Posts tagged ‘microfinance blog’
Money, Money, Everywhere
And so it was that, clinging desperately to the back of a moto taxi dodging its way to work on my first day, two thoughts struck me:
Great, there’s an economy up and coming, this really is encouraging
But hold on, in a country with such an active micro-enterprise economy, where is the need for Kiva funding? Aren’t our borrowers trying to help the poor?
Well, as I sit here at ALIDe (Kiva’s partner MFI here in Benin) three weeks later I begin to glean some understanding…
Continue Reading 25 February 2011 at 06:00 Gareth Davies 4 comments
Goodbye Kiva!
Last week was my last week as a Kiva Fellow. As I sat in the cold air of the bar Emprender took me to celebrate the end of my time with their offices and the national Dia del Trabajador (or workers day), I realized how far I have come. And how hard it would be to sum up the personal aspect of being a Kiva Fellow. And equally hard to sum up what microfinance looks like to me.
Here is an effort to show what I mean. Take a look at an album I made of my favorite entrepreneur photos from my placement in Honduras and in Bolivia.
I had just spent a solid hour learning the lilted, stomping, righteous traditional dance steps from Emprender’s regional directors and office managers. I was casually discussing (in imperfect but newly fully functional Spanish) the future of Evo’s MAS party. It was at this moment, during a pause in the live band’s flute playing and guitar strumming that I realized I have learned this city from the inside out. That is, I can tell you where the used clothes come from and how much a cow stomach has been marked up by the seller (35%). Microfinance can be a problem and I worry about over indebtedness, and irresponsibly lending to people who can’t repay. I worry that perhaps we still aren’t reaching the poorest of the poor, and perhaps there is a better way to relieve poverty. Is lending just a construct of “The West” (whatever that is) that shouldn’t be exported to “The Rest” (whatever that is)? I still don’t know.
Looking back on my 6 months as a Kiva Fellow, the sum total is positive. Enthusiastic, creative loan officers and entrepreneurs. Shiny new ideas and optimism. Smiles, laughs and hope. Microfinance doesn’t just change the material position of a family, but their self-image. This idea of self-image bleeds into the national consciousness. It changes women, and it inspires a community.
Flora bakes bread and now sells directly to a school with a monthly contract. Her loan allowed her to commit to a certain amount of product resulting in this contract that evens out her income and lends some predictability to a life wrought with uncertainty. She told me to pass along specific thanks to Kiva lenders.
Flora with her oven
Ramiro was robbed and lost the material he needed to run his tire replacing business. His Kiva loan puts him back on his feet. He spent the whole interview talking about the future. A bigger store. Transmission replacement. Employing his brothers.
Ramiro
Story after story like these two have warmed my heart, and made me believe.
Personally, I learned that I can’t stop my feet from itching, and will probably spend the rest of my life in a constant state of building a home and then taking it down again- and that I like that as much as I hate it.
Morning in La Paz- Sierra cleaning house
I’ll never find a solution to poverty that fits in every way, and I’ll always have my doubts. Still, the fight for equality moves me, connects me, and I’ll never stop trying, thinking, working and exploring. Thank you Kiva for this opportunity.
**Sierra Visher is a Kiva Fellow (KF6) posted in Honduras with Prisma and Bolivia with Emprender. She is heading to Pisco, Peru to volunteer with MAD Volunteers. After that- the open road. You can follow her journey on her personal blog. **
U.S. Microfinance 101
U.S. Microfinance 101
I hear the phrase U.S. microfinance and I perk up- I’m not alone. Last week I was at a microfinance 101 meeting in New York City. The event was catered to a group of young professionals that were interested in getting involved, somehow, in U.S. microfinance. Someone asked a question about repayment systems for U.S. microloans, wondering if borrowers come into the office to make repayments or do the loan officers go “into the field” to collect? The end goal with domestic microfinance is the same as it is internationally; empower individuals to create prosperity through entrepreneurship.
To answer her question: on occasion a borrower may come into the office to drop off their payment, or a loan consultant will do a site visit. Generally speaking in the U.S. the repayment system is electronic, a monthly debit from the borrowers bank account. This sounds less compelling than the vision of a loan officer riding the entire day on a motorcycle to a rural village to collect a five dollar repayment from a loan for a cow. But, not to worry there are definitely other aspects of appeal for domestic microfinance.
Entrepreneurs are turned away from traditional U.S. banks for many reasons, maybe because of a low credit score or no score at all. They may not have a solid business plan or have not yet acquired the appropriate permits and licenses. In many cases though, the estimated $30 million unbanked Americans simply aren’t served or don’t have access to traditional banking. Many entrepreneurs just need a few tools to help them create prosperity- microfinance institutions can provide that.
Credit scores were discussed at the microfinance meeting last week. One person pointed out that a large American bank just announced that they weren’t loaning to anyone with a credit score below 800, in other words: they aren’t lending. Microfinance institutions are lending, the largest U.S. microlender requires a credit score of just 575. U.S. microfinance institutions make loans to individuals ranging from $500- $50,000. They offer loans and other products such as financial literacy to individuals from all walks of life.
It’s very common in the U.S. to have a client walk into a microfinance institution with a bag full of tiny pieces of paper and request a loan. Traditional banks would quickly turn the client away. At an MFI, a loan consultant will sit down and go through each piece of paper to create a cash flow, help create a business plan and refer the entrepreneur to other agencies to get appropriate licensing. An MFI loan consultant will do everything they can to give the borrower the credit they need.
Domestic microfinance is in a position to begin scaling up to meet the needs of more low-medium income borrowers. Individuals from all walks of life can find themselves in need of the kinds of services a U.S. MFI can offer. Services like $500 credit builder loans, or help with creating a business plan, larger loans for business capital and inventory, and other types of financial literacy services. Microfinance provides individuals with the power to be self-sufficient and to create a legacy and life of prosperity. Domestic microfinance is playing a part in fulfilling this dream for entrepreneurs from coast-to-coast.
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Erica Dorn is a Kiva Fellow researching U.S. microfinance in New York City.
