied the executive director of FAPE (the microfinance institution I work with in Guatemala City) to pay his credit card and then his water bill.  And then I realized, for just about every bill, people have to stand in a new line.  About once a week, I go to a store to add more credit to my prepaid phone here, and so does the rest of Guatemala.  To open a checking or savings account and make deposits, another line.  And when a client takes out a loan here in Guatemala, they wait in another line. After waiting outside the “muni” for two hours, I realized that the services offered by ASDIR weren´t just convenient for its clients, but truly invaluable. Each month, ASDIR could save its clients days of time traveling to pay bills and make deposits and make loan payments by facilitating all of these transactions in their branches.

I looked down the street in Aldea Nimasac to see an ASDIR sponsored school, and on Tuesdays and Thursdays, I avoided having meetings upstairs because of the twenty kids packed into a computer room learning how to use Microsoft Office and the internet.  More than just a presence in the community, ASDIR is an influence.  One of my fellow bloggers wrote “Kiva (morethanjust) microloans”. And it´s true, the depth of services offered by some of Kiva´s microfinance partners make them (morethanjust) businesses offering credit.

A Short Video With Some Shots of Aldea Nimasac and the Surrounding Valleys where ASDIR works:

LEND NOW TO ASDIR!

Eric Burdullis is a roaming Kiva fellow in Guatemala working with ASDIR in Aldea Nimasac and FAPE in Guatemala City.  His recent activities include making it back alive through dirt roads, rain and mudslides from Totonicapán to Guatemala City and anything made with corn: atol, tamalitos, and pan de elote.

Have you read cartoons before understanding what they really meant? Ignorance is bliss from Calvin & Hobbes is definitely one of those cartoons for me. I worked as a design engineer before and in many occasions I thought I was asking a yes/no question but it never turned out to be that simple. You have to approach problems knowing the basic principles, look carefully at the details, make decisions and learn from your mistakes. As an engineer, the product of my work was an object and I needed technical knowledge; as a Kiva Fellow, I work on a process that involves many within an organization and I need to know the surrounding issues and understand the environment they are working in.

ASDIR's annual event to evaluate progress, look at current issues and communicate plans going forward.

Since I arrived to this institution delinquency has been the most important problem to solve and I wrote about it (Fellowsblog 2/27). With a very determined effort, the number of delinquent loans has been going down, but at the same time the stress level is up; the end of the month is a very busy time for collections and loan officers and branch managers are out of the office most of the day. In the quest to improve results two employees have just left. Was it the stress that pushed them to look for other opportunities or was it just a coincidence? The main issue I see is the knowledge void left and the time and resources it will take to recover from it.

Desk, computer monitor, keyboard, mouse, digital camera, gloves, helmet and riding pants and Jacket: gear for new loan officers.

ASDIR hires locally, this means all their personnel are from the communities they serve. Local people give the organization knowledge about their customers’ culture and environment, they speak the local dialect and they create a welcoming environment for customers. Now consider the current environment for a microfinance institution in a developing country: competition is tough, economy slowed down and, not to make this too long, delinquency went up. This is a very challenging environment and they have to find solutions to many problems. I’ve learned that people with different backgrounds bring a lot to the table when it comes to problem solving, you get different points of view to analyze problems and solutions you may never have thought of. From an organizational point of view, I wonder to what extent this organization sacrificing innovation or progress when everybody has -to a certain extent- the same background and think in a similar way…

In my previous job, the aftermath of Hurricane Katrina my work group was relocated to a different city, this brought unusual circumstances,  including family and work related stress; in the end many good people left. As we started getting new people, for different reasons, most of them were locals. Even though situations and line of business are completely different, the issues both organizations faced are similar…I guess we’re not that different after all.

Ready to go visit Kiva borrowers with Antonio (right).

The Kiva Fellowship has been a great experience. It has given me the chance to work with many across the organization, talk with almost every person, learn how this organization works, and in some cases I’ve been like the fly on the wall, just an observer… but it also presents many challenges. Unlike Calvin in the cartoon, ignorance is not an option, that is not why we are in the Kiva community. As Kiva Fellows one has to learn how things work, figure out ways to solve problems, work with management and local staff to implement solutions and many many more. Now, in my final days of this fellowship I’m faced with the challenge of passing some of the knowledge and lessons I’ve learned to my coworkers at this institution and that is no easy task.

Want to be challenged?  Apply to be a Kiva Fellow and come to the field to experience the impact of microfinance, learn how other people live, meet great people and work to further Kiva’s mission: connect people through lending for the sake of alleviating poverty.

Carlos Cruz Montaño is a Kiva Fellow 10th class working with ASDIR in Nimasac, Guatemala.

Going through borrower files I found finger prints in the signature line of many documents but didn’t think much about it until I went to the field to actually meet borrowers…

A very important task for a Kiva Fellow is to do Borrower Verification, this ensures that the people you lend money to are real persons that are actually taking loans as described in their profiles. To start this process I went to the borrower file which is very detailed; they include copies of personal ID, address (including a sketch of the house location), marital status, number of children, last grade in school, etc. Going through these files I found something in common: most Kiva borrowers went half way through elementary school (3rd or 4th) grade and many didn’t go to school at all and cannot read or write; those borrowers stamp their fingerprints in loan documents.

Signatures & fingerprints in the registry for a new Kiva group loan.

In one of my first visits I met Maria, her workplace is a very simple standalone room made up of mud bricks with dirt floor; the two windows and one door all faced a courtyard. Her Kiva loan was her first credit and she used it to purchased yarn, three looms (she now has two workers), and clothes to sell; definitely a busy lady. One of her children, a kid maybe around 12-14 years old, was in the same room doing something else and listening as I was talking to her and asking questions about the loan. Then he briefly interrupted and told his mom he was leaving to school. She gave him two quetzales for a snack (~25 cents) wished him well and he left.

We kept on talking a bit more, she got to see her Kiva profile and the lenders from many countries that contributed to her loan. At the end of the visit I asked her for a signature, but she made an unusual gesture, then looked at me and showed me her thumb; it finally dawned on me… Maria, like many other borrowers didn’t have the chance to go to school and trusts other people to read her documents where she stamps her fingerprint. What kept me thinking was her expression, all of a sudden it changed and Maria briefly showed a very different side.

One can only wonder what went through her thoughts… local culture used to say “girls don’t go to school, they will stay at home and don’t need to learn” and in 1996 Guatemala ended a 36 year period of civil war… going to school was probably not an option for her. Times have changed and now Maria and other borrowers work very hard to keep their children in school. I can just admire the courage and efforts of borrowers like Maria to give their children more opportunities than they ever had in the hopes that they will have a much better future.

Today, it is normal to see kids in uniforms walking to or from school, but it’s hard to imagine the effort behind the picture. The literacy numbers for women in ASDIR’s service area are at least 20 percentage points higher for 15-24 year olds than for all women above 15 according to a 2006 UNDP study.

Other kids on their way to school.

Like many others have mentioned, microfinance is one of the tools. As I had the opportunity to witness, it is helping parents like Maria keep their children in school longer. It will be up to these kids to keep up their parent’s hard work and take the opportunity their parents never had to use their education and improve their communities.

Mas firmas y menos huellas…
Al revisar expedientes de asociados (clientes) encontré varios documentos con huellas digitales en lugar de firmas. No le puse más atención hasta conocí a algunos clientes…

Una de las tareas mas importantes para un “Kiva Fellow” es la verificación de clientes, es como una pequeña auditoría para checar que los perfiles en la página de Kiva son realmente de personas que están pidiendo créditos. Para empezar este proceso primero revisé expedientes, en comparación con una solicitud de tarjeta de crédito en gringolandia son muy detallados e incluyen entre otros: número de identificación, dirección (con croquis incluido), estado civil, numero de hijos, escolaridad, etc, etc… Después de ver varios expedientes encontré algo en común; muchos clientes estudiaron hasta el 3er o 4o grado de primaria y muchos otros ni siquiera pueden leer ni escribir. Estas son las personas que usan su huella digital para autorizar documentos legales.

En una de mis primeras visitas conocí a Maria Roberta, su cuarto de trabajo es muy sencillo: tierra apisonada, paredes de adobe, techo de teja, una puerta y dos ventanas que dan a un patio. Su préstamo de Kiva fue su primer crédito. Lo usó para comprar estambre, tres telares (ya tiene dos trabajadores) y ropa para vender. Mientras platicaba con Maria Roberta y le hacía preguntas acerca de su préstamo, uno de sus hijos, un chavo entre 12-14 años, estaba en el mismo cuarto preparandose para salir. Cuando estaba listo le dijo a su mamá que ya se iba a la escuela, María Roberta le dio dos quetzales (~25 centavos de dólar) y se fué.

Seguimos platicando un poco más, le enseñé su perfil de Kiva y también le enseñé las personas que contribuyeron para su crédito. Para terminar le pedí su firma, pero ella cambió de expresión; solo me miró y levanto su pulgar derecho… en ese momento comprendí un poco mejor lo que significaba la huella digital. Lo que se me quedó grabado y me dejo pensando fue su cambio de expresión.

Quiensabe en que habrá pensado pero no creo que no saber leer ni escribir halla sido a voluntad propia…  en estas tierras antes no se mandaba a las niñas a la escuela porque “se van a quedar en la casa y no necesitan aprender”; también hay que considerar que Guatemala estuvo en guerra civil hasta 1996. Afortunadamente  la situación es diferente y Maria Roberta y muchos otros se esfuerzan para que sus hijos puedan ir a la escuela. Yo solo puedo admirar la dedicación con que Maria Roberta trabaja para poder darle a sus hijos las oportunidades que ella nunca tuvo con la esperanza que tendrán un futuro mejor.

Aunque hoy en día es normal ver niños, niñas y jóvenes de camino a la escuela, no cualquiera sabe el esfuerzo que esto representa considerando las limitaciones de los padres. En esta región de Guatemala y de acuerdo al Programa de las Naciones Unidas para el Desarrollo (UNDP) el porcentaje de mujeres que saben leer y escribir es 20 puntos más alto para el grupo de 15 a 24 años en comparación con el grupo de todos los adultos (mujeres arriba de 15 años).

Ya muchos otros lo han mencionado, los préstamos de instituciones de microfinanzas son una de las herramientas para promover el desarrollo,  gracias a ellos varios padres de familia como María Roberta tienen mayores ingresos para poder mantener a sus hijos en la escuela más tiempo. Ahora les toca a estos jóvenes aprovechar la oportunidad que sus padres nunca tuvieron para usar su educación y mejorar sus comunidades.

Join Kiva and Viva Guatemala to support other parents.

Carlos Cruz Montaño is a Kiva Fellow 10th class working with ASDIR in Nimasac, Guatemala.

There’s differing opinions and many comments on the default protection policy where partners will no longer be able to guarantee Kiva loans (see posts by Claude Mansell and Nicky Goh), many of you Kiva Lenders are worried this move will greatly affect your portfolio and that MFIs will not care as much about delinquency and default in Kiva loans, but I ask… are you alone?

Of course these are valid concerns. While you are a very important part of the Kiva supply chain, there are many shareholders and stakeholders in the microfinance chain. In my case at ASDIR, I can mention a few: loan officers, branch managers, loan approval committee, Microfinance Director and the Board of Directors (BoD).

Why would all these people care that Kiva loans don’t go bad and you get your money back? The short answer for ASDIR is because there is no distinction between Kiva funded loans and locally funded loans. Let me explain the reasons why in more detail for loan officers and BoD.

End of the month checks: Armando, branch manager, & Jose Santiago, loan officer, review list of delinquent borrowers before field visit.

Loan officers as part of their screening process they gather very detailed information about the prospective clients:

• Basic Information:ID number, age, marital status, address (field verified)
• Location and age of business or work place (also field verified)
• Other sources of income
• Number of children
• Personal references – they also visit and have a short interview

All officers I’ve had a chance to talk to take pride in their work and develop & maintain relationships because they work in their own communities. Moreover, their success metrics and incentives are based on the number of new loans, client retention and repayment rates. They care about repayments because not only do they screen new borrowers but also collect payments. Most officers remind their clients when payments are coming up and when they are late branch managers and even the Microfinance director gets involved to work out a solution with the borrower. The end of the month is crunch time for repayments when officers and branch managers go visit delinquent borrowers. In my short time here I’ve noticed a big effort to reduce delinquency and default.

The MFI Board of Directors, in contrast with my previous concept of a BoD, is a very active group of local people – many of them founding members. They care about repayments because it is critical to the mission of the institution: contribute to the social and economic development of their rural communities by providing access to financial products and services. Repayments for any loan are vital to the survival of the institution, while the cost of capital is zero (not considering inflation, currency… topic for a different blog) they have to keep the lights on, pay administrative expenses and pay all their personnel’s salaries. Collecting repayments on all loans means they can reach more clients – there’s a pilot product focused on low-income women, again focusing on their mission. BoD members are also active in internal committees  and committed to keep the organization on the right track.

Who really cares about Kiva loans? From my experience and perspective, I can assure you are not alone, there are many others vested and interested that all loans including Kiva’s are repaid.

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Hay opiniones encontradas acerca de la nueva política de Kiva que ya no permite a las instituciones socias garantizar los préstamos (ver artículos de Claude Mansell y Nicky Goh). A muchos usuarios de Kiva les preocupa que al implementarse esta política los prestatarios estarán mas inclinados a dejar de pagar y que las instituciones socias le darán menor atención al cobro de estos préstamos…

Ustedes, los usuarios de Kiva, son una parte muy importante en este sistema, pero también hay otros grupos que estan involucrados en este proceso y dependen del pago íntegro de los préstamos. En mi caso, les puedo mencionar a algunos miembros de esta cadena en ASDIR: Asesores de Crédito, Jefes de Sucursal, Comité de Aprobacion de Créditos, Director de Operaciones y la Junta Directiva.

Y cómo es que todas estas personas estan realmente interesadas en que los préstamos de Kiva sean pagados y devueltos en su totalidad? En pocas palabras, en ASDIR no hay ninguna diferencia entre un préstamo recaudado por medio de Kiva y uno otorgado con fondos de la institución. Para ser más claro les explico los detalles del porque los asesores de crédito y junta directiva estan interesados en que los préstamos de Kiva sean cobrados en su totalidad.

Los asesores de crédito realizan el levantamiento de información y evaluación inicial del cliente; para ello recaban información muy detallada del cliente, por ejemplo:

• Información básica como número de Identificación, edad, edo. civil, dirección
• Ubicación y antigüedad del negocio o lugar de trabajo
• Otras fuentes de ingreso
• Número de hijos y edades
• Referencias personales incluyendo entrevista breve

Los asesores de crédito con los que he platicado en muchos casos trabajan en sus comunidades y en varios casos conocían a sus clientes con anterioridad. En cuanto al trabajo, sus bonos y metas estan basados en el número de préstamos otorgados, retención de clientes y calidad de cartera. Además de colocar los créditos, también se encargan de la cobranza. Los asesores llaman a sus clientes para recordarles de los pagos y cuando hay clientes retrasados el jefe de sucursal y a veces hasta el director de operaciones se involucran para llegar a una solución con el cliente. A fin de mes todos estan ocupados haciendo cobros a clientes que se han retrasado. En el poco tiempo que he trabajado con ASDIR me he dado cuenta del gran esfuerzo para contener  reducir los pagos retrasados y la mora.

La junta directiva es un grupo muy activo de personas de la comunidad, muchos de ellos son también miembros fundadores de la institución. Los pagos puntuales son requisitos e indicadores de que se esta cumpliendo con la misión de la institución: contribuir al desarrollo económico de la comunidad.
Aunque el costo del capital Kiva es cero (sin contar riesgo cambiario e inflación), los pagos puntuales aseguran la sustentabilidad de la institución. Los intereses recaudados pagan salarios y otros costos administrativos. El recaudar los pagos significa que la institución podrá otorgar más créditos y continuar su misión abarcando más clientes – los bancos comunales es un producto en fase piloto que se enfoca a grupos de mujeres de bajos ingresos.
La junta directiva además tiene varios comités que estan enfocados en mantener a la institución en la dirección correcta y la misión en la mira.

A quién le interesa que se cobren los préstamos de Kiva? Desde mi punto de vista, les puedo asegurar que ustedes los usuarios de Kiva no están solos, hay muchos otros que dependen de que todos los préstamos, incluyendo los de Kiva, sean cobrados en su totalidad.

Carlos Cruz Montaño is a Kiva Fellow 10th class working with ASDIR in Nimasac, Guatemala

Shampoo, bananas & bread, how much would you pay?

As a kid growing up, and now at 5’-6” tall I’ve always been on the short side, among friends, classmates, teammates, you name it! As I walk  around town and meet people in my new town, I noticed I’m actually a tall person around here. Never thought being a Kiva Fellow would make me tall… anyways, what is interesting is that it depends on your reference point.

We know that the earth is round but can you tell from your window? Maybe not. Is 40 degrees Fahrenheit (4.4 C) cold or just chilly? Depends on what you’re used to. Are you tall? Well, now I can say it depends.

Take the same point of view for $25, what do they represent for you in your hometown? Here in Nimasac Guatemala, home of Kiva Field Partner ASDIR,  you can buy three small pieces of bread for Q1 (13 cents), a bottle of locally produced shampoo for Q5.45 (70 cents), two dozens of small bananas for Q3 (38 cents) and a lunch (not pictured but pretty tasty) for Q15 ($1.90). The things you can buy with $25 are different in every country, but what I would like to know is the value of a loan for a Kiva borrower.

I believe Kiva loans represent so much more than the actual value of money and hope to learn, understand and share that with you while I work in Guatemala as a Kiva Fellow… so, join Kiva and Team Viva Guatemala or your favorite team and let’s make a difference together.

Carlos Cruz Montano is a Kiva Fellow working with ASDIR in Nimasac, Guatemala.

The family I live with has satellite TV, a wide screen television (and a television in every bedroom) but they have no indoor running water or heating. They still wash their laundry by hand in a lavadero, outside.  They cook over a wood stove. The water for showers is heated by a fire lit under a big black drum, which they fill with water early, every morning (before the water runs out). They make their own masa from the corn that they grow. And they all have cell phones, MP3 players and their favorite “novellas” (soap operas) on television.

The office where I work has internet access (including wi-fi) and right outside my window, there is an elderly couple working their land like it’s probably been worked for centuries—all by hand, living in an adobe structure (with no running water or heat). One of my most surreal experiences during this fellowship was the day I was sitting in my little office at ASDIR, uploading Kiva borrower videos to YouTube; listening to a loan officer explain the terms of a loan in K’iche and, through my office window, watching the elderly couple plant their corn.

At dinner, in the weeks before Easter, my host family would sit around the dinner table and listen to the story of Christ’s resurrection told in K’iche, being broadcast over a radio on someone’s cell phone.

The inside of their stores and homes are very tidy—almost meticulous. Yet, they don’t hesitate to litter pretty much anywhere and everywhere else.

Lori Gibson Banducci is a Kiva Fellow, working with ASDIR in Nimasac, Totonicapan, Guatemala where she blends in perfectly with the people who live here.

Lori and Kiva Borrowers

But, here are two videos that give a definite flavor of life here in Nimasac, Guatemala where I have spent the last two months as a Kiva Fellow with ASDIR, Kiva’s field partner in Totonicapan, Guatemala.

K’iche is the predominant language spoken here. Many people have asked me to describe what it sounds like, but I’ve found that to be an impossible task, so here is a short video of animated dinner conversation in K’iche.

The second is a glimpse at what is involved in washing clothes here in Nimasac (it takes a LONG time!)

Lori Gibson Banducci is a Kiva Fellow working with ASDIR, Kiva’s field partner in Totonicapan, Guatemala where she blends in perfectly with the people who live there.

Lori with Kiva Borrowers

I have to say I have been most impressed by the dedication, care and compassion of the  loan officers at this MFI. I would also bet  that most of Kiva’s 90+  field partners  have similar, committed loan officers—- clearly motivated by a lot more than money!

Interview is in Spanish, with subtitles and, it will soon become clear that I was not selected as a Kiva Fellow on the basis of my video editing (or taking) skills.

Click on this link for more information on ASDIR

I have visited almost 50 Kiva borrowers since arriving here, but these two stand out for me as exemplifying the role that “having access to credit”  can play in the lives of the hardworking and resourceful poor.

The first, is an interview with Ofelia Marina,  a woman who used her loan to become her own boss. Ofelia’s loan enabled her  to get out from underneath dependence on a patrón and to develop her own, custom apron sewing business. Ofelia’s customers  come directly to her and order custom aprons to be sewn for them.

Microcredit has given Ofelia Marina control over her own destiny.

The second, is a young father, Juan Pedro who originally took out his loan to buy leather and other raw materials for his “shoe-part” making business. He lives in a one room home in Nimasac, Guatemala with his wife and toddler son.

Aside: Making shoes here is a classic cottage industry. Someone sews together the buckles and straps, someone else makes the soles and the heels and then, finally someone puts them all together to make a pair of shoes. Much of the work is done by individuals, in their homes. They depend on their ” patrón” for their business—the ” patrón” decides how many straps and what color need to be made this week.  This will be a subject of a separate blog as I will walk you through the steps (and number or individuals) involved in making a pair of shoes.

Unfortunately, the orders for his shoe parts dried up and it didn’t seem like such a good idea to invest in more raw materials. Instead, he used the money to buy a foot (or treadle) loom which is used to weave traditional “cortes” (traditional fabrics which are then used to sew blouses or skirts ).

The interview is in Spanish and I have not yet mastered subtitles. But, the gist is that Juan Pedro says that if it weren’t for his loan from ASDIR/Kiva, he would have nothing. He might be right.

Not every micro finance loan is going to dramatically change someone’s life or provide compelling video.  In fact, the majority I’ve seen have been “nice to have” but not “life altering”.

I think that may be the real and sustainable power of micro credit—to incrementally improve the lives and financial stability of the world’s poor.

When I was first accepted as a Kiva Fellow,  I was asked if I had any “special” requirements. My response was that I wanted to be relatively safe and be able to take a hot shower.

Taking a hot shower is no simple matter in Guatemala. First of all, most homes do not have running water. (this includes the family that I am living with). So, in that situation, here is how you get to take a hot shower. First, they run a hose from the closest water source (in my case about a block away from the house) and fill this black (20-50?) gallon drum up with water. Then you light a fire underneath the drum and wait until the water gets hot. This big drum is always located above the shower, as it is gravity fed.

Now it gets dicey……because without any cold running water to “mix in” with the hot water, instead of a “hot” shower, you can get a SCALDING HOT shower……..so, it takes some time to figure out exactly how big of a fire to build and how long after the fire has been built is it safe to take a shower…….go too soon and you get scalding hot…….wait too long and it’s tepid at best.

When there is running water, as there is at many hotels, they use this kind of an electrical contraption which is located right there in the shower, right above the shower nozzle. The one pictured here is one of the “safer” versions…..many have electrical wires portruding and a lot of electrical tape wrapped (sometimes loosely) around them. And, when you’re tall like I am and the water splashes on the exposed electrical wires, that too gets a bit “dicey”.

And, as long as we’re talking about “bathrooms”, I thought I’d share a photo of the outhouse that my host family and I use. (actually, it is quite pleasant, as the view from the crack in the door is of the beautiful countryside surrounding Totonicapan)

Boys often leave when they are teenagers (16 or so) and take the perilous route to the U.S. through Mexico, by enlisting the services of a “coyote” (immigrant smuggler)—which is a very risky proposition. If they do make it to the U.S. alive, they arrive in large cities (Houston and New York seem to be the favorites here) where they connect with acquaintances or friends who are already there. Many leave wives and young children behind. Many stay for years before they return……..some never come back to Guatemala.

In the U.S. they find work in restaurants, construction, landscaping and, most of them, faithfully send money back to their families in Nimasac twice a month. It is hard to imagine the impact of these bi-monthly “remesas” (remittances) on the families and the local economy. In fact, annual remittances from the U.S. to Guatemala are the second biggest driver in Guatemala’s economy—second only to exports, totaling $ 4.3 billion in 2008  (Sources: MIF, IMF, US Census International DataBase, Latin America Monitor).

You can look around this village and clearly distinguish between the houses that were built with American money and those that were built with Guatemalan money. (see photos below)

Families with sons or husbands in the U.S. can often afford to feed and clothe their families, send their children to school, have cement block homes with running water and maybe even have electricity. It is estimated that 43 percent of Guatemalan households receiving remittances have been lifted out of extreme poverty. (Source: Economic Commission for Latin America and the Caribbean (ECLAC)). So, these families are still poor (especially by American standards) but no longer among the poorest of the poor.

Remittances are projected to decline by 8% or more in 2009. In data just released by Banco de Guatemala, remittances for the first two months of 2009 are down 9.6 % compared to 2008.  The impact of the decrease in remittances is profound and widespread and likely to get worse. Construction on many homes has simply “stopped” (putting those who were building the house out of work). Families can no longer afford to buy things, significantly impacting demand across the board, and especially the weaving, sewing and shoemaking cottage industries in Nimasac.

One Kiva borrower I spoke with said she used to have 35 individuals sewing/making parts for her shoes and now she is down to 15, with prospects looming of further declines. (She used her Kiva loan to pay her employees for work produced, but not yet sold due to lack of demand.)  Another Kiva borrower had originally taken out a loan for leather and other shoe making materials, but the market for his product has all but disappeared. So he bought a loom instead—hoping the market for traditional fabrics “cortes” is more dependable. This is a young, industrious, positive young man with a wife and a toddler to provide for. But, demand is down, across the board, in almost every area of the economy here.

On one hand, I understand the associated “hidden” costs of illegal immigration in the U.S. I know that some illegal immigrants do not pay taxes and often times avail themselves of the education and medical care and, with the economic downturn, may be taking jobs from Americans who need the work. I also realize that, since some illegal immigrants are paid under the table and do not pay into Medicare or social security or income tax, we all “pay the price” for their use of our services.

On the other hand, I can also understand the desire of these young men to provide for their families, to improve their lives by immigrating to the U.S. (legally or illegally) where they can find jobs and opportunity. It reminds me of the situation that Jean Valjean finds himself in Les Miserables, when he steals a loaf of bread to feed his daughter.

As with most things, there are definitely several dimensions to this illegal immigration issue. And it is apparent from the Guatemalan side, that many families who had been able to escape extreme poverty are about to be thrust right back into it as remittances from the U.S. continue to decline. And, in the absence of “demand” for products and services, the ability for micro credit to make a meaningful difference in the lives of these people may be compromised.

built with $$$

built with quetzales

Example One-The Water

There are over forty communities in Totonicapan and each one is responsible for their own water. That means that the community must find a source for water for their residents and deliver it to them. This is not done by the government.

So, in the example of Nimasac (the community where I am living), the “elders” got together and worked with the adult men in the village to find a means to deliver water, reliably, from their source—which is a mountain spring located about a 3 hour walk from Nimasac, high in the mountains. The community layed the pipe, built the holding tanks and built the “water stations” located conveniently throughout the village. This, of course, took place over a number of years. This same scenario was repeated across dozens of villages in Toto.

Enter the Guatemalan government. After all the villages had developed their own water delivery systems, the government gave notice that it was going to take control of the water AND that, instead of being free, villagers would have to pay for it.

Well, you can imagine how this went over—after the villagers had invested hours, hard work and hard earned money to develop their own water systems. In fact, the father of the family with whom I am living is currently a member of a group of 8 men who, each and every Sunday for an entire year, go to the water source and make sure that it is cleared of debris and that everything is functioning. This is a rotating, one year long, responsibility shared by the adult men in the village.

In January of 2009 all of the villages of Totonicapan decided to protest the government’s action by calling for all adult men in the villages to converge upon “cuatro caminos” (four roads). Which they did, by the thousands! Cuatro caminos is where the four main highways connecting this part of Guatemala to the rest of the state converge. The protestors completely shut down all four highways……for an entire day! They also issued a warning to the government that, if they continued in their efforts to take over the water systems, the villagers would take the protest to Guatemala City. Apparently, at least for now, the government has backed off and the villagers continue to manage their own water systems.

Example Two-The Catholic Church

Okay, the details on this one are a bit sketchy as when this family gets passionate about something they talk in k’iche, and I do not understand a word. But, here is what I understand after a couple of conversations in Spanish with various members of the family.

This family is deeply religious. I can see no evidence of any continued existence of Mayan spiritual beliefs here…….Catholicism definitely permeates their lives. Night time activities, meetings and mass seem to consume the bulk of what little free time they have. Seems some one is constantly coming and going to various religious activities—every day of the week.

Mass here is not free. People must pay 10Q to attend mass or 25Q if you are married. (In fact, one of the daughters tonight told a story of a priest who said he would not say mass unless there were at least 300Q collected!) Seems that the church is always asking for money to pay for various activities and religious celebrations. The church has been growing significantly. It brings in a lot of money every single week. The church desperately needs repairs and needs to be expanded……but, the priests claim “there is no money” for repairs.

However,there is plenty of money for the priests to have cars, to have fancy clothes, to take trips, to entertain friends. This fact has not been lost on those who attend the church in Nimasac.

And, the people of Nimasac are not happy.There are petitions circulating, boycotts of mass being organized, letters being written. In fact today, one of the daughters came back from mass to report that where there were usually over 100 people in attendance, today there were only 30. All the talk centers around the power the villagers/church supporters have if they all speak as one. The idea that the church will have “no choice” but to listen to them.

Community organizing here seems to be ingrained in the culture. They have a history and tradition of working together—to better themselves and to fight the common enemy. This is consistent with what I have read of the current Mayan culture. What I don’t know is whether this spirit of cooperation and speaking with one, strong voice has intensified as a result of the atrocities experienced by the indigenous Mayans at the turn of the last century. Is this is an example of “never again” or is this how they’ve always been?

I have tried to explain all the factors that go into how a microfinance bank determines just how much interest it must charge in order to remain a viable business.

I go through the litany of factors contributing to the “high” interest rates—-the fact that it costs as much (or more) to make a $300 loan as it does to make a $10,000 loan; that in order to reach the poorest of the poor, the loan officers must often travel long distances on back roads in order to serve this population(because these borrowers do not usually have transportation to get to the banks); how a microfinance bank must cover its costs if it is to stay in business and continue to provide credit to the poor, that inflation rates must be accounted for in order for the banks to even recoup the original value of the loan. Usually, their eyes glaze over, they remain unconvinced and they find it difficult to get beyond their shock at the absolute level of the interest rates.

So, yesterday, I listened to a loan officer with ASDIR (Kiva’s field partner in Totonicapan, Guatemala) explain to a couple how they would have to repay their 30% interest loan in 12 monthly installments and (this is the key) that with each payment the total amount due on their loan would get lower and lower, until it was paid off.

That is when the differences between credit card debt which most U.S. consumers use to finance purchases and the microcredit consumer loans became crystal clear! It’s not about the absolute interest rates; it is about having reasonable repayment terms, which pay off the loan!

Let’s compare two loans of, say, $1000 —-one done the microfinance way and the other the American credit card way.  The microcredit loan is made at the apparently outrageous rate of 50%, while the credit card loan is at a far more “reasonable” 20%.

___________                                  Microcredit                    American credit card
Loan Amount                                             1000                                       1000
Interest Rate                                               50%                                         20%
Minimum monthly payment              ($107.59)                                ($16.67)
Total Payments in one year              ($1,291.02)                             ($200.00)
Amount owed after 12 months                 0                                        $1,000.00
Total amount paid in 5 years           ($1,291.02)                             ($1,000.00)
Amount owing in 5 years                           0                                        $1,000.00
Interest Payments to Bank                  $291.02                                  $1,000.00

With a microcredit loan, a loan officer evaluates the financial position of the borrower and develops a payment plan that is reasonable. It is a plan that gets them out of debt in a relatively short amount of time. In contrast, in recent years, the credit card way has been to provide people with a credit line, encourage them to make purchases on their card (up to their limit) AND then encourage/allow them to make only the minimum monthly payment. Paying off the card/the loan is NOT encouraged. Better for the banks to keep them paying interest only.

After one year, the borrower with a microcredit loan has paid off her loan and has paid a total of $291.02 in interest. After one year, the American credit card borrower has paid $200 in interest and still owes $1000 on the loan. After 5 years, the American credit card borrower has paid $1000 in interest and still owes the entire $1000. Meanwhile, the microcredit borrower may have taken out and repaid another loan or two, while the credit card borrower is still paying on the original loan!

Ends up the lower rates, but totally open-ended repayment terms are far more onerous for the borrower (and beneficial to the bank in the short term) than a significantly higher interest rate with clear and closed-ended repayment terms.

I don’t know if this will change the minds of some of my doubting friends and family, but, I think it illustrates how banks can charge interest rates high enough to cover their costs and risks, while still benefiting the borrowers who must pay the interest. It is truly a win-win, even if it may not seem like it at first glance.

For more information on microcredit interest rates:  http://www.cgap.org/p/site/c/template.rc/1.26.2617