By Adam Preston, KF9, Philippines

AKSI clients prepare lunch

In addition to being a very hard word to spell, Tuguegarao (pronounced too-gig-a-raou), is the location of one of the ASKI branches that posts their clients on the Kiva website.  It’s also the destination of my second trip to the field.  One part of my job as a Kiva Fellow is to help conduct borrower interviews for journal updates.  Even though these field trips can be somewhat of a grueling experience, to me this is one of the most effective ways to connect the lenders to the borrowers.   And so it was, on Monday morning at 5:30 AM Teke, our loyal driver, Kenneth, an ASKI staff member, Mary, my KF partner, and I loaded up the minivan and headed out for an 9 hour ride to Tuguegarao City.

Eating Frogs
That next morning, accompanied by three members of the local branch staff we headed out and for a full schedule of meeting with ASKI clients.  As we headed out of town, with our lists and Flipcams in hand, I noticed a women selling something on the side of the road.  Trying to get the conversation going in the car, I asked what she was selling.   Its was then that a burst of Tagalog erupted in the car, then some giggling.  It wasn’t long after asking that seemingly innocent question, that we had stopped the car, negotiated a price, and stowed away in the front seat our lunch.  Yep, frogs.   Later that afternoon, we sat down to a wonderfully prepared and delicious meal prepared by some clients.  And yes, it actually does taste like chicken.

Caving

I think if you would ask someone in my home state of Minnesota the name of the activity of hiking in a cave, they would probably say “Hiking…in a cave”.  When asking a Filippino the same question, they would describe this activity as “Caving.”

Well, after finishing up on Wednesday we went “Caving” at Callo Cave, one of the local attractions.  Along with two, the local ASKI field officers, and my Kiva Fellow partner in crime, we all partook in the what ended up being one of the more grueling cave hikes I can remember.  Don’t get me wrong, it was good but it was also very slippery and required the utmost concentration as to avoid slipping into what I can only imagine as  the abyss.  In the end it was worth it, the rock formations, the natural skylights, the very dark and damp sanctuary.

That Friday night, 1 cave, 1 fried frog, and thankfully no  renditions of “Bottles of Beer on the wall”  later we all arrived back in Cabanatuan City safe and sound.

Adam Preston is a Kiva Fellow at Alalay sa Kaunlaran, Inc (ASKI), Philippines.   He thinks you should click here to lend a helping hand to one of ASKI’s clients today.

By Thomas Gold, KF9 Dominican Republic

For English version, click on “(more…)”, then scroll down.

Après un mois passé dans la  succursale de Samanà de mon institution de microfinance Esperanza, me voici, de retour à la capitale Santo Domingo, après une journée entière de voyage. Samanà ne se trouve qu’à un peu moins de 250km de la capitale, mais le manque d’infrastructures routières et le fait qu’une seule compagnie œuvre dans le transport de voyageurs, rendent un voyage des plus banals dans le monde occidental en une épopée d’une journée en République Dominicaine.

Pas facile de se remettre dans le bain du travail de gestion et d’administration, réalisé ici au siège d’Esperanza après avoir en quelque sorte tiré le rideau et été au cœur de l’action, littéralement les manches retroussées et mains dans la boue (la saison des pluies commence à s’annoncer dans les Caraïbes).

Pourtant les tâches qui m’attendent ici au siège de l’institution ne manquent pas de challenge et d’intérêt, avec notamment la mise en place d’un outil de mesure de l’impact social qui me permet au passage de rencontrer et discuter avec les cadres d’Esperanza et de les managers des différents programmes de microcrédits et services complémentaires de santé et d’éducation.

Il y a deux mois encore, la microfinance se représentait dans mon esprit, comme un concept, un outil qui permet d’accélérer le développement économique d’une région tout en y apportant des progrès sociaux  comme le renforcement du pouvoir économique et de l’autonomie des classes les plus pauvres. Après un entraînement complet dans les bureaux de Kiva, le concept se matérialisait en problématiques économiques (taux d’intérêts élevés, modalités de prêts, viabilité économique des institutions de microfinance, modèle de personne à personne et transparence). Enfin, après une première semaine au siège d’Esperanza, la microfinance devenait des noms de programmes menés dans le pays, associés à des chiffres (portefeuille d’actifs, nombre d’associés) et des points sur une carte (les succursales !).

Cependant, tous ces concepts et ces idées se sont évanouis pendant un mois, remplacés par des questions beaucoup plus pratiques : Dans quelle « Guagua » (voir vidéo) dois-je monter si je veux voir la réunion du groupe «Unidas para Seguir » après celle de « Trabajando para el futuro » , ou encore « Comment puis-je faire pour inciter Maribel a me parler plus en détail de son commerce et de ses plans » et enfin « Comment cela se fait-il que tant de commerces tenus par les clientes d’Esperanza sont à ce point identiques ». Ce brusque changement de réalité m’a fait perdre de vue les objectifs d’analyse sur le terrain des principes et concepts précédemment exposés. Peut-être que l’aspect le plus intéressant  et ambitieux du travail de Kiva Fellow est d’être capable de zoomer et dézoomer avec agilité entre le travail de terrain et de bureau,  faire un pont entre le pratique et le théorique.

J’ai encore beaucoup à voir et apprendre sur le terrain, notamment les aspects de ce qui est appelé ici la microfinance Plus, c’est à dire les services complémentaires de santé et d’éducation. J’espère aussi pouvoir pousser un peu plus l’analyse sur les différents aspects de la méthode Grameen de microcrédit, qui est celle implémentée par Esperanza.

Cependant, une chose m’a réellement marqué : En un mois, à chaque fois que j’ai expliqué que je travaillais au sein d’une institution qui donne des prêts de petits montants sans besoin de garanties, mes interlocuteurs se mettaient soudainement à me porter un intérêt des plus vifs, et au bout de quelques minutes essayaient de voir s’ils ne pouvaient pas obtenir un prêt par mon intermédiaire.

Bien que je ne les ai jamais vus, beaucoup de clients d’Esperanza m’ont décrit leur seule autre option pour obtenir du crédit : Des véhicules ambulants, faisant office de banques, et offrant des prêts à court terme aux commerces sur la route, avec des intérêts allant de 10% à 20% par mois ! Seules les personnes ayant un emploi stable dans le tourisme, peuvent, avec l’appui d’une lettre de leur employeur, obtenir un prêt dans une institution bancaire normale. Ceci démontre, que si la microfinance est bien implantée dans certains pays, elle a encore un énorme marché et marge de développement en République Dominicaine et  certainement dans beaucoup d’autres pays.

Après un mois à Samanà, j’ai eu l’occasion de rencontrer beaucoup de clients, de temps en temps de profiter de leurs services pour découvrir des pâtisseries que je n’avais jamais goutées,  ou encore faire des achats aussi banals que du pain. Je me suis même vu parfois offrir des produits, et notamment 500g d’un excellent morceau de calamar. Lors d’une visite touristique un weekend, j’ai eu l’occasion de passer un moment, cette fois-ci en tant que client, avec  un entrepreneur d’Esperanza, que j’avais précédemment rencontré, et qui tient une « boucherie-bar ». Tous ces relations commerciales des plus normales, mettent en évidence s’il en était encore besoin, que les connexions entre les entrepreneurs de pays en voie de développement et les membres de Kiva (qu’ils soient Kiva Fellows, ou plus simplement  prêteurs) se font d’égal à égal, basé sur la confiance et le respect mutuel nécessaires à une saine relation commerciale.

Si vous découvrez Kiva avec  cet article, lancez-vous et inscrivez-vous afin de prêter vos premiers 25$ et voir le résultat.

English version

After spending one month in my MFI’s branch office in Samanà, I am back in Santo Domingo, the capital city, after a day-long trip. Samanà is less than 250Km (150 miles) from Santo Domingo, but the lack of well-maintained roads and the fact that only one company offers transportation between the two areas transforms what would have been an ordinary trip in the western world into an epic journey in the Dominican Republic.

It is not easy to get back into the swing of doing the administrative work carried out in Esperanza’s main office when one has been witnessing what happens in the field  rolling-up the shirt sleeves and literally plunging one’s hands in the mud (the rainy season is just starting in the Caribbean). However, the tasks to be accomplished in Esperanza’s headquarters do not lack challenge or merit, comprising of, in particular, the setup of a social impact assessment tool.  This gives me the opportunity to meet Esperanza’s most experienced employees and the managers of different microcredit programs and accompanying health and education services.

Two months ago, my concept of microfinance was of a tool that enables and supports economic development of an area or country, while contributing to social improvements such as the empowerment of, and increase in autonomy of the lowest social classes. After completing a comprehensive training at Kiva’s offices, this concept became more defined in terms of economic issues such as high interest rates, loan terms, the sustainability of MFIs, and so on. Eventually, after spending one week at Esperanza’s main offices, microfinance materialized into concrete facts such as microcredit program names and relevant statistics (portfolio outstanding, number of clients) and thumbtacks on a map (the branch offices!)

However, all of these concepts and  thoughts vanished as soon as I arrived in Samanà, and were replaced by much more practical questions : “In which ‘Guagua’ (see the video)  do I have to jump in if I want to attend both the‘Unidas para seguir’ and ‘Trabajando para el futuro’ group meetings” or “How can I encourage Maribel to tell me more about her business and her plans for the future” and at last “Why do so many clients’ businesses look exactly the same?”. This radical change of scenery caused me to forget  the need to analyze the principles and concepts of microfinance described above while in the field.  Maybe one of the most challenging parts of a Kiva Fellow’s work  is to be able to zoom in and out with flexibility and ease between office work and work in the field, or being able to bridge between the theoretical and practical aspects of microfinance.

I still have a lot to see and learn about in the field, particularly around the aspects of Microfinance Plus,  or the complementary health and education services. I also hope I will gain a better insight on the outcomes of the Grameen method, implemented by Esperanza.

Nonetheless, one thing has really struck me: every single time that I have explained  that I am working with an institution that gives small loans without requiring any collateral, the person I am talking to starts paying much closer attention to me and eventually asks if they can get a loan through me.

Although I have never seen them, many of Esperanzas’ clients described to me their only other mean of getting credit: vehicles passing by and acting as informal banks, lending money to roadside businesses with interest rates ranging between 10% and  20% a month! Only people with a steady job in tourism may apply for a loan in a traditional bank, after requesting a letter of support from their employer. This demonstrates that although microfinance may be strongly established in certain countries, it still has a wide and untapped market t in the Dominican Republic and certainly in many other countries.

After one month in Samanà, I had the opportunity to meet a lot of generous clients, and to enjoy their businesses from time to time, tasting new pastries or purchasing everyday items such as bread. I once was even offered a 1lb piece of excellent calamari. On a tourist trip one weekend, I stopped by at an Esperanza entrepreneur’s “butcher-bar”, but this time as a client. All these normal business relationships highlight the fact that connections between Kiva’s entrepreneurs in the developing world and Kiva members (either Fellows or lenders) are based on trust and mutual respect between equals, which is necessary for any kind of business relationship.

If you are discovering Kiva with this article, get involved and lend your first 25$ to see the result.

Lots of thanks to Gemma for helping with the translation!

Saahkem Dorothy Muyang. 1954 - 2009.

By Dennis A. Espinoza, KF9, Grounded and Holistic Approach for People’s Empowerment (GHAPE) in Bamenda, Cameroon

I was working at my desk when Kenneth, my roommate and GHAPE loan officer, answered his phone and heard that ten year GHAPE member and Kiva borrower, Saahkem Dorothy Muyang, had passed away after a bout with diabetes.

Just glancing at Dorothy’s picture and noticing her beaming smile gives you an impression of who she was.  She had a big heart, a deep love for her family and was very involved in her community.  Needless to say, her passing was a significant loss to a lot of people around here.  She was well loved and I wish I would’ve had an opportunity to meet her in person.

As I took my bucket shower at 4:30am the morning of the funeral, I was a bit concerned that I hadn’t brought the proper clothes.  Black wasn’t a color I was planning on wearing much in this heat.  Fortunately, I dug deep and found a black polo at the bottom of my luggage to go with some black slacks and black shoes.

When I arrived I noticed I stood out.  I wasn’t the only one in colorless attire but we were in the minority.  Those closest to Dorothy weren’t wearing black. They weren’t even wearing dark colors.

Her church community wore bright yellow and white.  Fellow members of her fish frying community wore green, yellow, white and purple.

Her GHAPE community wore their blue, yellow and white GHAPE dresses.

Like a military uniform or a flag draped across a soldier’s casket, Dorothy’s GHAPE outfit was a defining article that remained with her throughout the entire ceremony.  Each of the individuals in her GHAPE lending group did also.

GHAPE rarely has to declare a bad debt.  The nature of the lending circle makes it so that all members’ loans are properly supported by peers and it seems to work well.  One of the few instances when GHAPE does declare a bad debt is in the event of a borrower’s death.  When a borrower passes away GHAPE forgives the loan and provides the deceased’s family with a bereavement contribution for the funeral and burial expenses.  The financial contribution is a gesture that makes a big difference in a place that doesn’t have the luxury of life insurance, but it is the least of what GHAPE does.

Throughout my short time in the field I’ve learned that GHAPE, and most of Kiva’s field partners, are so much more than a loan.  The fact really hit me when I saw four of GHAPE’s ten loan officers, GHAPE’s program director and a GHAPE board member consoling Dorothy’s family’s during the service and funeral.  Besides being a bit concerned of how the others were holding down the fort, I was amazed.

I sometimes wonder if the old personal financial advising firms took a cue from an MFI when they ran ads depicting a financial advisor speaking at the wedding of one of his client’s sons.  While I have yet to personally experience that level of involvement from any of my banks, it is exactly what many of Kiva’s partners do for their clients.  They know each borrower’s name, they have their account numbers memorized, they share in the joy of a birth, they celebrate their successes and they cry during their funerals.

So it seemed fitting that, instead of mourning in solemn dark attire, most of Dorothy’s friends demonstrated and celebrated the community they shared with her through their clothing and their songs.  They didn’t wear black.  They didn’t wear their Sunday best.  They displayed how they knew her best and what brought them together.  Watching Dorothy’s lending group stand together alongside GHAPE employees made it apparent that being a GHAPE member may be based on a loan but it means so much more.  It means standing in solidarity during a loss.  More importantly, it means standing united and supporting each other throughout life.

I think I need to find a new bank.

Support GHAPE and GHAPE’s borrowers by lending (search GHAPE) and joining GHAPE’s lending team.

By Victoria Kabak, KF9, Nicaragua

As the holiday season fast approaches, I imagine many of you back at home are starting to make lists (checking them twice?) of presents or of people you’re going to buy presents for or even of presents you hope someone else gets you. It’s no secret that businesses in the United States – and in other countries – experience a significant uptick in sales in December.

But I’ve learned in the past few weeks that this phenomenon isn’t unique to the United States or to developed countries. Many of the borrowers I’ve met with recently have expressed to me that, even if business is a little slow right now, they’re optimistic for December since it tends to be their best month every year.

This got me thinking about seasonal changes and how different times of the year can impact the businesses of Kiva borrowers in distinct patterns. There are some obvious ways in which seasons and time impact their livelihoods. In addition to Christmastime, for example, those who work in agriculture are affected by when the harvest times for their crops are. Here in Nicaragua, working with Kiva’s field partner AFODENIC, I’ve recently learned from clients that tomato season ended just a few weeks ago and pitahaya season is coming to a close shortly.

However, there are several less obvious impacts that turning the calendar page has on microentrepreneurs’ work. These types of consequences – which are, of course, out of clients’ control – are not ones that had occurred to me before coming to Nicaragua. To share with you what I’ve learned, here are a couple of ways in which the time of year can have either a negative or a positive effect on borrowers and their businesses. Let me know in the comments if you can think of or have heard from clients about any others!

The School Year

In Nicaragua, the school year is just ending and the students are about to have their three-month break; the months of November, December, and January are to them what June, July, and August are to us. For some borrowers, the break is a boon. Rosa Maria Madrigal sells school uniforms, among other clothing, and she said that parents usually buy their children new uniforms in between the school years, giving her a bump up in sales. More than one owner of a pulpería – the local name for a sort of grocery store that sells a wide variety of products and is often run out of the front of the owner’s home – have told me they have been planning to add toys to their inventory in anticipation of a toy rush to keep children entertained while they’re not in school.

Maritza del Carmen Estrada Sanchez and her snack kiosk, which will close when the school year ends

But one person’s boon can be another person’s loss. Maritza del Carmen Estrada Sanchez runs a snack kiosk in the schoolyard of a primary and secondary school, so when the school year ends, she shutters her kiosk. Fortunately, she is able to continue selling some food from her home during the off-season, though she said that doesn’t bring in quite as much income. It has been interesting to see how the same seasonal change can benefit some clients while being a detriment to others.

The Rainy Season

Nicaragua has two seasons: The rainy season, known as winter, runs from May to October or so, while the dry season, called summer, lasts from November to April. For some borrowers, the rain really puts a damper on their businesses. Luisa Ercilia Tardencilla Rodriguez said that the rain keeps clients away from her restaurant because they stay at home instead of going out to eat. Similarly, Maria Isabel Zapata, who owns a general store in a market, told me that the rain makes potential customers likelier just to go to a pulpería in their neighborhoods to buy what they need, rather than coming to the market.

The rainy season can also be seen as an example of one way that the same seasonal change can help one client and harm another. While the clients I mentioned above rue the rain, those who count on their crops to support their families take it as a welcome respite for what has been widely deemed to be an ongoing drought in the country.

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While these sorts of seasonal impacts may be out of borrowers’ hands, the good news is that microfinance institutions can help ease any difficulties created by them by structuring loans with an awareness and sensitivity to these types of potential consequences.

Victoria Kabak is a Kiva Fellow at AFODENIC in Managua, Nicaragua. Check out AFODENIC’s currently fundraising loans on Kiva.

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

Music by: JPMounier  Introduction video: Coffee Insitute (1961)

 Last week, I had the pleasure of accompanying David, a credit officer with FUDECOSUR, to Altamira for the monthly credit committee meeting. Altamira is a small village bordering la Parque de La Amistad, a National Park straddling the Costa Rican-Panamanian border still yet untouched by the hop on-hop off tourist brigade that covers so much of this small country. Altamira is coffee country, where the altitude helps cultivate a rich Arabica blend and the lack of oxygen ensures a light head to go with it.

David navigating our way through the backroads of La Parque de La Amistad

Each month, David travels 4 hours to reach Altamira and meet with the credit committee, a group elected by the people of Altamira to run the village bank. The village bank is funded and supervised by FUDECOSUR where David oversees new credit disbursal and interest and principal repayments. The meetings take place at AsoProLa, an organization working to educate coffee producers and promote rural tourism. Every meeting ends just the way it should in Altamira, with good company and a strong cup of coffee, 2 heaping spoonfuls of sugar for the ticos, black for me.

The Altamira credit committee enjoying a well deserved cup of coffee after the meeting.

Please consider asking your local coffee house to support the small-scale coffee farmers it relies on. They can do this by making a loan on Kiva.org or creating a lending team  to promote their business and social awareness. You could also  convince them to place a simple print out of a Kiva borrower profile near their cash register to help garner support for Kiva.org and small scale farming. If you are interested in the work FUDECOSUR is doing in Southern Costa Rica, please join our lending team, Friends of FUDECOSUR. You can support coffee farmers in Latin America by browsing the current fundraising loans here.

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Karl Baumgarten is serving as a Kiva Fellow working with the new field partner FUDECOSUR in San Isidro, Costa Rica

By Jeremy Lapedis, KF9, Guatemala

I’m Jewish, but, before every meal at Manuel’s hous,e we say a prayer thanking Jesus Christ.  Manuel is the director of FAPE, the MFI where I work in Guatemala, and I have been staying with him since arriving.  He is also a pastor at a Baptist church.  So I was surprised Thursday night when lifting my head, just after our prayer, I spotted a menorah on display.  What is this doing here?

Manual caught my gaze. “Oh, a friend gave me that.  Do you know what it used for?”  he queried.

I attempted to impart what knowledge I had of the menorah: It was a miracle that the oil burned for eight days, but there are nine candles.  Channukah was the festival of lights.  He listened intently on what I had to say completely fascinated with my every word.  His genuine interest in my religion, in hearing my thoughts, was not something I was accustomed to back home.  How often do we hang onto every word of someone we barely know?

Shortly thereafter, he shared with me what my name meant to him.  That Jeremias was a very important saint.  He taught me a song the he sang at church.  I absorbed his words.  We were not just talking at each other, but having a deep connection. This is what Kiva is all about, making personal connections with people.  Finding things you have in common and learning.  Although Manuel is not a lender nor a supported entrepreneur,  he too likes to make connections while alleviating poverty.   I am glad his organization is the intermediary, facilitating connections.

On Friday night, I baked a challah, and he asked that I say the prayer over the meal.  I started. “Baruch atah Adonai…”

Join FAPE’s lending team to support its entrepreneurs.

Suzy Marinkovich, KF8 Peru & KF9 Bolivia

One of the most exciting things about being a Kiva Fellow is the opportunity to tell the untold stories of those so remote, so rural, and so ignored by the media.  When there are six billion humans sprinkled across the world, the media has the unenviable task of picking and choosing stories that deserve local, national, or even global attention.  As a result, we hear about unimaginable tragedies plaguing certain parts of the world — and often only the most painful and shocking stories are told.  Ayacucho, Peru during the 1980s was simply a red zone, a place known only for the violence between the Peruvian military and maoist-terrorist group Sendero Luminoso (Shining Path).  After spending four months in Ayacucho with partner FINCA Peru, my husband and I made our way overland to Bolivia.  En route, we took a taxi in La Paz and as we chatted with the driver, he asked us where we’d been.  When I told him, the next thing he said was: “Ayacucho, oh that’s where the terrorism is, Shining Path, why would you go there?”  The reality is that the Shining Path has fragmented and exists only in the most rural parts of that region, and the estimated 70,000 people killed is a tragic echoing statistic from pre-1993.  But he made a great point; often, the way we look at certain parts of the world is through the lens of their tragedies.  As a result, we forget that there are innocent mothers, fathers, children, farmers, market vendors, beauty shop owners, cell phone vendors, and artisans that exist there, too.  Their stories fall by the wayside, and sometimes we associate the conflict with the region or country itself, and we wouldn’t dare going there.  It was so when two years ago I went to the D.R. Congo’s North Kivu region — its most volatile.  I was scared to cross over the border, having only heard about the horrible atrocities and human rights violations occurring in the very border town I was entering through.  But after walking across the border, I was surrounded by women carrying fruit in baskets on their heads, their babies on their backs, children in school uniforms, and dozens of smiling innocent faces.  My hope is that through the wonderful story by PBS Frontline World on Kiva’s borrowers at FINCA Peru in Ayacucho, we can all begin to look beyond the lens of tragedy and see the talent and remarkable entrepreneurship hiding among some of the many innocents and those left behind.

Click the photo above or follow this link to check out the iWitness story on PBS Frontline World about FINCA Peru’s rural borrowers!  Then, lend to Kiva’s entrepreneurs here.

Laughing with Myrna Data, a Kiva Borrower

Mary Riedel, KF9, Philippines

“…What do you think your biggest challenge will be if you become a Kiva Fellow?”

I heard this question twice during my interview process with Kiva.  On both occasions I was sitting at my kitchen table in San Francisco, working from home (experiencing some cabin fever), and planing to meet up with friends later in the day. My answer was, “Feeling disconnected from friends and family.”  And yes, some days staying connected has been a bit of challenge, looking at the clock wishing it was telling me a different story,  jumping to Skpye and hoping to to see little green dots. For the most part though, communication has been good, it just takes  more planning and acceptance.

So that’s not my biggest challenge…

Last week I had the pleasure of meeting Myrna Datu a woman with a warm smile and a boisterous laugh.  She was the first person I noticed when we got to Parog Parog barangay (village) in Solana, Cagayan. She was standing in a group of women holding a sign that said “Welcome Kiva Fellows Adam and Mary”. Myrna had a lot of energy, was wearing a bright orange shirt and a canvas hat (I love hats).

A Very Warm Welcome - Myrna Datu, left of sign

Myrna is the mother of girls (one in high school and one in college), she was widowed 7 years ago, which means she does all of male and female duties in the household by herself . Myrna raises pigs, buys and sells vegetables, makes and sells small snacks, and works in the field growing rice (she walks a Karibou – Filipino Buffalo – to plow the fields becasue she’s afraid  of riding him.

Karibou (Filipino Buffalo)

A little while later after many group photos…. it was Myrna’s turn to be interviewed. She sat down and looked away (she was really nervous) she started laughing…and then her expression changed – tears, a quivering face, but still a smile… “oh, no!” I thought… “she’s crying,..like, a lot..but smiling, what’s going on…” Could it be…really?… “tears of joy”.

Sitting in small a room full of about 20 women, the Documentation Officer from ASKI (a Kiva Microfinance Partner) asked, “Myrna why are you crying?”

You HAVE TO WATHCH THIS VIDEO (the first 30 seconds at least) and hear Myrna…her voice and spirit are far more touching then I could ever put into words…Which is why I am humbling myself and posting this – despite the fact that my “journal interview” sort of turned into an Oprah episode and some of my comments sound pretty ho-key. I’m learning less is more when the camera is rolling. (My ego really wants me to spend a ton of time editing this on imovie to get my voice out of there, but to be honest  it would take me far tooooo long and have a ton of journals to post).

As you can see keeping a boundary and acting as an objective reporter/fellow might be pretty challenging. It’s proving to be the most challenging aspect of being a Kiva Fellow…. Here’s what you don’t see in the video… While I was sitting with Myrna, as she lovingly touched my hand over and over,  crying and telling me her story– all of me wanted to jump up, hug this woman, and say, “You ROCK! You are doing an awesome job! Everything is going to be OK.” I wanted to thank her for sharing her story with me and tell her how touched and honored I was. Then my mind got going… “Myrna works so hard. I hope she has some joy in her life….maybe I could take her to a movie, get her a facial.” Then my mind really got going, “What about a different job, a vacation, a husband…. I wonder how widows find dates here? Do widows date here –  maybe in Manila?  I’ll talk to Prem (the Kiva Fellow there), Do they use e-harmoney here. Hmmm, this is sounding a little crazy…. but I bet she’d like the special soap I use, maybe I’ll bring a little next time… I wonder what she wants for Christmas.”

So as you can see, from the inner chatter I actually held back in the video, but it was really uncomfortable, I was having a hard time finding the line…the boundary. Knowing how to respond to this intense display of human emotion?…This definitely  would not have happened at Wells Fargo in California.  Was I supposed to stay stoic like a real reporter, no feedback…nothing?

We left the barangay, time passed, my mind settled, I wrote a journal, and then another, because that is how I help. That is how I help everyone not just Myrna, by working toward’s Kiva Mission – connecting people through lending in order to alleviate poverty. There are many people like Myrna Datu out there.

All things considered I did a pretty good job (minus a few dorky sentences) but as I said, I’m learning. I’m getting more comfortable with silence and letting people have “their feelings” and experiences (independent of me) without interrupting the process…because it is a beautiful one.

Loan to ASKI Borrowers

by James Han, KF9 Cambodia (AMK)

We typically measure the impact of microfinance through financial measures.  What interest rates are the microfinance institutions (MFIs) charging? Has the client’s business experienced increased profits?  Has a population increased its household income?  These are all valid questions and are at the center of measuring the effectiveness of microfinance.

But, I was recently inspired by the broader social impact that microfinance can have.  While the “social bottom line” may not be as quantifiable as interest rates or household income, MFIs such as AMK are proving that an MFI with a strong social mission can have a truly profound impact on a local community.

AMK is Cambodia’s fifth largest MFI and more importantly, one of Cambodia’s most socially focused MFIs.  Back in June 2009 with the help of Katie Davis (KF7), AMK started SIGU (Special Interest Group Unit), an internal team that focuses on assisting “vulnerable groups” that are currently under-served by microfinance services.  These vulnerable groups include women who are victims of human trafficking, domestic violence, and other gender-based traumas, as well as people living with HIV/AIDS, street children, and the disabled.  Last Thursday was a special day for Katie and the SIGU team as they disbursed their first loan to a group of young women who will use the loan to start a sewing cooperative in Phnom Penh.

I had a chance to interview Katie to further dig into how AMK is using microfinance to combat issues such as human trafficking.

What is your position and how did you end up at AMK?

I am the Special Interest Group Unit Coordinator and ended up at AMK because of my Kiva Fellowship, which I completed earlier this year.  After my 4-month placement, I wanted to get a deeper understanding of microfinance and also contribute something unique to the industry.  AMK had already started the research for SIGU and the opportunity naturally came up for me to lead this initiative so I decided to stay with AMK.

Last Thursday was a big day for you, can you tell us more about it?

We recently partnered with a small sewing co-operative comprised of 5 young women who previously worked under exploitative conditions.  These young women had all come to Phnom Penh from rural provinces to escape vulnerable family situations which put them at risk of being trafficked. The women attended a vocational training program that taught them how to sew. The tailor who had employed these girls was very indebted, so she stopped paying the girls’ salaries.  Because the tailor had housed the girls, they had nowhere to go and consequently worked in this exploitative situation for over a year.  They finally broke free when a sympathetic client realized the injustice of the situation and facilitated a way out. Last Thursday, AMK/SIGU extended each woman a loan of $145 to buy a sewing machine.  The 5 girls will work for the co-operative and receive a salary, but if they ever want to leave to start their own businesses, they have their own sewing machine to do so.

The loan disbursement was a special day for me.  I had been to inspiring loan disbursements before through my Kiva Fellowship but to see the smiles on the girls’ faces, knowing the adversity they had been through was an amazing thing.  My experience at AMK has come full circle in that SIGU has been able to designate this first loan as a Kiva loan because these 5 brave ladies want their story told.

The First SIGU Borrowers

Why are these “vulnerable group” underserved in the microfinance community?

There are different vulnerable groups, for example people with HIV/AIDS, people who have become handicapped due to land mines, and human trafficking victims; and in Cambodia they all seem to fall through the cracks of microfinance.  Due to some element of past trauma, they are perceived as a “too risky” poor.  Moreover, NGOs usually become the default supporters for these individuals, and if dependency results, individuals are less exposed to microfinance as a viable economic option for self sufficiency.

What else is SIGU working on?

A big part of my job is to be an ambassador for AMK and microfinance to the NGO community.  The NGOs that assist vulnerable groups are great at implementing after-care programs and supporting victims emotionally but we also recognize they need to be supported financially.  I don’t believe NGOs in Cambodia should spread themselves thin by trying to create a credit program from scratch, just as we as a bank should not try to develop after-care programs in a field where we have no expertise. Collaboration which draws on the core strengths of both MFIs and NGO, in the form of a partnership, can help ensure that clients are supported both emotionally and economically.

We currently have formal partnerships with two well known after-care organizations in Phnom Penh, Hagar International and Daughters of Cambodia.  Hagar operates as a residential shelter and community outreach program.  SIGU is designing a microfinance-specific financial education curriculum which will be incorporated into Hagar’s existing vocational programs as a credit pilot gets underway.  Daughters of Cambodia operates as a day center in an area of brothels, offering programs and activities designed to empower victims of sexual exploitation through a range of social, psychological, and alternative employment opportunities.  Clients receive a salary once they acquire new skills and begin contributing to the many social businesses run out of the Daughters center.  Some of the women who have worked at the center for a prolonged period have expressed a desire to start their own business.  So, we have recently conducted trainings for the women interested in obtaining a loan, and we expect to make at least one loan to a Daughter’s client this month.

SIGU will continue reach out to additional NGO’s in the anti-trafficking arena and open the door for further partnerships.  Also, the financial education is something unique to the market in Cambodia and is crucial to the mission of SIGU.  We want the financial literacy training to precede credit discussions.SIGU loans are similar to AMK’s regular loans, but they do differ in collateral requirements. AMK does not expect to profit on SIGU loans, but  we do believe in the capacity of these people to repay, and we believe that these “socially focused” loans can be self sustaining.

Katie

After thanking Katie for her time and for her inspiring work, I began to see a theme in Katie’s work.

She is facilitating cooperation and collaboration between the NGO community and the MF community to alleviate all facets of poverty.  Poverty is being in a state of lack rather than abundance and this can be the case not just from an economical sense, but from an emotional one as well.  With reportedly over 1,000 NGOs in Cambodia addressing needs in education, healthcare, and various human rights issues, there are significant and noble efforts being done to restore “the emotional wealth” of the marginalized.  At the same time, Cambodia’s 18 licensed MFIs have reached close to a million borrowers to provide economic opportunity.  Although both movements have made significant strides individually, only with collaboration will all facets of poverty be alleviated in Cambodia.  And thanks to the efforts of people like Katie, that is becoming a reality.

James Han is a Kiva Fellow working for Angkor Mikroheranhvatho Kampuchea (AMK) in Cambodia.

AMK’s mission is to help large numbers of the poor in Cambodia improve their livelihood options through the sustainable delivery of appropriate and viable microfinance services.  To view their current fundraising loan, click here.

By Meg Gray, KF9 Nicaragua

How to describe one of the markets in Nicaragua? It’s hard and there really isn’t anything like them in the States to compare to. When I visited the Mercado Central in Chinandega, a small city that serves as a supply hub for the farms surrounding it, the heat was stifling. A few aisles are well lit with a sprinkling of fluorescent bulbs, while others are dark and cave-like. At the same time, the whole building is bursting with colors, smells, and noises. Every aisle is packed with people and very few aisles are wide enough for more than two people to walk side by side. And did I mention it’s hot. Chinandega has a well-deserved reputation for being one of the hottest places in Nicaragua. My guidebook accurately describes it as feeling like a rotisserie chicken the moment you leave the AC behind. In the end I decided, it was too hard to describe my day visiting clients in the Mercado Central. I decided it would be more fun and easier to try to figure out my video editing software and give you guys a taste of what my day was like. So here goes my first attempt at making a video…

Meg Gray is currently a Kiva Fellow in Nicaragua, where she is working with Kiva’s field partner CEPRODEL. Support a loan to a CEPRODEL entrepreneur or introduce a friend to Kiva with a gift certificate.

By Zal Bilimoria, KF9, Ecuador

Ecuadorian cheese tastes a bit different if one is not accustomed to eating it. Cheese is not necessarily the most common ingredient in local fare, as the staple for most meals is rice, plantains and beans served with beef, chicken or some other type of meat. However, it’s unmistakeable when you take that first bite of pizza, pasta or ham and cheese sandwich…especially if it hasn’t been refrigerated properly due to the energy crisis sweeping the country.

Mote (Corn) with Egg and Cheese

This is typically the dry season for much of Ecuador, but for the past two years, it has rained just enough to support the energy demands of the country, which hinge on the Paute hydroelectric dam south of Cuenca. Unfortunately, the presidential administration and the energy department decided to forgo plans to build additional hydroelectric installations and bet Ecuador’s future on their belief that rain would come once again for a third year in a row. However, here in Cuenca just 100 miles north of the dam, clear blue skies and record high temperatures suggest that pending rainfall is but a dream.  Paute needs to operate at roughly 70% efficiency in order to satisfy domestic demand; at the present time, the most it can muster is 35%.

Paute Hydroelectric Dam South of Cuenca

You might wonder why a single dam is responsible for supplying most of Ecuador’s energy. As do I. Essentially, it comes down to a lack of financial resources to design, build and manage further capacity. Ecuador’s relationships with neighboring countries are sub-par at the moment, but after two weeks of power rationing, Peru has agreed to sell 1,200 megawatts per hour per day and Colombia has committed to increasing cross-border provisions — at a great economic and political cost to the Ecuadorian presidential administration of Rafael Correa. Daily power rationing began on November 5, and each zone in every town nationwide is without power for 3-5 hours on average, and on Sundays for up to 12 hours — when everyone (including me) flocks to the beaches. Even though some headway is being made, the government estimates that power rationing in some form will last through the holidays.

The rationing has severely injured the economic health of Ecuador’s population, especially the working poor. All of you have likely been through rolling brownouts or even the massive east coast blackout during the very hot summer of 2002. Mostly a temporary inconvenience for us. But imagine it being a daily occurrence with no idea when the government will manually shut down electricity in your place of business, never mind your home. Luckily, the authorities are beginning to publish and distribute more schedules of non-operation.

Here is just a brief list of situational examples of how Ecuador is being impacted:

• Kiva entrepreneur with a photography business forced to turn away clients because she could not print photos
• Kiva entrepreneur with a restaurant needed to close on Sunday since there was no power during daylight hours
• Long bank lines during peak hours in order to cash in government-aid vouchers with many being turned away
• Extensive automobile lines for purchasing gas during hours of electricity operation, thus pushing up prices
• Major bus accident outside Cuenca last night at dusk prior to street lights turning on for the night, taking 14 souls
• No running water in many locations during times of power rationing since they share the same electricity lines

Again, the government feels like they have a handle on the crisis now and will begin to reduce the power rationing. But until then, I think I’ll stay away from cheese and its distant cousin sour cream.

Zal Bilimoria is a Kiva Fellow based in Ecuador (currently, Cuenca) working for Fundacion ESPOIR. Consider making a loan to the working poor of this South American country.

By Nick Malouin, KF9, Togo

There’s something about traveling at high speeds in Africa that allows the mind to open up and do its best thinking. Maybe with the pot holes and daily frustrations left behind the brain can finally concentrate on something else. I had such an experience on a recent weekend trip to Lomé. Traveling at 60km/h, I had two hours to take in the beautiful scenery between Kpalimé and Lomé. The villages, usually a cacophony of noise and activity, had the brief illusion of serenity.

I started thinking about earlier that day when I met a client selling motor oil on the side of the road. His stand had looked like every other motor oil stand in Kpalimé and you might think for a second that it was part of a chain. The fact is though with only certain inputs available (wood boards) and zero money to invest, all merchant stands, whether selling vegetables, pagne or motor oil, look exactly the same. I started wondering if a little training could go a long way; if a quick lesson on product differentiation, branding and marketing strategy, along with financial planning, could turn this motor oil stand into the next Jiffy Lube. 

Nassirou Ouro-Couloum, Kiva Client

Before I had time to finish that thought I heard a loud POP! Remembering that I was still on the road I looked around and wondered what had happened. Although not a car expert, I had a pretty good feeling we had just gotten a flat tire. I looked around for confirmation and got it from the other passengers but not the driver. For a second it looked like he was going to try and make the second half of the trip on three wheels.

A flat tire in Togo, as in many developing countries, is not a big deal. The highways are scattered with cars pulled over in the ditch with various ailments. In fact, I was even glad the event had happened for one quick and interesting observation – every car that passed us offered to help. Once the tire had been fixed (with such help) and we were back on the open road I tried to think why this would happen here and not back home. I came up with three answers. Firstly, when cars can only travel 60 km/h you have more time to see someone in trouble, realize they need help and stop. Sometimes that’s not possible, or too dangerous, on faster roads. Secondly, when everyone has had their car broken down you can empathize with them more easily because you’ve been in that situation yourself. Since Togo is a small country you might actually be stuck one day yourself and see that person driving down the highway. The last reason, and one that may reveal something about the fabric of society here, is that the Togolese do not view or interact with strangers the same way North Americans do. It’s not uncommon for Togolese to say hi or “Ca va?” to complete strangers on the street whereas, on the other extreme, Westerners have been taught not to even talk to strangers growing up. To be fair, that’s not to say all strangers are treated well in Togo – if you’re walking down the road you better get out of the way because the oncoming car won’t. In either case, if my car broke down I’d much rather be here than Toronto.

Interested in lending to Togolese entrepreneurs like Nassirou Ouro-Couloum (seen above)? Please click here!

Ilmari Soininen

KF9  UIMCEC  Dakar, Senegal

Topping up one’s phone credit is never a problem in Dakar – on every street corner you will find one, or usually three or four young men hawking the same exact Orange Telecom cards. They offer the exact same cards, in the exact same spot, at the exact same time. Peanut vendors are equally ubiquitous, often stationed only a feet away from each other, selling the same peanuts, in the same 50 Franc increments.

These vendors often rarely have many other avenues for generating income. Many come from the countryside, where subsistence farming is usually the one and only option. They prefer the hustle and bustle of the city. They prefer the 500, 1000 or even 2000 CFCA (between US$ 1-4) they can make a day. Who can blame them.

But when you add up all of the thousands of phonecard, peanut (cigarette, tissue, fruit …) vendors, you begin to see why this country, and indeed many of its neighbors, are still so poor.  With so many young, able bodied workers devoting long hours every single day to hawking the same commodity items, it seems like a 0, or at best 0.0001, sum game. It is hard to argue that each additional hawker is reacting to increasing demand. The same amount of phonecards would be sold with one guy per street corner instead of four.

Further up the food chain, the story seems the same. Looking through the stack of loans at a local branch, every single loan application the loan officer read-off was for a small-scale merchant. Many were selling the same exact Malian fabrics, Guinean fruit or Chinese mobile phone accessories as the boutique one hundred feet away.

These merchants often do see an increased income thanks to micro-loans. Many go on to invest these gains in the health and education of their children, or in building a home or diversifying their business. All very positive for both social and economic development. And there is the intrinsic value of participating in the formal financial sector – supporting the integral institutions of a functioning economy. But at the end of the day, the amount of added value to the economy from simply selling an (imported) good hits a peak quite quickly.

We are often caught up on the success of micro-lending on the individual micro level, but how does it add up in the aggregate? Is financing vendors of commodity items adding to the well being of the community and nation as a whole? Is the pie actually growing or is it just being sliced up into more and more pieces? Does micro-finance really have the power to propel an entire country out of poverty?

I invite your ideas and comments – these are tough questions, and ones to which I’m sure Kiva fellows and lenders can offer good insight.

Why not make your next Kiva loan to UIMCEC? We currently have two loans from the Dakar area. Check ‘em out  UIMCEC borrowers

By Jeremy Lapedis, KF9, Guatemala

I am the visitor. I am from Kiva. I am Jeremias. This has been my introduction for my first days in Guatemala.

Tueseday, we went to San Martin. It is a two hour drive from Guatemala City: thankfully it was Marco and not me who was driving so I could observe the scenery as we passed through beautiful rolling hills covered in forests. In the distance we could see small peaks, and each one was covered in trees.

Once we arrived, we were greeted by Bertha Carmelina Tohon, who just finished fundraising on Kiva.  She gave us a warm welcome and insisted that we have tea before we leave her comedor (eatery).  She not shy to share her life story.  I quickly learned that her kids attending college, one studying psychology and the other chemistry.  I learned that she thought the Guatemalan school system did not teach the children anything practical, and that she has a typing school where kids learn using typewriters.  I learned that she was hard working: “There is time to rest when you die,” she said.

But not all of our visits on this day would be this happy. Our purpose was to seek out entrepreneurs that had been tardy on paying back their loans.  Complicating matters was the fact that the loan officer who worked with these people, had an accident and is no longer working with FAPE.  With only adresses of where we thought the people would be located, we went on somewhat of a goosechase to find people.  We only ended up finding about 5 entrepreneurs throughout the entire day, one of which I wrote a journal update on.  Each time, Marco introduced me as a visitor from the US who works for Kiva.  Some were more welcoming and some were more closed as a result of my presence.  Either way, the visits were different because I was there.   I can see now, just how hard it is to collect repayments.  Two hours there; 5 entrepreneurs visited collecting repayments from no one; Two hours back.

Wednesday we had a a different task: giving people checks who had been approved for a Kiva loan, and will soon be on the website. Carolina, the coordinator for the region, and I went to Sacatepequez, and I was at the wheel. Carolina introduced me very much in the same way, as the visitor. This activity was a happy one. A sixty-year-old woman smiled widely at me while placing her thumb print on the signature line to receive the check. A thirty-year-old woman gave us frozen ice treats from her store as I left–Carolina told me that this was only because I, the visitor, was there.

I then got to witness the the disbursement of a group loan. About twenty-five women, ages 20-60, sitting in the “courtyard” of a house, kids running around, roosters pecking next to the Carolina, who was taking signatures and distributing checks. Again, I was introduced. I said about 3 sentences in nervous Spanish thanking them for allowing me to share this experience with them, and the whole group broke into applause. They took pictures of me with their cell phones. I was served what I would call a Guatemalan pizza, made on baked tortilla instead of dough. I was the guest of honor.

The whole hour and a half ride home, when I was not concentrating on avoiding giant potholes, or buses that stop at any given moment without warning, I questioned what I did to deserve that applause. More than that, I questioned the impact of my presence in the places, and whether or not is was a good thing. I questioned whether I could ever observe the process of a Kiva loan without affecting the environment. Carolina, Marco, FAPE, and the Guatemalans who have loans with FAPE have been more than welcoming, but what I really want is not to be welcomed, but to be treated the same as anyone else. I know that this is not reality, and as a 6′3″ white male from the United States, I’ll just have to live with being a welcomed visitor.

Join FAPE’s lending team to support FAPE’s entrepreneurs and lend on Kiva.

Rebecca Corey, KF9 Tanzania

The first time I got shoved out of the way in a mad rush to the dala-dala bus, my friend Victor said to me, “This is the local local lifestyle, pole sana–I’m very sorry.” The next time he said it was when the electricity went out and I was reading in the living room. “This is the local local, pole dada–sorry sister.” Then again when I had Malaria: “The Tanzania local local, pole sana, pole sana.” In the streets, when Tanzanians are shouting to me, “Mchina, mchina!” Chinese person, chinese person! : “They are local local, they cannot tell you are Korean. Pole.” And every time, he smiles his big smile, apologetic, almost wistful, partly amused, always sincere.

I have also started to think to myself, “local local,” several times each day. We haven’t had water for the past eight days because of a broken water pump, so we fetch bucketfuls from next door. Tanzania is suffering from a major power crisis, so electricity is rationed. Ours goes out for a full day once every three days. I get up at five every morning to catch the dala-dala before the major traffic jams so I can get to work by eight. I see one bus that says on the back, “Don’t Hide, Just Pay,” another claims “Jesus is Power,” and a third “Blootooth On.” “Local local,” I think.

I myself am becoming more and more local local. I bought a kanga the other day, a long sheet of patterned fabric that is cut in half and worn around the waist and draped or wrapped over the shoulders. I sleep in it and wear it around the house. I’m also starting to think and speak in Tanzanian English. I have started to say things like, “this here pen” and “I live some few miles away.” When I want to say “etc.,” or “and so on,” it’s “and this, this, this.” When saying that someone went on and on (as in blah, blah blah), it’s “he said, ‘You are wrong,’ and what, what, what.” One of my favorites is “I feel to relax,” or “I feel to go to the store.” And not only have I started to speak like this, these phrases make perfect sense to me, have a charm and character of their own.

My Swahili is improving, too. This past week I went into the field to interview two Kiva clients who were filmed about five months ago for a documentary for BBC World. The film crew is returning soon to shoot follow-up segments on the same borrowers. With help from Rita, the Kiva Coordinator, I was able to ask a majority of the questions about Atuna and Neema’s businesses. While I don’t want to give away details of what will be in the film, I will say that I was humbled and inspired by both of these women. They are shrewd business owners, caring mothers, and true bread-winners. When one endeavor doesn’t work out–cassava crops fail, it’s too hard to turn a profit running a pharmacy–they adapt, start new businesses, continue without a thought of giving up. They, too, are local local.

At a Rotary event last weekend, a kind Rotarian expressed shock and dismay that I take the dala-dalas to get around. He suggested hiring a private car. At work, my co-workers have urged me not to move in with a Tanzanian family, and instead to “get a nice apartment for mzungu.” I even got an email today from the U.S. Embassy warning foreigners against living in unguarded homes and taking taxis and dala-dalas for transport because they are “frequently overcrowded, poorly maintained, a common site of petty theft, and [their] operation is generally unsafe.”

I don’t want to be reckless or unappreciative to those who are looking out for me–but here’s the honest truth: I love the local local. It’s not always easy, and much of the time it’s very hard. I’m on the edge of exhaustion, I’m sunburnt and hungry, but I am also supremely happy. I can get a mango or an avocado for 50 cents at the Mombasa market down the street. I can fight my way onto a dala-dala like any Tanzanian, and I’ve come to enjoy the nearly four hours I spend a day on those “overcrowded, poorly-maintained” vessels because they give me time to think, to listen, to watch, to become daily more a part of the world around me. Children shouting “Hello-madam-how-are-you-I-am-fine!” in one breath, sleeping outside on the porch during an afternoon rain, eating in the dark at one of the many small canteens around the city, perfecting the bucket shower, taking clean clothes down from the line, this is the local local. Friendliness, generosity, grit, patience, hope. These are the local local.

I am learning hard lessons the easy way. That is, I am doing something I love, that I believe in, and for that reason it is worth every moment of sweaty, dust-caked fatigue, of anger at the world’s injustices, of fear that change is hard to come by. I’m living for a while a faint imitation of what millions live every day, for their entire lives. And what I’ve found is that poverty is cruel, but human dignity, ingenuity, and heart are persistent, unafraid. This gives me hope, conviction, and a fierce pride in how strong people can be despite their circumstances. So here’s to that strength. Here’s to the local local.

*********

Rebecca Corey is a Kiva Fellow in Dar es Salaam with Tujijenge Tanzania, Ltd. See Tujijenge’s currently fundraising loans here, and join the Tujijenge lending team! Also, remember that the holiday season is coming up, and Kiva.org gift certificates make wonderful presents!

Me and the other Africa-based Kiva Fellows (photo provided by John Briggs)

By Taylor Akin, KF9, Togo

In the months of preparation leading up to my Kiva Fellowship in Lomé, Togo I have had plenty of opportunity to practice my take on the taxicab test – a concise explanation of Kiva’s mission and the work of a Kiva Fellow. Upon completing my training at Kiva Headquarters in San Francisco, I felt confident in my ability to accurately explain Kiva’s approach to microfinance to a relatively neutral audience. More often than not, I encountered the disinterested but common eyes-glazed-over look immediately following the words “non-profit.” To be sure, anyone who has ever gone to the developing world to do anything other than build schools has faced this problem.

While we learned the many ways in which to defend Kiva, there was one area where our taxicab test fell short: defending our host countries. It had not really occurred to me that I would be put in the position of having to justify a five-month trip to the continent of Africa. Yet, I rarely got beyond “I’m going to Togo” before being hit with a surprising amount of ignorance, miseducation, and prejudice.

At first, the most common responses seemed innocent enough. They generally fell along the lines of cautionary warnings like “be careful,” “watch out for the lions,” and “it’s not safe there like it is here.” At other times, comedy was the vessel through which this prejudice was revealed. One co-worker recently asked me when I leave “for the jungle to visit Tarzan” despite my repeated explanations that I’ll be based in a bustling capital city.  Finally, there are the truly shocking remarks. About a week ago, a co-worker warned me to “be careful in Africa because the people there are like animals, not real men.”

I was horrified. And worst of all, I was rendered speechless. As a student of International Development Studies, I spent the last four years learning to take the African continent’s diversity of history, language, politics, and culture for granted. I had also learned to question colonial accounts of these diverse nations and expose any hidden biases. Yet, this prejudice encountered in my workplace was nowhere near subtle. Instead, it was so blatant that I had no idea how to even begin to respond.

To be sure, the prejudiced comments I encountered are certainly not limited to Africa. Before embarking on an independent trip to Ecuador 3 years ago, one friend of the family deemed it fit to summarize my 6-week experience as nothing more than “squatting in a bush.” Even my family in England is quick to label the entire North American continent as having one identity.

Yet, the ignorance towards Africa has certainly been astounding. Most commonly, Africa is reduced and homogenized into a single geographic region where specificities do not exist. As a result, my trip to Togo is consistently referred to as my trip to “Africa.” (Nevermind the fact that this one continent is home to 57 independent countries!)  Moreover, this homogenization is often coupled with a negative descriptor – poor, underdeveloped, dangerous, tribal, etc.

Africa is somehow…different.

While these comments may primarily reflect the specific views of a few colleagues, this single story of Africa – one of danger and underdevelopment – persists in a broader context.  In her lecture on Ted.com, Nigerian novelist Chimamanda Adichie discusses this concept of the single story in greater detail. She argues that we are consistently exposed to many versions of one single story that is meant to serve as an accurate description of the entire continent. While this story may take several shapes (an AIDS orphan on an infomercial, a tyrant dictator on the news, or an imprisoned diamond-miner in a Leonardo DiCaprio movie), the overaching theme is always one of sadness, turmoil, death, and struggle. As Adichie clarifies, many interpretations of this single story are true, but they do not tell the wholestory. As an alternative, we need to be exposed to a variety of African stories – good and bad and all true.

Despite these frustrations, I try to stay positive. I do my best to focus on the few co-workers who will listen long enough for me to explain microfinance, and the friends who are genuinely interested in the work I will be doing. Sometimes, all it takes is the simple response “Oh! That sounds cool” to brighten my day. While I’ve certainly had to alter the taxicab-test to incorporate a justification of travelling to West Africa, it has definitely given me some perspective. It is important to remember that my audience will rarely be neutral. Instead, many people have very strong opinions about what it means to be poor, how banks should work, and what Africa is like. The preparation for this Fellowship alone has presented me with challenges both intellectual and emotional, yet I look forward to the experiences I will have once I truly am in “Africa.”

Taylor Akin is  a member of KF9 who will be working with Women and Associations for Gain both Economic and Social (WAGES) in Lomé, Togo. To lend to a WAGES entrepreneur, click here. To learn more about WAGES, please click here.

By Mohammed Al-Shawaf, KF9 Palestine

Recently, Kiva’s been engulfed in controversy over how it presents its Person-to-Person lending platform–a convenient shorthand for the reality on the ground or a more draconian attempt to mislead the casual lender?  I will not weigh in on this specific debate because there is already a rich dialogue that has taken place. However, I have noticed that a theme in some of the posts and responses has been to lament the limitations of P2P lending today.  

In this equation, the microfinance institutions (MFIs) servicing the loans have been regarded as indispensable, but still undesirable middlemen between Kiva lenders and borrowers.  I can’t fault that view.  On the Kiva website, MFIs have partner pages that explain their missions.  But Kiva, above all, is a place that connects people and only in borrower and lender profiles can you learn what motivates individuals to engage in microfinance.

With that in mind, I asked employees at Ryada, the MFI I’m working with in Palestine, to finish the following prompt:  I work in microfinance because…

Note that responses from the four branches have been translated from Arabic to English (thanks, Dad) and that the answers are more specific to why they work at Ryada.  Nevertheless, I hope this brings about a deeper understanding of the people often forgot about in discussions of Person-to-Person lending.

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“I want to help the poor.  I want to help the Palestinian people.” Lina Nasr, Admin Assistant, Ryada HQ

“’Microfinance is not a magic ticket out of poverty, but it can help both the loan receiver as well as the loan giver. ‘” Anonymous

“It is the tool for ending poverty.” Alaa Sisalem, Program Director, Ryada HQ

“I love it.” Reem Al-Sheikh, Kiva Coordinator, Ryada HQ

“Micro Finance is a major tool in poverty alleviation, helps in improving the living conditions for the low income people. It also protects the poor by providing them with diversified service they will never be able to afford through any other alternatives such as micro insurance . I love to see a smile on the faces of these needy people who really reached a point they think they lost the hope of everything , the doors are closed in front of them and you support them to continue their dreams and to proof that everybody has the right to dream and have hope.”  Izz Tawil, Operations Manager, Ryada HQ

“For 9 years, I worked in different areas, mostly at NGOs.  They play an important role in helping people, specifically when there is a crisis or the individuals are very poor.  But there is a need for microfinance in our society—it is a sustainable sector that also has a social agenda.”  Nadin Zaghal, Finance & Administration Manager, Ryada HQ

“To improve my income and my family’s income.  I also see it as a successful institution that can guarantee me good and sustainable income.” Hasan Abdat, Loan Officer, Nablus

“[Ryada is] a successful program that provides dignified living and work stability and/or continuation.” Sawsan Azem, Admin Assistant, Nablus

“When an individual successfully performs a job and continues with it , that individual has complete confidence in that work and its goals and it’s banner. I’m totally convinced in Ryada’s goals, where I have been working for the past 5 years, because of its humanitarian and social services.

Theses goals and/or services are providing middle and lower income families opportunities to improve their standard of living and providing better housing and/or new housing via the loan programs.

Also the loans that provide for [business] developments at the same time enhance personal income and with that we can participate in improving the economic condition of our society.

Hard, united work and our perseverance kept us going despite all the circumstances that we went through and our ability to persevere and move forward regardless of it all was an incentive to continue work and improve on it.

Good admin support, and the support that team members give to each other which resemble a united family are important reasons which strengthened our ties to the organization, and contribute to our continuity and improvements.” Alaa Dbari, Site Engineer, Gaza

“To achieve a dignified life for me and my family.  To help families and small business people  to improve their lives.  To have a distinctive role in developing peoples’ lives and their working conditions.  To explore and expand peoples’ experiences and abilities in projects that will pay back in benefits to them and the society.” Yousef Abu Assida, Loan Officer, Nablus branch

“To provide services to the society with regard to projects, housing and others.  To improve conditions.” Gaza branch

“It’s a job I held before.  To improve my financial condition.” Suhair Atari, Admin Assistant, Jenin Branch

“It’s a credible organization with good reputation.  I’m proud to be a part of it. I hope that I can bare the responsibilities put on me and provide my services to the organization.  Ryada gave us a lot and we are obligated to give back to it what we can.” Ramallah branch

“To achieve Ryada’s goals. We aspire to be a well known organization in the market.  To bring financial sustainment to its workers.” Ali Thekri, Branch Manager, Ramallah branch

“1- It serves the Palestinian local society and contributes to its development.

2- It has a long history and service in Palestine.

3- It contributes in reducing high unemployment via borrowers loans.  A place to find work (at Ryada).

4- Contributed in solving part of the housing problem in Palestine. 

5- The internal polices of the institution is fixable and can be changed and improved according to the general situation of the Palestinians.

6- It will be transformed to a Palestinian institution.” Nabil Khyal, Loan Officer, Gaza branch

“When I first started working I did not know the organization,  just like any other member in our society.  Now I’m very proud to be part of it.  Ryada expanded and developed with time and kept on going despite all challenges.  Ryada faced difficulties and stood fast and now it’s a Palestinian institute that achieved what many other institutions failed to achieve. We grew up with it and now it’s part of our life. We give to it and it gives back to us.  

I’m proud to belong to this kind of an institute. For me personally, this is not just talk, I belong to Ryada which is a pioneering institute in every aspect.” Tulkarem branch

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Join the lending team Palestine and help us reach the 100 member mark by year’s end!

Follow Mohammed’s experiences in Palestine on Twitter @moshawaf

Mohammed Al-Shawaf is serving as a Kiva Fellow with Ryada and FATEN, two new field partners based in Ramallah (West Bank).

By Maia Pelleg, KF9, Kenya Agency for the Development of Enterprise and Technology (KADET)

This video was filmed in response to the following interaction I had with a borrower group outside of Nairobi, Kenya…

“Habari. Nina itwa Maia,” I practice saying as I walk into my first group meeting of the day. A KADET credit officer named Gachi,and I are visiting Kiva borrowers living in Kamae, a slum-like area filled with tin huts and roads littered with garbage and roaming animals. Almost all Kiva borrowers here lack formal education and exposure to English, and I wanted to make sure that I could at least introduce myself in their language. I take my seat on a long sturdy bench and face a group of 12 borrowers sitting in four straight rows before me. With perfect posture, the borrowers stare earnestly at Gachi, waiting for an explanation as to why a mzungu (white person) is joining their meeting.

A round of introductions begins, translated by Gachi, and I learn that the group’s name is Kihatu, meaning broom. When they hear their group name announced to me, every single borrower’s face breaks into a proud grin. Until now, the groups I have met have names that translate to English words like lion, opportunity, and faith. Puzzled by this self-designated title, I ask for insight into this choice. A willowy woman with a strong, clear voice responds and Gachi translates, “This is the first loan cycle for all of us in this group,” she says, “and each of us is looking to sweep away the problems of our past and the problems of luck. We are no longer going to depend on luck, but on ourselves.”

The symbolism behind this word selection moves me, and I’m eager to learn more about this community. However, my excitement to engage with these individuals is met with wariness and even hostility as Gachi describes what Kiva is and why I’m here.  Voices rise as rapid Swahili dialogue fires between group members and Gachi. I try to wait patiently for a pause in the conversation to ask Gachi to explain what is going on. Although I do not know most of the cultural norms here, I have learned that heated discussion is rare among Kenyans, and that this is an unusual scene playing out before me. Thinking that perhaps I can help Gachi explain Kiva’s role in a constructive way and emphasize that becoming a Kiva borrower is completely optional (while still being able to remain a KADET borrower), I finally interrupt.

I’m told that the group, led by a particular woman seated in the third row, objects to the idea of having their photos taken for Kiva borrower profiles. Historically, this community has been a target area for aid workers and NGOs. Unfortunately, despite posing for pictures in front of their homes and allowing their children to be photographed in their streets, the Kihatu group has not reaped any of the benefits promised by camera-toting journalists and aid workers. Instead, what money has trickled in has gone to squatters, those individuals who roam the streets and sleep on piles of dirt. The Kihatu borrowers have been considered above the need for these donations, even though they lack appropriate nutrition and their homes are unsound, one-room tin structures. There is a consensus in the group that somewhere, someone (even a reporter or newspaper) has profited from the photos of their families, and they are angry at what they see as a violation of their rights.

The woman in the third row, Lucy, also questions why Kiva works through KADET instead of just giving (not loaning) money directly to her.

Through Gachi, I join the conversation and tell them that Kiva lenders do not view them as vulnerable victims in need of hand outs. “Instead,” I say turning to Lucy, “lenders view you as a business partner, capable of engaging in a financial relationship based on respect and for the purpose of providing you with opportunity.”

I explain how Kiva works, but Lucy is so used to western aid workers parachuting in to “save” people in Kenya, that it is hard for her to grasp the concept of accepting a loan from people in the United States (or other western countries) that she must repay. She views all mzungus as rich, and therefore is angry that we would ask someone who is much poorer, like her, to pay it back. In Lucy’s experience, this is simply not the ruling precedent for how a relationship with the west functions.

My next approach is to explain to the group who are Kiva lenders. I’m grateful that I remembered to print out a few lender profiles from Kiva’s website. I hold them up, giving them three different faces to attach to the concept of lenders. “Lenders and borrowers are equal partners; this is not a benefactor relationship. These individuals that you see here are some of Kiva’s lenders. Your loans are not funded by just one of these individuals, but by a group of people who have banded together to invest in you. Contrary to your belief, they may not have much money to spare, but by grouping together they are able to support your business and empower you to improve your life.”

I wait while Gachi translates in his soft, calm voice. When he finishes, I add, “The purpose of taking your photograph and interviewing you for a borrower profile is to facilitate this connection and to create understanding. By providing a view into your life and work, lenders are likely to choose to invest in your business.”

I reach into my bag and extract a thin photo album covered in a plastic coating that depicts a map of the world. Passing it to Lucy, I say, “This shouldn’t be a one-sided mirror into your lives. In here you will find pictures of my family, friends, boyfriend and favorite places in my home town. This is what my life is like in the United States. And this is my job, working with KADET to create greater access to funding for micro-entrepreneurs.

Finally, I want to re-emphasize that being on Kiva’s website is your choice. If you do not feel comfortable signing the waiver, then please do not.”

When Gachi has completed the translation of my words, two women actually stand, walk to the front of the room and wrap their thin arms around me in a strong embrace. For Kenyans, people to whom formality and courtesy are extremely important, this is a big gesture. “Asanti sana kwa kazi njema,” they say. Thank you for your good work.

I’m proud that I was able to reach through to them, and extremely touched at the appreciation they’ve shown for a conversation that took less than 30 minutes. Insecurity can stem from ignorance, and these people have not had the education that would equip them with the ability to fully understand how their loans work. They are used to being taken advantage of, and I am so happy to have the chance to dispel their doubts by providing information. The power of transparency cannot be underestimated.

The murmurs settle and Gachi goes around the room, asking every individual how they feel, if there are any lingering questions, and if they are willing to become a Kiva borrower. Susan needs time to think about it. John says that my presence has given Kiva validity in his mind and is appreciative that Kiva will help him receive a loan; he agrees to be photographed and interviewed for Kiva’s website that afternoon. Turning to Susan and those that have not yet responded, John uses big hand gestures as he speaks, trying to convince them to become Kiva borrowers. “We are lucky to have the opportunity to receive a loan from KADET,” he says, “by becoming Kiva borrowers, we bring the possibility of loans to more people. The money KADET may have allocated to us can now be given to someone else. We help our neighbors by being on Kiva.”

This is a message they all seem to hear. Mary, Matthew, Naomi, Paul and five others, even Lucy, their fearless leader, agree to become Kiva borrowers. Susan changes her mind and asks if she can be photographed first.

I’m touched by John’s message of community and his desire to provide opportunity for others. This is the spirit of Kiva and why I am here working as a volunteer. To see this sentiment echoed in a place where access to electricity, running water and sanitation is minimal is extremely moving.

After we’ve visited our day’s worth of borrowers, Gachi and I catch three different matatus before arriving back at the KADET branch office. During our trip back, I’m able to reflect on the day and am thankful that our morning group challenged Kiva’s role in their lives, and with it, my assumptions. I naively expected all borrowers to be grateful to Kiva for providing access to capital. I didn’t take into account skepticism towards the west that has brewed from past experiences or the expectation of donations and an inability to immediately grasp the concept of a business partnership. It’s also given me a lot to think about on another level, in terms of what the mechanism should be for assisting less fortunate communities. In a country that lacks the infrastructure, or in which corrupt systems exist, how do we reach those like the Kihatu group in a constructive way?

Finally, the morning’s discussion reinforced the responsibility I have as a Kiva fellow to portray these individuals with the dignity and respect they deserve. Photos that circulate of emaciated African children and downtrodden workers, what some at Kiva call “poverty pornography,” fuel the image of Africans as helpless, dependent victims rather than as diverse, capable people with unlimited potential. No one hears this message more than Africans themselves. I am working hard to combat established expectations of relationships with the  West. I believe Kiva loans and partnerships are a big step in the right direction.

To learn more about KADET, Ltd and its borrowers, click here. To become a Friend of KADET (KADET’s lending team), click here to join.

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Some of the Kihatu group borrowers with their businesses:

Naomi Wambui with one of her three cows

Though Naomi is unsure of how to sign her name, opting for three small dots on the paper, she is excited to be a Kiva borrower. Her loan is for 10,000 KSh (~$130) with which she will diversify her income by opening a fruit stand. Naomi used to borrow with another MFI, but switched to KADET after a loan officer disappeared with the group’s money, including their savings. Encouraged by others in the Kihatu group, Naomi decided to give micro-credit another try. She doesn’t know her age and can’t remember the name of where she comes from, but she does know how to keep a passbook and make her repayments. Naomi says she is proud to provide food for her children.

We find Lucy standing in front of her used clothing business, 12 or 13 blouses carefully laid out on a piece of worn, woven straw. As Gachi interviews her in Swahili, Lucy takes hold of my hand and squeezes several times. Lucy announces to Gachi that I am hard-working, just like her daughter, and therefore she wants to hug me. She insists on taking eight different photos together, and giggles when she sees herself in playback mode on my digital camera.

In one of Lucy's embraces

Lucy’s loan is for KSh15,000 (~$200) and with it she will purchase more stock to sell. Although this is Lucy’s first loan with KADET, we learn that she had previously borrowed from another MFI but that her group was crippled by the hospital bills of two members and their inability to repay.

Julius Mwaugi with his taxi

Julius’ taxi is a red motorbike with peeling paint and cracked seats. Julius has a big grin on his face during the entire Kiva interview. His loan is for KSh20,000 (~$265), which he will use to purchase merchandise for a secondary business and pay for limited insurance. With his profits, Julius says he will purchase comprehensive insurance, which will cover his vehicle and all parties in the incident of a crash.

Mary mostly sells charcoal, and once in a while vegetables if she can afford to stock them. Mary’s kiosk is made from wood and tin, with burlap walls. A large jug labeled “sulfuric acid” sits next to the charcoal. When I ask why she has sulfuric acid, Gachi laughs and tells me it’s a container for water. It has never been cleaned. Mary’s loan is for KSh10,000 (~$130), which she will use to purchase potatoes and additional charcoal to meet customer demand.

Mary Wambui, in front of her charcoal kiosk

Peter Mashariah, inside his butchery shop

Across town, we find Peter’s butchery. The thick, pungent smell of blood and fresh meat hit my nostrils the moment we walk through the narrow door. A partial carcass hangs from a hook in the window. On the counter sits a scale and a glass aquarium, which holds three small pieces of raw meat. The instant we step inside, it starts pouring rain outside. The noise is amplified by the tin roof over our heads, making it difficult to hear what Peter is saying (not that I understand anyway). Peter’s loan is for KSh15,000 (~$200), which he will use to renovate the butchery. His top priorities are improving the broken tiled floor and installing an appropriate enclosure for where the meat hangs. One day, Peter says, he hopes to buy live animals to slaughter and sell to retailers. By the time we leave Peter’s shop, the rain has completely stopped falling.

With John in front of his stew and sausage pot.

A five-minute walk down the main dirt road and we come to John’s butchery. A slightly muted version of the thick odor present in Peter’s shop lingers. Flies swarm, landing on my head, notebook, jacket and hands. This space is larger than I expected, and three men sit inside chatting. John wears an orange and white mesh jersey and sucks on a toothpick during the interview.

With warm eyes and a bright smile, John is charming–even in a language I don’t understand. This is John’s 11^th year in business; he buys cattle and sells the individual pieces to retail butchers (like Peter’s).  John takes the parts of the cow that he is unable to sell (intestines, heart, lungs, feet, etc) and creates a stew and sausages, selling lunch and dinner on the street. The loan he seeks is for KSh40,000 (~$535), with which he will expand his meat supply coverage. When it is time to photograph John in front of his business, he is giddy. He runs across the street to find a butcher’s coat, slicks his hair back and poses.

By Jennifer Gong, KF9 Tanzania

YOSEFO has come a long way.  In 1997, it humbly opened its doors to 50 clients, for a total loan portfolio size of $5000.  However, with unwavering determination, it has succesfully expanded into 14 different communities around Dar es Salaam and has opened offices in Ifakara, Zanzibar, Kilwa and Tanga.  Today, YOSEFO can proudly claim to serve over 11,000 active clients and has seen its loan portfolio increase to $1.5m. This is definitely something to celebrate about, and celebrate we did!  To mark 12 successful years of serving Tanzania, my MFI decided to organize YOSEFO Day 2009.  

The purpose of the celebration was not only about rejoicing, it was also about recognition.   It was about acknowledging the outstanding clients and staff members that have played a significant role in making the past dozen years successful.   Recognition is important because the sweat and tears of both clients and staff often go unnoticed. Furthermore, the showcasing of successful stories will hopefully create a competitive spirit that will drive everyone to strive for more.  

Here are some highlights of YOSEFO Day 2009…

Best Borrower - Deogratius Likunga

Mr. Likunga is one of YOSEFO’s  earliest clients.  His group applied for their first loan in 1997.  Due to his excellent repayment history, he was eventually able to graduate from the group lending method to the individual lending method.  His loan sizes are much larger than the average YOSEFO client, yet he still maintains a spotless repayment record.   And his dedication to being a terrifc client has paid off, his hardware business is doing better than ever.

Best Entrepreneur – Anold Peter Kavishe

Anold left Moshi to come to Dar es Salaam to work as a servant boy.  But by age 19, his entrepreneurial spirit told him to strike it on his own.  In 1998, he took out his first loan with YOSEFO.  Anold now owns a few businesses, including a retail store and a wholesale store.  Furthermore, he is able to employ 17 workers and thus create jobs for others in his community.

Best Credit Officer – Ashama

The job of a credit officer is painstakingly difficult, each day he or she needs to spend hours in the communities.  Ashama is the only officer to cover two communities (Kitunda and Mazizini).  With 554 clients to see each week, she has gone above and beyond to serve everyone.

The award ceremony showcased the amazing possibilities of microfinance as well as the hard work needed to transform those possibilities into realities.  Above all, it was a chance for every shareholder – management, officers, clients, board of directors and partners – to come together and get revitalized for many more great years ahead.

By Eva Wu, KF9 Philippines

Having followed the recent debate over Kiva’s transparency and the P2P model, the main critique that stuck with me was that there should be more transparency on Kiva’s partner MFIs. This resonated with me because I believe that Kiva has, on the whole, picked out partner MFIs that do amazing work and have really compelling stories to tell about their organization. So in that spirit, I’ve decided to share more details here about some of the products and services that my host MFI, Hagdan sa Pag-uswag Foundation, Inc. offers. In addition to lending, Hagdan also offers a mandatory savings program, optional insurance programs, and leadership/business trainings. Hagdan also runs community development programs out of a different part of the organization.

Before I dive into those services though, I want to devote this post to HSPFI’s interest repayment policy. Over the last six weeks I’ve realized that my understanding of the details is sadly lacking. So one weekend when I was in the office, I grabbed Sir Melchie Badion, HSPFI Internal Auditor, and asked him for a detailed rundown. Knowing that interest payments cover much of an MFI’s operational costs, I wanted to make sure I had everything straight in my head from start to end.

A few minutes into our conversation I quickly realized was that loan term is very important to keep in mind when thinking about interest. Before I started on my fellowship, I’d look at a Kiva partner MFI page and assume that all clients are paying a uniform 32% interest rate on their loans, without taking into account that the interest rate on Kiva is expressed in one-year increments. Hagdan charges 3% interest a month, and has two loan terms – 5 months and 10 months. So a client who took out a 5-month loan will be paying 15% interest on the loan, whereas a client who took out a 10-month loan will be paying 30% interest on the loan.

It should be obvious by now that I’m a terrible finance person. But Melchie was patient. We then got to talking about early repayments. I had noticed that quite a few Hagdan clients had paid off their loans early. Melchie explained that HSPFI allows clients to repay their loans anytime in full after three months of payment. If you’re a first cycle client (with your first HSPFI loan), after your payments for the first three months are complete you can opt pay off the rest of your loan, plus the full interest amount owed. However, if you’re a second cycle client or above, after the first three months of principal plus interest payments you can then opt to pay off the rest of your loan, interest free. So technically you can get a HSPFI loan with only 9% interest if you’re a) not a new client b) have a good repayment history and c) have enough money to pay off the rest of your loan after three months. This completely blew my mind in a really awesome way when I first heard about it.

Melchie added as a caveat though that the project officer (or loan officer) can deny early repayment if the client doesn’t pass the business assessment. For example, if a client took a loan from another MFI and wants to pay off their HSPFI loan with this other loan, the project officer may deny their request so as to discourage poor borrowing practices that could rack up more debt.

This is definitely quite an amazing way to give back to the clients though, I thought. I also wondered if this policy would give some HSPFI borrowers additional incentive to focus on their businesses so they can take advantage of the “interest discount.” In any case, this seems to be a win-win policy for both the borrowers and HSPFI. Melchie explained that most other MFIs will allow clients to pay off their loans early, but the interest on the rest of the loan is never waived. This policy gives Hagdan a competitive edge over other MFIs that are operating in the same space.

Wrapping up the conversation, my mind floated back to a great CGAP Microfinance Blog post, in which author Richard Rosenberg wrote,

I think there is strong evidence that poor people find microcredit very valuable in helping to deal with their circumstances. When you offer microcredit in a new setting, you almost never have to advertise: customers come out of the woodwork in droves. Most of them come back for additional loans. Most important, they usually repay those loans at extremely high rates year after year, when the main motive to repay is not collateral or group pressure, but rather their desire to keep future access to a service they find very helpful. They are voting with their feet.

I think most people’s concern over high microcredit interest rates comes from the fact that we’re worried about the poor getting exploited by profit-greedy MFIs. That poor people in rural areas are driven to a particular MFI despite high interest rates because there is no one else to borrow from. The reality as I’m finding in Cagayan de Oro is that the microfinance arena here is crowded with players. There are a LOT of MFIs competing here who want to retain and grow their client base at the same time. Even in rural villages that takes three hours to reach by motorcycle over rugged terrain, I’ve spoken to HSPFI clients who openly acknowledged that they have multiple loans from different MFIs. But with choice comes savvy. When I ask HSPFI clients what they like about Hagdan, many of them were able to clearly articulate the Hagdan products and services that they like, in comparison to products and services from other MFIs that they’ve borrowed from.

Also, with choice comes the need to stay competitive. MFIs here need competitive interest rates and a variety of attractive programs to attract clients and encourage them to “vote with their feet.” So an innovative interest repayment policy isn’t the only service that Hagdan offers to its clients. Stay tuned for more on HSPFI’s savings and insurance programs!

Eva Wu is a proud member of KF9, and hopes that she did this topic justice without boring everyone to tears! She’s working to spread the love for her host MFI, Hagdan sa Pag-uswag Foundation, Inc. through the Kiva Fellows Blog and the HSPFI lending team. Support HSPFI by lending today!