One popular critic to microfinance is it promotes businesses that don´t bring value. For instance, giving a loan to a woman to start a tomato shop beside 10 other tomato shops. Instead of creating value, it divides it.
This is why one of the biggest bets from Kiva are green loans. Under this category you can have solar lamps, ecological kitchen and other type of products that aim to improve families standard of life.
I was not sure of the effectiveness of this type of loans until I met….. He has a very humble family that lives in the coast of El Salvador and he is a fisherman. One day the loan officer told him about a solar lamp that could take energy from the sun and turn it into light and electricity. After serious discussions with his wife they decided to risk and buy it.
3 months after they bought the solar lamp and with his own words: “It is the best purchase we have ever made, it has changed our lives”.
Before they used candles, which apart from being expensive and dangerous, (they live in a wooden cottage), they did not bring light enough. With this solar lamp, children can now do their homework after the sunset and potential robbers are also espantados. One other curious thing that has changed is now his mother (grandma) wants to go and have dinner with ner grandchildren. Before she did not want to go because she said there was not enough light and you could not see. Now she goes whenever she can.
Moreover, they have found a way to get income from the lamp. As this lamp enables charging cell phones, they offer to their neighbors recharge their batteries at a fair price, bringing advance to their community and saving them time.
These last Christmas have been the first ones with proper light. And this big change hasn´t cost them at all, because the monthly expense in candles thay had is now their monthly fee to Integral and Kiva. After one year, their loan will be fully repaid.
Kiva. Loans that change lives.
By: Abhishesh Adhikari
One of the best parts about my Kiva Fellowship has been the opportunity I get to meet and interact with entrepreneurs. During the 4 months that I spent in Kyrgyzstan, I helped Bai Tushum (Kiva’s partner MFI) launch a new Startup Loan Product and met a wide variety of entrepreneurs all across that country. After I got back from Kyrgyzstan in January, I have been working on a new Kiva project called Kiva Zip, trying to expand it here in Chicago.
Kiva Zip is a new initiative to make interest-free, small business loans to entrepreneurs in the United States. This new lending model is based on community relationships whereby entrepreneurs can request interest-free loans (up to $5000 for the first loan) based on endorsements from organizations or prominent individuals in their communities. Lenders can view the profiles of these entrepreneurs on Kiva Zip’s website, and lend $25 or more at a time.
Spring has arrived in Mongolia! That means warmer weather (afternoons creeping closer and closer to the double digits)… and, of course, baby animals!
by Rose Larsen | KF20 | Dominican Republic
One of my first tasks upon arriving in the Dominican Republic was to visit 10 borrowers, chosen at random from all of the borrowers with ASPIRE (Kiva’s partner MFI), to verify data and find out how they are doing on their loan. This was an exciting but challenging introduction to daily Dominican life, as I navigated Santo Domingo and the surrounding areas via shared taxis, public buses, motorcycles, the metro and my own feet. I traversed bustling neighborhoods in the center of Santo Domingo, small towns in the mountainous interior of the country and everywhere in between, seeking out 10 lucky individuals to interview for Kiva’s audit of ASPIRE.
As a recent arrival in the country, it was a great experience to learn more about the Dominican Republic and what it’s really like to live here. Though each visit was uniquely interesting in its own right, four experiences stood out as having taught me a lot about what life is like for Kiva borrowers in the DR.
1. Dominicans have a very strong connection to the United States
I have often been surprised by the number of Dominicans who speak to me in near perfect English. Everyone seems to have a cousin or an uncle or a sibling in the States (mostly in New York and New Jersey), and many Dominicans that I’ve met have spent years living in the US as well. According to the census, in 2010 there were 1.5 million people of Dominican origin living in the US.
But what really drove that home to me was when I met my first Kiva borrower, Ramon, the owner of an internet center in the town of La Vega. He heard my accent when I spoke to him over the phone to arrange our meeting, and asked me where I was from. When I said the US, he told me he had lived there, all over – in New York, New Jersey, and Maryland.
As we began our interview in his little computer center, I was surprised to hear him answer my questions in perfect English! After months in Colombia of struggling to understand Kiva borrowers’ difficult Costeño Spanish accents (the ends of all words seem to be cut off), this interview was a breeze!
Like many other Dominicans, Ramón moved to the US in search of a better life, and spent 20 years there. Unfortunately his wife preferred the Dominican Republic and he had to move back. He said that here in the DR, it was much harder to make enough money to live on, because here, inflation is high but wages and income streams remain low.
2. Dominican food is delicious, and Kiva borrowers sure know how to cook
I arrived in Villa Altragracia in the early afternoon, and the branch manager immediately rushed me into the lunch room to eat the Dominican lunch they had ordered for me. It was a plate of rice, soupy beans that are called “habichuelas,” salad, and stewed beef – this is the national dish of the Dominican Republic and is called “La Bandera Dominicana,” or “the Dominican Flag.” The bandera dominicana comes in many variations – sometimes the beans are red and sometimes they are black; the meat can be beef, chicken or pork; and it is often accompanied as well by plantains. The meal I was served in Villa Altragracia was simple but really tasty.
After eating a satisfying lunch I followed a loan officer down the street to a Kiva borrower’s restaurant. It was only after finishing the interview and leaving that I found out that the ASPIRE branch office had ordered my lunch from there! I only wished I could have thanked her for the delicious meal.
3. Riding on the back of a motorcycle on a highway is terrifying, but loan officers do it daily
The second borrower I was scheduled to visit in Villa Altragracia was apparently not walking distance from the branch office. Since Villa Altragracia is a fairly small town, I agreed to get on the back of a loan officer’s motorcycle, so we set out motoring down the main road in search of Nailan.
I was very surprised when, 10 minutes later, I found myself merging onto Autopista Duarte, one of the main cross-country highways in the Dominican Republic. I clutched the waist of the extremely young-looking loan officer sitting in front of me who suddenly held my life in his hands. We stayed mostly on the shoulder, zooming by people selling snacks by the side of the road, and my heart leaped every time an enormous truck went by, going twice as fast as us.
20 minutes later I shakily stepped off of the motorcycle, and Nicolás, the loan officer, seemed surprised by how much the journey had scared me.
“I make this trip every day,” he said. “I used to have a car to do it, but the motorcycle is cheaper.” Gas prices are astronomical in the Dominican Republic – prices are currently at $5.25 per gallon! I had a renewed awe for the hard work that loan officers do to reach borrowers, even ones who are not very conveniently located.
4. Kiva Borrowers Span Many Economic Levels
My visits around the country were a great opportunity to see how normal Dominicans live – I visited their homes and businesses, met their families, and even shared meals with them. I was struck by how different each borrower’s life is – the pair of borrowers that I visited in the Santo Domingo neighborhood of Los Alcarrizos were the perfect example of these contrasts.
One borrower who left an impression on me was Papio. We found him spending the day at his parents’ home, a few kilometers down a dirt road outside of Los Alcarrizos, a working class neighborhood in Santo Domingo. He took out his loans to fund two of his businesses – a car and motorcycle repair shop, and a “colmado,” or corner store. He was spending the day overseeing construction on his parents’ land, where they raise chickens, bees and will soon rent out the new buildings they are currently working on. This was a man with multiple lucrative businesses – though perhaps the home was modest by US standards, he was clearly not struggling and in fact seemed to be flourishing, especially with the help of his Kiva loan! Though these borrowers are not what one normally thinks of when imagining a Kiva borrower, the money they borrow can go very far – Papio has multiple employees at his various businesses, all of whom depend on him doing well.
I spent an hour exploring the extensive acreage owned by Papio’s parents, as he pointed out different types of trees and plants that they grow – besides bees and chickens, they also produced mangos and avocados. I even got to share a meal with them.
Another borrower lived nearby, in the same municipality as Papio. To get to Elisabel, we bumped along down a dirt road filled with potholes, passing rundown shacks that housed whole families. The only day Elisabel was available to meet was Saturday, as she works the rest of the week as a maid in someone’s home – she finished paying off her loan a few months ago and unfortunately is not currently running her own business anymore.
Her home was very basic – a small wooden construction with a tin roof, and a tiny yard out front where a few chickens scratched in the dirt. The difference between Papio’s parents’ acres of land and well-furnished home and Elisabel’s shack where she, her husband and their three children lived was huge – it was hard to believe they lived just a few miles from each other. The difference in the quality of their lives was even more obvious.
Elisabel and Papio, though different, can both be helped by microfinance and the loans that ASPIRE and Kiva provide – though at very different levels. Elisabel’s loan was for $5000 pesos while Papio took out a $40,000 peso loan. The Dominican Republic has a lot of poverty, but as you can imagine, this poverty doesn’t always look the same, and it’s important to remember that Kiva borrowers don’t fit just one profile – they are as diverse in background as Kiva lenders!
Rose Larsen served with the 19th class of Kiva Fellows in Colombia and is now serving her second fellowship with KF20 in the Dominican Republic, with Kiva partner ASPIRE. Lend to one of ASPIRE’s borrowers today, or apply to be a Kiva Fellow!
Last week I started visiting some of Kiva’s borrowers with Transcapital, one of Kiva’s field partners that I’m working with here in Mongolia. While it was really encouraging to see Transcapital’s enthusiasm for Kiva at the head office as well as its various branch offices around Ulaanbaatar (UB), the new insights I’ve gained on urban poverty—both from these visits as well as just day-to-day life here—have left me perplexed so far, with far more questions than answers.
A short term solution?
Our visits began with a stop at Narantuul market, the largest outdoor market in UB where a number of Transcapital’s clients have retail outlets. At a first glance, Narantuul is a colourful and vibrant marketplace where vendors sell everything from food and candy, to winter coats, scarves, belts, jeans, baseball caps, cardboard, and more. It’s the place where Mongolians often go to find cheaper wares, which makes sense considering some of the staggering prices I’ve seen at Ikh Delguur, the State Department Store. We spoke to Bayasgalan, the proud owner of a shop selling winter coats and clothes, a long time client of Transcapital’s, and a Kiva borrower.
Other vendors watched us with curiosity as we chatted with her, and the mood at the market was lively despite the cold. But my translator friend, whose family had sold candy there, explained to me as we left that pretty much all the vendors there need continual loans to in order to sustain their businesses. Without loans, they can’t operate; but even with loans, they struggle to get ahead… which is anything but encouraging.
Harsh working conditions
The next day, we visited Kharkhorin market, UB’s second largest outdoor market, located on the other side of the city. The wares there were slightly different: I saw lots of shoes, but also an eclectic collection of hardware parts, sinks, ropes, tools, and other random second-hand items.
We had trouble locating one of the two borrowers we had to meet, so we wandered around for some time looking for her. In the meantime we met and chatted with Saranchimeg, who had used her loan to increase her supply of winter boots. We had been outside for about 45 minutes by the time we finished chatting with her, and I thought my fingers and toes might fall off. It must have been around -25oC that day with the sharp wind whipping through the stalls. But my thoughts were with the market’s vendors who stand out there all day long, day in and day out. My translator friend assured me that, just because they’ve lived in Mongolia their whole lives, it doesn’t make the cold is any easier for them to bear. I was humbled by how hard they work.
The reality for taxi drivers
We also visited with some taxi drivers. While a male taxi driver may not be one of the sexiest loans on Kiva’s website, you should know how hard these people work to support their families, just like anyone else. And for what? Being a taxi driver is a tough way to make a living in UB: A one-kilometre ride will earn a driver about 1,500 Tugriks (or 1.07 USD).
Moreover, the competition is stiff. Since cars have become ubiquitous in Mongolia’s capital, everyone has become a taxi driver. It’s an overhang from the early days of capitalism, when cars were not that common and the city’s residents would help each other out by giving rides. Now, you see people on the streets with their hand out all the time, and it usually only takes a few minutes for a car to pull over.
Another borrower we met lived in one of the outer ger districts, the slums of the city which lack basic services like running water and sanitation. He was middle-aged and had taken out a housing loan, but he told us that he had been a driver under the socialist regime. He explained that he had had much difficulty in finding employment in his profession. Recently, though, he has started applying for driver jobs again. It’s a mystery to me how he has managed to make ends meet over the years.
Survival of the fittest?
It’s easy to think that people don’t work because they’re too lazy, or because they simply refuse to accept lower-paying positions. This may be true in some cases. But there may also be more to the issue than meets the eye. Mongolia had its Revolution and transition to a market economy in the early 1990s and it seems the transition was difficult for those who were brought up and educated in the socialist era: Many of their skills and experiences have not translated well in the new economy. While a lot of the leadership I’ve seen in white collar jobs are shockingly young—in their late 20s or early 30s—street and market vendors tend to be in their 50s or older. And for many of them, their wares include no more than a couple handfuls of gum and candy, which can’t possibly bring in that much at the end of the day.
Maybe skills training is needed to support these people… or maybe it’s not that simple. Imagine being in your 40s or 50s and getting trained (or competing for jobs) alongside people who are a whole generation younger than you. And the longer you stay out of the workforce, the less confidence you generally have to return to it. One colleague of mine surmised that perhaps self-employment is the way to go for these people.
The fork in the road
Of course, this reflects only one facet of urban poverty here. Another, and perhaps larger, driver is the massive migration of traditional nomadic herders to the capital, as zuuds—extremely harsh winters—have killed off the millions of animals on which they depend for their livelihoods.
Mongolia has gone through some incredible changes over the past several years, thanks to the discovery of the largest unexploited reserve of copper, gold and silver in the world. Roads have appeared where they previously didn’t exist; herders have disappeared from the streets of UB; shiny new buildings have gone up; inflation has gone through the roof. It’s poised to be one of the fastest growing economies in the world in 2013.
There is immense potential for large-scale economic development and poverty alleviation in Mongolia. Microfinance is helping to tie things over, but how the country handles big issues such as corruption will ultimately determine whether the spoils will be shared by many. So far, everything I’ve taken in only seems to have raised more questions. I’ve only scratched the surface in terms of grasping the complex economic factors at work in this country, much less understanding the solutions.
This last week I have started to meet borrowers and feel the reality they face. It is a reality full of difficulties and challenges, in which a small amount of money can make the difference to the person that receives it, his family and his community.
ID Ghana has a different approach to microfinance, they call it “Onipa Nua”. It is based on group relationships. What they do is forming 15 to 40 people groups (95% of members are women) and they are trained in different abilities: saving, convive, how to manage a business, loaning, health…and many more areas that help them build a successful group up.
Each member of the “Onipa Nua” is only responsible for his loan, and does not guarantee other members´ loans. However, as in these countries “your problems are also your neighbors and friends´ problems”, the compromise borrowers have with their loan is total, and under any circumstance they want to let other members down.
Onipa Nua´s members are extremely aware of the importance of a loan and what it implies, this is why they just borrow what they need, and if it is necessary, they stop eating rather than stop paying back their weekly fee.
When you see this, it gives you goosebumps. You feel again those values that are not fashionable anymore, like compromise, effort and honesty.
This reminds you that what is worth in life is what you achieve following those principles.