A Glimpse of Microfinance and Urban Poverty in Ulaanbaatar

Munkhbayar, the Kiva Coordinator, promoting Kiva loans at Transcapital

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?

Narantuul, the largest outdoor market in UB (above), and what you’ll find there (below)

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.

Bayasgalan and her clothing shop

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

Kharkhorin market (above) and some of the items for sale (below)

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.

Saranchimeg was busy selling her winter boots when we stopped by

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 -25^oC 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

Batbileg, a taxi driver, in the car he purchased with the help of his loan

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).

I need a ride, someone… Anyone?

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?

an elderly lady I often see selling gum and candy on the street, even on the coldest winter days

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.

some people sell fruit, others sell services such as the use of a telephone or a scale (like this lady here)

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.

How the Arab Spring Has Affected Microfinance in the Middle East

” After weeks of headline news about the Arab Spring, we seem to have forgotten the man who started it all: Mohamed Bouazizi, the  [26 year old] Tunisian fruit vendor who set himself on fire after police confiscated his small cart.  It was Mr. Bouazizi, a microentrepreneur, who sparked this revolution in a single act of protest against the same harsh economic realities shared by the majority of citizens across the Arab world.” ~ Elissa McCarter, Vice President of Development Finance, CHF International

Juice vendor in Downtown Amman, Jordan

A Mexican Tale of Women and Sheep

Emmanuel M. von Arx | KF 16+17 | Mexico

Who would have thought that my second Kiva Fellowship would teach me just as much about microfinance as about the rearing of sheep? Seriously, ask me anything you want: How do you best hold a lamb? How do you wrestle with a grown-up mutton? How do you treat sheep for worms? Where and how often do you set them a vaccine? How do you determine a sheep’s age? Why does a sheep bite normally neither hurt nor bleed? For what reason does a sheep have four stomach compartments? And how do you compel a lamb’s reluctant mother to accept her kid after birth? I owe this knowledge to UNAM-educated veterinarian Linda Velázquez Rosas, who made a sheep-expert not just out of me, but also out of 200 amateur sheep-owners in and around the little town of San Felipe del Progreso, two hours west of Mexico City. This training was made possible by Vision Fund Mexico (also known as Fundación Realidad or FRAC), a Kiva field partner that excels both at financial and non-financial services (in a previous blog post I documented an artisan fair in Mexico City that was co-organized by FRAC).

Beyond Financial Services: Mexico’s Greatest Artisan Fair

Emmanuel M. von Arx | KF 16+17 | Mexico

Shortly after arriving at my first Mexican microfinance organization, FRAC (or Fundación Realidad, soon to be called Vision Fund Mexico), I had the joyful task of presenting in the name of Kiva two Social Performance Badges to its enthusiastic staff: one for Vision Fund Mexico’s strong and persistent focus on poor people, and one for the organization’s success in empowering families and communities. The description of the Family and Community Empowerment Badge on Kiva’s homepage immediately piqued my interest: it states that recipients of this badge “implement innovative business practices and offer services in addition to their financial products to meet the needs of the people they serve.” Innovative business practices and additional services beyond financial products? At FRAC? I began to ask members of FRAC’s staff and was soon pointed to some great examples of non-financial services that Vision Fund Mexico has provided in past months and year: they include support in product marketing and distribution given to beekeepers and artisan villages, over 380 free financial literary workshops for well over 4,000 borrowers, and free expert veterinarian training and medical services provided to hundreds of borrowers who are raising cows and sheep in their backyard. While I hope that some of these topics will be addressed by future guest blog posts of FRAC staff members (continuing the series that was started by Rosa’s gorgeous post on her recent field visit), I will report here on FRAC’s selfless contribution to Mexico’s largest artisan fair, the Expo FONAES. In many ways, this is just another example to David Gorgani’s great piece on the wide range of non-financial services that Kiva field partner organizations provide.

Recycling for Life and Family in the Mexican Countryside

Emmanuel M. von Arx | KF 16+17 | Mexico

I have a confession to make: I love to browse Kiva borrower profiles – even occasionally without any actual intention to make a loan. I believe that reading the stories of borrowers from all over the world and knowing their dreams tells me more about a country and the mentality of its people than even the best of all travel guidebooks. And knowing some of the challenges they are facing in their lives and how they are surmounting them, being aware of the long hours they work every day and their dedication to their families – all this inspires me deeply and on a very personal level: if people can thrive under difficult circumstances thanks to incredibly hard work and a dream, then I should and will be able to do something meaningful and lasting with my own life as well! My Kiva lender profile reads: “I loan because… Kiva borrowers never cease to inspire me with their courage, talent, and dedication!”

That strong sense of inspiration that speaks to me out of every Kiva borrower’s history has been multiplied during my time in the field as a Kiva Fellow in the course of many personal meetings with borrowers. I have met literally dozens of borrowers who have left an indelible mark in my heart and mind. But recently I have met a borrower who is so extraordinary and unusual that even I – one of the more seasoned Kiva Fellows – was blown away. Her name is Ma de los Angeles and this blog entry tells the story of her work and her success.

The Heart of Kiva – A Guest Blog from Mexico

Emmanuel M. von Arx | KF 16+17 | Mexico

Kiva is all about stories – what draws us all in and inspires us to lend are the stories of courageous micro-entrepreneurs that speak of hard-ship and success, challenges and dreams, love and dedication. But Kiva is not just about borrowers and their stories. It is also about the people behind the scene on the ground – the staff of the close to 150 field partners of Kiva – who screen loan applicants, grant, administrate, and look after Kiva loans, and make sure that Kiva borrowers are treated respectfully and fairly. Their stories are almost never told. Yet, the local staff of Kiva´s Field Partners are those people who make the magic happen – they are the ones who make Kiva possible. If Kiva Fellows are called the “eyes and ears in the field”, I propose local MFI staff be called “the brain and heart of Kiva.” MFI staff has insights on the conditions on the ground, the local mentalities, and the practical aspects of microfinance that can rival (and – I have no doubt – normally exceed) those of Kiva staff and Fellows. Yet, their perspective is seldom heard and their stories are rarely told.

Just how much local field partner staff have to tell and to share with the world I learned during the brief three week period during which I had the pleasure to be the Kiva Fellow for FRAC or Fundación Realidad (soon to be known as Vision Fund Mexico) in Mexico City. FRAC, has over 200 employees – they encompass 200 breathtaking stories and lives from all over Mexico, coming together in FRAC’s vision of wanting to provide financial and non-financial services to those families who do not have access to formal banking services in order to improve their quality of life.

During my work in FRAC’s Mexico City Headquarter, the MFI’s staff turned out to be an endless source of inspiration for me. There was not one person I talked to whose story and motives wouldn’t be worth sharing. Within a few brief hours I felt not just surrounded by close friends, but soul-mates – I discovered that everybody around me was at least as passionate and enthusiastic about FRAC’s and Kiva’s work and the impact of micro-finance as I am.

As soon as I told FRAC’s staff about the Kiva Fellows Blog, I was bombarded with requests of staff members to publish their thoughts and their experiences on it. Many have a particular pet project they feel most passionate about; others have made an experience on the job they are keen to share. Thus grew the idea of creating a little guest blog within the Kiva Fellow Blog. I offered to all staff to publish their thoughts and words on the Fellows’ blog as a way to make readers aware that Kiva doesn’t just connect lenders with borrowers, but that it connects lenders with local staff with borrowers with friends with staff with borrowers with lenders with… stop! Let’s just say: Kiva connects people through lending!

Rosa Gonzalez is the first staff member of FRAC who agreed to share her experience. She was hired by FRAC as their English-Spanish translator a few days after I joined the organization as a Kiva Fellow. Rosa translates both borrower profiles and journals for FRAC borrowers before they are being published or sent to lenders. But let me introduce Rosa in her own words – you will immediately see that they are pure poetry.

“Sustainable” Tourism in the Quirimbas Archipelago: Sustainable for Whom, Exactly?

Micaela Browning | KF17 | Mozambique

The Quirimbas Archipelago in Northern Mozambique is a paradisiacal chain of 24 verdant islets blessed with the tropical vacationer’s holy trinity: ivory sands, ubiquitous royal palms, and resplendent turquoise waters . Last weekend, I was fortunate enough to have the privilege of visiting Quirimbas, which – I figured – would be a pleasant respite from the toils of city life.

From what I was able to gauge from my guidebooks and conversations with previous visitors, the economic landscape of the Quirimbas is rapidly evolving. Prior to 2006, the islands were largely neglected. There was no electricity, scant provision of other public goods, zero transportation, and little commercial activity beyond small-scale fishing and agriculture. Now that the archipelago has been “discovered” by the “sustainable” tourism industry, foreigners are buying up property, streets buzz underneath the newly installed power lines, and charter airlines and boats are travelling several times daily to the main island.

Same Continent, Different Worlds: Part 2

By Kiva Fellows in Africa, KF16
Compiled by Tejal Desai

Ow de body! Are Sierra Leone and Rwanda still danger zones? What challenges do Ugandans most commonly face? Kiva Fellows from KF16 bring you another unique perspective from the diverse and vast continent of Africa! We patched together an overview of each of our placement countries that includes: basic socioeconomic stats, common stereotypes (and to what extent they are true or false), greatest challenges, most common loan products at our respective field partners, and the borrowers’ most common use of their profits. Our part 2 series follows the Kiva Fellows through Sierra Leone, Rwanda, and Uganda. We hope our summaries give you a new perspective on the continent and its distinct countries that we’ve been fortunate to explore, thanks to the Kiva fellowship!

Same Continent, Different Worlds: Part 1

By Kiva Fellows in Africa, KF16
Compiled by Tejal Desai

Where might you find muzungu hunting? Where do Kenya’s elite runners hail from? And what do most borrowers in Burkina Faso use their business profits for? Kiva Fellows from KF16 bring you a unique perspective from the diverse and vast continent of Africa! We patched together an overview of each of our placement countries that includes: basic socioeconomic stats, common stereotypes (and to what extent they are true or false), greatest challenges, most common loan products at our respective field partners, and the borrowers’ most common use of their profits. This first post of a two-part series focuses on Kenya, Tanzania, and Burkina Faso. We hope our summaries give you a new perspective on the continent and its distinct countries that we’ve been fortunate to explore during the Kiva fellowship!

Producto Creer: How for a Bank Doing the Right Thing Can Pay Off

By Emmanuel M. von Arx, KF16, Guayaquil (Ecuador)

My host and Kiva´s partner organization Banco D-MIRO provides over ten different types of microloans to borrowers in and around Guayaquil: among them loans to finance housing improvements, school expenses, medication, and loans awarded specifically to employees, young clients with a business idea but no experience, and – as Ecuador´s only microfinance institution – discount loans for HIV-positive micro-entrepreneurs. Yet, one borrower group beats all other borrowers in their dedication and commitment to paying back their loans on time: the well over 400 disabled borrowers of Banco D-MIRO, whose payment discipline has turned “their” loan – “Producto Creer” (“Product Believe”) – into the most successful and inspirational product of D-MIRO´s extensive spectrum. The delinquency rate of Producto Creer is by far lower than that of any other major micro-loan type of Banco D-MIRO, which means that borrowers of Producto Creer are better at paying back their monthly rates than any other client group! In these times of economic and social turmoil, Banco D-MIRO´s Producto Creer may be a much needed reminder that it may pay off for banks to do the morally right thing.

A Typical Day in the Life of a Kiva Fellow: Loan Officer Training (Video Blog Post)

By Emmanuel M. von Arx, KF 16, Guayaquil (Ecuador)

Video posts on a “typical day” in the life of a Kiva Fellow are a time-honored tradition on the Fellows Blog. Without any more words, here is my contribution to the video series of documenting a typical day in the life of a Kiva fellow. Like all previous contributors to the series, I am keenly aware that there is no “typical day” for Kiva Fellows. But taken together, the growing number of “typical day”-videos may at least convey something of the diversity, unpredictability, spontaneity, and joy that a typical untypical day of a Kiva Fellowship entails. Enjoy!

Malaria Dreams: The True Kiva Fellowship Experience

By Tejal Desai, KF16, Sierra Leone

As my Kiva fellowship winds down, I reflect on the memorable journey I’ve been privileged to experience through the Kiva Fellows Program as a member of its 16th class. Through personal revelations and humbling lessons in adaptation, microfinance work, cultural differences (and a unique incidence of malaria), I’ve grown attached to beautiful Sierra Leone. Throughout the fellowship, I’ve found my journey paralleling that of a character in a humorous novel, Malaria Dreams by Stuart Stevens, in which a man travels through the Central African Republic in one mission in mind: to find a friend’s Land Rover and drive it back to Europe — only to find that his 3-month journey has a lot more in store for him than he anticipated, and nothing goes exactly as planned. My fellowship similarly followed suit with its own surprises, bumps in the road, and memorable moments.

Village Banks BY Farmers FOR Farmers: A Microcredit Labor of Love

Oxen hauling coffee harvests in La Sierra, Platanares, Costa Rica.

 By Julie Kerr, KF16, Costa Rica 

Part 2:  Microfinance Models in Costa Rica – Featuring FUDECOSUR

 

(See Part 1 for details on how FUDECOSUR’s village banking model works)

 

The warm red earth pulls me in, as I follow FUDECOSUR loan officers on their labor of love.

Serpentine paths lead us through farm lands carved out of dense swaths of jungle, as borrowers take us to the plots of land they proudly cultivate, thanks to the help of Kiva lenders.

As I slip and surf along steep paths slick and thick with monsoon rain, sprawling ferns the size of a family hut, reach out to us, with unfurled leaves heavy with the same mist that envelopes us.

Majestic white oxen haul mighty harvests out of the valley depths, where machines dare not tread, due to thick, quicksand clay mud, which all too lovingly pulls all things passing, toward the womb of the world. We move to the side of the path, making way for the heaving beasts of burden, as they pull weighty sacks of coffee beans and other food crops, in brightly painted “carretas” (wooden carts with wooden wheels).

Continuing along our trek, we descend into a warm, moist Eden of lush green, where water-collecting trees grow taller and stronger as we approach the river.

“Welcome to La Sierra! Here we take care of nature!” – Village welcome sign in La Sierra, Platanares, Costa Rica.

Unlike farms I’m used to seeing in the United States, Costa Rican farms boast fields of crops coexisting with an abundance of medicinal plants and native trees, which are protected by law.

True to Costa Rica’s conservationist spirit, owning land means that one is charged with protecting existing plant species essential to long term survival, while cultivating crops essential to immediate survival.

Cutting down old-growth, or endangered trees, or trees which sprout, stretch and rise along rivers, is strictly punished by hefty fines and jail time. These rules apply even if one destroys any such tree on land one owns.

The result?  Farming in Costa Rica is no longer synonymous with deforestation. Because of the great care that has been taken to preserve the environment, Costa Rica has become a Mecca for biologists and laymen lovers of wildlife. The nation boasts the largest percentage of protected land in the world (25%, compared to the developing world average of 13%, and the developed world average of 8%). While making up only 0.25% of the earth’s land mass, Costa Rica is home to 5% of the world’s biodiversity. And though such animals are nearly extinct in neighboring countries, large jungle cats, a variety of monkeys, reptiles and amphibians, and an abundance of bird species and marine turtles, survive and thrive in the ecologically rich coast that is Costa Rica.

Oxen hauling farmer and son to coffee fields - La Sierra, Platanares, Costa Rica.

Protected land swells and wells with sweet, crystalline springs, rolling rivers, tumbling white waterfalls, lakes, mangrove swamps and marine estuaries brimming with life.

Due to a deep respect for the earth, exceptionally clean water and fresh air blanket the country, and are a great source of pride for Costa Ricans.

Those who work the land are especially proud of it, and in the eyes and smiles of Kiva borrowers and FUDECOSUR loan officers, beams a joy and passion that comes from living a labor of love.

In The Fields:  Loan Officers Serving as Agricultural Development Partners

Not only are FUDECOSUR  village banks run by village farmers, as detailed in Bank-O-Mat Under a Hot Tin Roof, but they are also trained and managed by loan officers who are farmers themselves.

As FUDECOSUR  seeks to assist and develop agricultural communities by becoming an integral part of each community, FUDECOSUR’s loan officers provide much more than a mere financial services relationship. Since loan officers Geiner Gonzáles Marín, Gerardo Barrantes and Danny Zuñiga all come from farms themselves, they also serve as valued partners, advisors and mentors, not only from a bank operations training and guidance perspective, but also with regards to helping clients optimize crop and livestock output.

Geiner Gonzáles Marín: Chief Loan Officer

Geiner Gonzáles Marín entering a coffee farm in La Sierra, Platanares, Costa Rica.

When visiting borrowers and the lands they cultivate, Chief Loan Officer Geiner Gonzáles Marín, often leads the trek into plunging valleys or up steep mountains, with unceasing enthusiasm.

Born and bred on a coffee plantation with dairy cows and various food crops, Geiner is in his element and is unstoppable –copious rain or shine.

With an absolute passion for the land and the fruits of farmers’ labor, his camera is always in hand, snapping photos of crops grown with Kiva loans. He also interviews the farmers with great interest, inquiring about crop cultivation challenges (such as destructive wilting or fungus caused by excessive rain), and offers vital suggestions on how to combat various crop infirmities and increase crop yields.

Gerardo Barrantes: Loan Officer 2

Gerardo Barrantes with the largest of his giant Ayote harvest, measuring 67cm long, and weighing 17 kilos – San Rafael Norte, Costa Rica

Sharing the same intense passion for the land, loan officer Gerardo Barrantes shows off photos of gigantic yucca and ayote crops he’s produced organically. Clients are wowed by the 37-pound mega-vegetable Gerardo proudly cradles like a newborn child.

While eagerly inspecting and praising crops produced by Kiva borrowers, he offers guidance on stronger, more rain-resistant produce likely to benefit from organic farming methods.

Gerardo’s love of the land is also reflected in his paintings. One features his childhood home – an evergreen dairy farm, fed by fresh spring water, cascading from the mountains shadowing his boyhood village. Gerardo’s artisan talents are also used to turn “carretas” (ox-drawn wooden carts) into rolling works of art, for the proud farmers in and around his village.

Danny Zuñiga: Loan Officer 3

Danny Zuñiga (far right) with his proud parents in the family sugar cane fields - Pilar, Costa Rica.

Like his counterparts, loan officer Danny Zuñiga has always had a deep desire to remain close to the land, and the people who tend it.

As a small child, Danny’s mom jokes that it was hard to get him excited about school, since he preferred spending time with dad in the family sugar cane fields.

True to his passion, Danny enrolled in an agriculture-based vocational school program. From grades 7-12, Danny bussed his way to Colegio Tecnico Profesional de Platanares, which has a working coffee farm, and livestock farm full of cows, pastures, pigs and rabbits. Just like his colleagues, Danny’s favorite part of the job is being out of the main office, and in the field with borrowers. As such, Danny is especially proud to help serve client needs with his agronomy training, both in theory and in practice.

In addition to informal cultivation guidance provided by loan officers, FUDECOSUR borrowers also benefit from community and business development courses funded by FUDECOSUR profits.  Free technical training and education are provided to increase crop and cattle yields, improve community health and sanitation, and expand alternative job opportunities. Course themes are requested by the Village Banks, and are coordinated by the FUDECOSUR director and loan officers – who source experts in each field of training (such as technical college agronomists for crop cultivation or livestock care courses, or information technology instructors for computer training courses). Village bank communities in need have benefitted from detailed courses combining theory and practice, such as:

• Livestock Health Care and Output Optimization
• Coffee Cultivation and Output Optimization
• Hydroponic Farming Capacitation (to optimize more environmentally-friendly, and disease-free farming)
• Food Handling and Sanitation (to improve community health and support start-up food service businesses)
• Computer Training (MS Office for children and adults)
• Sewing/Clothes Making
• Community Recycling
• Water Purification

FUDECOSUR provides these free courses not only as a form of long term community development, but also believes that such courses are responsible for client loyalty and very low default rates (2% reported for 2010). The more involved FUDECOSUR is in the village bank communities, the greater affinity clients feel for FUDECOSUR as a member of their community, and the more willing and able clients are to repay loans (per FUDECOSUR’s philosophy).

Furthermore, borrowers who are taught methods to improve production, make stronger clients and business partners in the future, since they’ll eventually have more income resources.

In The Village Banks:  Loan Officers Serving as Financial Operations Partners

Working “carreta” painted by FUDECOSUR Loan Officer Gerardo Barrantes.

Beyond working to provide agricultural communities with formal and informal business development guidance, FUDECOSUR loan officers also train farmers to run village banks, which operate in the communities where farmers reside.

With dedicated mentoring and guidance from loan officers, FUDECOSUR’s Village Banks (also known as Credit Committees) are run by 5-7 dedicated volunteers, who are elected every 2 years by members of their community.  Partnering with FUDECOSUR’s loan officers, Credit Committees are responsible for assessing and approving loan requests, disbursing loans to borrowers, collecting loan payments, documenting all credit requests and exchanges, and monitoring borrower progress. Credit Committees are also charged with educating their community members on FUDECOSUR rules and requirements for soliciting, receiving and repaying loans.

Geiner Gonzáles Marín (right) inspecting and gathering coffee beans for Kiva borrower Rigoberto Garro Godinez - La Sierra, Platanares.

Given their intimate knowledge of the land, FUDECOSUR  loan officers are deeply respected and revered by clients as fellow farmers, who bring much-needed credit funds and education to underserved communities.

“Geiner is one of US!”  Village bank members of Cedral de Cajón exclaim (referring to the Chief Loan Officer).

Since agricultural communities are commonly excluded from traditional financial services, the introduction of FUDECOSUR funds and training has given clients a renewed sense of hope, pride, and excitement.

Many FUDECOSUR clients recant tales of suffering through intimidating, confusing and lengthy application processes for traditional bank loans.

After losing money to travel costs, and crops left unattended for multiple visits to national banks, farmers are often left disheartened by rejection at the end of the process.

After struggling unsuccessfully for years to obtain national bank loans to support his farm, Antonio Vargas Hernandez, is now Vice President of FUDECOSUR’s village bank in Cedral de Cajón.

“After being rejected for loans with national banks time after time, I never imagined I’d actually be running a bank!” Antonio is radiant with warm pride and enthusiasm. “I’m so proud to be able to help my community move forward with affordable loans that can be obtained right here!”

Geiner Gonzáles Marín descending into the valley of La Sierra, Platanares to reach a Kiva borrower’s coffee farm.

The complexity of the national bank loan process, plus the constant rejection of farmer applications, made many farmers feel inadequate and incompetent when seeking credit.  In contrast, FUDECOSUR has taught clients that they are not only valued borrowers – they are also essential, competent and capable financial services partners.

As farmers with intimate knowledge of the land, and personal experience with members of their community, Credit Committees are well-suited to decide which business proposals are most apt to thrive from a micro-loan.  If an unprofitable business proposal is presented (such as planting crops in areas not conducive to successful crop production), the hands-on farming expertise of Credit Committees is leveraged, to help prospective borrowers come up with alternative proposals, which will generate positive growth, and help borrowers thrive.

Because of FUDECOSUR’s inclusive village banking model, farmers who formerly perceived themselves as financially illiterate, have become highly functional village bank operators who now beam with confidence.

“Loan officers like Geiner make us better people” says Arrelio Arías Brellas – President of FUDECOSUR’s village bank in Cedral de Cajón.  They’ve made credit processes easy to understand, and loans fast and easy to obtain. Because of their time and dedication, we are now equipped to help our community improve their businesses, and make life easier.”

Miguel Mora Vargas, Treasurer of Cedral de Cajon’s village bank, explains how loan officers lead by example, and are a great source of inspiration for village bank officers, who are also borrowers themselves.

“Geiner’s hard work makes us want to work harder every day to help our community succeed. Loan officers like Geiner are always punctual, and they stay after hours to ensure all credit exchange tasks are understood and complete. Their knowledge and expertise becomes our knowledge and expertise, and we learn more every day. Our community is stronger because of FUDECOSUR.”

Thumbs-up and smiles from a proud coffee farmer - La Sierra, Platanares, Costa Rica.

As village bank operators express their gratitude for FUDECOSUR’s inclusive and educational community development model, monsoon rains often thunder down outside, making a mighty rap-a-tap-tap chorus of sound, which mimics roaring applause.

Cedral de Cajón is just one of many communities expressing deep thanks for FUDECOSUR credit services, and the Kiva loans that help make them possible.

Time and again, I have the pleasure of seeing borrower hardships converted into eventual successes through Kiva loans, and I redefine the concept of wealth every time.

Most FUDECOSUR borrowers, due to their isolated location, have never had a relationship with a national bank, and therefore, don’t even have savings accounts. They are subsistence farmers who don’t become financially rich with Kiva loans, but who are able to maintain crops and cattle for more consistent production, or grow their businesses when weather and market conditions are optimal.

With each new loan received (after years of exclusion from traditional financial services), FUDECOSUR borrowers feel that their work is valued and more important than ever. With each successful harvest supported by Kiva loans, farmers stand taller. Single mothers raising pigs which give birth to litters of 6, or chickens producing piles of healthy eggs, radiate with a newfound belief in themselves as capable and successful providers for their children. Sons producing more abundant coffee beans or corn with nutrient-rich fertilizers, beam with pride, as they are able to care for aging parents, and feel confident about supporting a future family of their own.

What price tag can you place on the renewed sense of life, optimism, enthusiasm and excitement that comes from feeling valued, confident, competent, capable and hopeful?

The value, in my humble opinion, is priceless.

And though life is not easy for these hardworking borrowers, they are growing wealthy in many ways human beings should be, thanks very much in part, to generous Kiva lenders.

Past Blogs:

• Bank-O-Mat Under a Hot Tin Roof: Making Non-Profit Microfinance Sustainable

Upcoming Blogs:

• Kiva Borrower Stories and Thanks from The Field
• Jungle Journals – Adventures in the Wilds of Región Brunca

How YOU Can Help:

• Lend to a Kiva entrepreneur today!
• Apply for the Kiva Fellows Program!
• Join the FUDECOSUR lending team!

Julie Kerr is Kiva Fellow serving in San Isidro, Costa Rica. She currently supports FUDECOSUR (Foundation for the Development of Southern Communities).  FUDECOSUR is a non-profit microcredit provider, dedicated to empowering Southern Costa Rica’s disenfranchised agricultural sector.

The Double-Edged Sword: Sierra Leone’s Battle Against Poverty

By Tejal Desai, KF16, Sierra Leone

Aid: What does it mean for a country recovering from a devastating decade-long civil war that killed over 50,000 of its people? And what does it mean for microfinance organizations that aim to loosen the leash from dependency and push for sustainability? After taking an okada ride through Sierra Leone’s capital, Freetown, one may find the presence of international aid ubiquitous, and acting as a double-edged sword in the fight against poverty.

Visiting an HIV-Clinic in Guayaquil (Part II)

By Emmanuel M. von Arx, KF16, Guayaquil (Ecuador)

One of the great joys and privileges of being a Kiva Fellow is to go along with loan officers when they are meeting Kiva borrowers and new clients. One of my most memorable outings was a visit of an HIV-clinic in a public hospital in Ecuador´s largest city Guayaquil. In the first part of this blog post I recounted how I drove with Nahin Alvarado from Banco D-MIRO´s headquarters on Guayaquil´s Isla Trinitaria to the HIV-clinic at Hospital Abel Gilbert. Nahin is the bank´s loan officer specializing in HIV-positive and/or disabled clients who have the right to receive a discount micro-loan. And Banco D-MIRO is the only micro-institution in all Ecuador to provide financial products especially for these two long-excluded client groups.

Nahin is talking to a patient outside of Guayaquil´s HIV clinic

While Nahin is presenting the bank´s special loan products to the patients in the HIV- clinic´s crowded waiting room, Franklin walks towards me. A strong man in his forties, Franklin is the leader and community organizer of FUSAD (Frente Unido por la Salud y los Derechos – in English: United Front for Health and Rights), a self-help and support group for HIV-positive people, based at the hospital and well known for the professional education courses they provide to their members.

Visiting an HIV-Clinic in Guayaquil (Part I)

By Emmanuel M. von Arx, KF16, Ecuador

“Don’t be scared to shake the hand of a client with HIV or to drink out of his glass. You cannot get infected that way.” This was the message that Nahin Alvarado repeated over and over during a training session in September with a group of twelve new and somewhat incredulous loan officers of Banco D-MIRO, when I first met him. A loan officer himself, Nahin has been with Banco D-MIRO for over two years, focusing on two very special client groups who – not just in Ecuador – have long suffered from discrimination and lack of access to financial services: micro-entrepreneurs who are HIV-positive or disabled. The moment I heard Nahin so forcefully speak up on behalf of HIV-positive clients, I knew that I wanted to spend a day with him in the field.

What´s Easier Than Getting Robbed in Guayaquil?

By Emmanuel M. von Arx, KF 16, Ecuador

As much a therapy session as a blog entry, this is the narrative of a recent robbery incident in Guayaquil: It happened two hours ago and my co-workers and I can still feel the shock in our bones. This day had begun like a normal day: At 7.30am Rubi Chaca – the Kiva Coordinator of Banco D-MIRO -, her 16-year old intern Joel Kenny Matias, and I had met outside of the bank´s headquarters, where we were picked up by Roberto, the official driver of the bank. He drove us to the branch office of Guasmo where we gave a training session to the local loan officers, reminding them about Kiva and explaining to them why it is so important that they keep finding micro-entrepreneurs who agree to be listed with their name and photo on Kiva´s website.

Bank-O-Mat Under a Hot Tin Roof: Making Non-Profit Microfinance Sustainable

One of FUDECOSUR’s 45 Village Banks - Pueblo Nuevo, Región Brunca, Costa Rica

By Julie Kerr, KF16, Costa Rica

Part 1:  Microfinance Models in Costa Rica – Featuring FUDECOSUR

 

(Check out Part 2 for more adventures in FUDECSOUR village banking)

 

Bump-duh-duh-thump-thump, Bump-duh-duh-thump-thump, Bump-duh-duh-thump-thump WHUMP!!!

So goes the rockin’ and rollin’ commute to remote villages along dirt roads – speckled with basketball-sized boulders, and craters large enough to swallow a small man (that’s where the “WHUMP!” comes in).

Maneuvering these roads with a grin and gusto are FUDECOSUR’s dedicated loan officers:  Geiner Gonzáles Marín, Gerardo Barrantes and Danny Zuñiga. Our destination for each turbulent trip is one of FUDECOSUR’s 45 village banks – which provide the only source of much-needed credit most clients have ever had.  THANK YOU to all Kiva lenders who help make this possible!

As we zig-zag along winding roads trying to avoid the mammoth “WHUMPS!”, we run into traffic. Blocking our path is a fearless bull unspooked by our roaring engine. He stares us down as if to say: “This is my road, buddy, and I refuse to moooooove”.  As we inch forward, gently nudging his bum with the bumper, he finally decides to amble on.  Then our ascent is blocked by a bulldozer shoveling landslide debris off of the road.

While we wait, I savor the warm sounds of humming insects, and whispering laughter from palm leaves rustling in the wind. I take in the views of lush, green valleys and farmland terraced along the hills and rising mountains.  Coexisting with carefully planned crops of fire red coffee beans, sugar cane, corn, and legumes, are patches of wild, unclaimed land full of sweet lemon trees (yes – the lemons here are sweet), bright fuchsia bananas (which are mostly eaten by the birds) and miniature yellow bananas (which humans find sweet and delicious). Wild avocado and coconut trees can also be found, and like the sweet lemons and baby bananas, they are free to those who wish to indulge. Have I landed in Heaven??

Our vehicle lunges forward, and I’m whisked out of my glassy-eyed daydream of staying here forever. We pass pristine waterfalls tumbling down the mountain, across the road, and down into whitewater rivers which snake through the valley below.  Aaah… slipping back into my daydream again… I’ve grown so accustomed to the rhythm of the roads that the “Bump-duh-duh-thump-thump” now serves as my lullaby.

WHUMP!  We arrive at the village bank.

Perched on a verdant plot of land amidst pastures of feeding cattle, or rising food crops stretching  toward the sun, are many of FUDECOSUR’s village banks. Some village banks are simple one-room structures with a burning tin roof shading us from the elements.  Other village banks operate out of a farmhouse kitchen or living room.  All village banks are a part of FUDECOSUR’s mission to bring financial support to the doorsteps of disenfranchised populations.

Due to the isolated nature of the farming communities we visit, most residents have never had a savings account. The absence of national banks in these remote areas has excluded much of the agricultural sector from financial savings and borrowing opportunities.  In order to qualify for a loan, national banks often require costly cash deposits – which most farmers can’t pay, since they rarely have savings accounts. Without access to savings accounts, farmers often purchase a pig or a cow with remaining cash.  These animals serve as the farmers’ insurance plan, and are sold when large sums of money are needed for emergencies (such as unexpected medical expenses).  While farmers are able to subsist without access to credit, it is extremely difficult, at best, to increase living standards or to recover from natural disasters (such as floods or blight) or major health emergencies.

Filling this vast credit void is FUDECOSUR  (Foundation for the Development of Southern Communities)  –  A non-profit microcredit provider, dedicated to empowering Southern Costa Rica’s agricultural sector.

Besides providing loans for expansion of crops and livestock, FUDECOSUR also provides Family Well-Being loans, which cover medical, educational and home renovation expenses.  Such loan diversification ensures that struggling farmers are not forced to sacrifice one essential need (such as money to purchase seed and fertilizer) for another (such as money to pay for life-saving medical treatment).

To facilitate easy repayment based on agricultural development and sales cycles, FUDECOSUR offers loan terms of up to 3 years, with annual rather than monthly principal repayment terms. Loan terms are also restructured to help borrowers overcome crop and cattle losses from natural disasters (such as floods and blight), and financial losses due to health emergencies.

To ensure credit services are easily accessible, affordable and sustainable, FUDECOSUR literally brings banks to remote villages in need. Leveraging dedicated volunteer networks, existing social infrastructure and building facilities, FUDECOSUR maintains low operational and servicing costs, and minimal environmental impact, while building community cohesion, and opportunities for community members to thrive.

How The Village Banks Operate:  Volunteer Power!

Village Bank operations in action: Santa Elena, Región Brunca, Costa Rica. Tables to the left serve clients repaying interest, while tables to the right serve clients soliciting or receiving money for new loans.

FUDECOSUR’s Village Banks (also known as Credit Committees) are run by 5-7 dedicated volunteers, who are elected every 2 years by members of their community.  Partnering with FUDECOSUR’s loan officers, Credit Committees are responsible for disbursing loans to borrowers and collecting loan payments.

As farmers with intimate knowledge of the land, and personal experience with members of their community, Credit Committees are also charged with deciding which business proposals are most apt to thrive from a micro-loan.  If an unprofitable business proposal is presented (such as planting crops in areas not conducive to successful crop production), the hands-on farming expertise of Credit Committees is leveraged, to help prospective borrowers come up with alternative proposals, which will generate positive growth, and help borrowers thrive.

Where The Village Banks Operate:  Mi Casa Es Tu Casa!

Village Bank in Cedral de Cajón, Región Brunca, Costa Rica

To ensure zero resources are spent on office construction, rent or maintenance, Village Banks operate out of existing community structures, such as a tin-roofed central market shelter, or the homes of Village Bank (Credit Committee) members.

And, since Village Banks operate in villages where borrowers reside, clients avoid costly money and time expenditures, required for travel to distant towns or cities (where national banks reside).  In short, the proximity of the village banks to clients ensures unprecedentedly easy and consistent access to credit services.

When The Village Banks Operate:  After The Cows Come Home!

Kiva borrower traversing the farmland he works: Administración, Región Brunca, Costa Rica

To accommodate the demanding work schedules of agricultural borrowers, Village Banks meet every 2 weeks, on recurring set dates (i.e.: every first and third Tuesday of each month). Bank meeting times start in the late afternoon (2pm, 3pm or 4pm) to allow borrowers to meet essential crop cultivation and livestock care demands. As such, borrowers are able to access credit services without sacrificing critical production tasks and wages.

At each meeting, debt principal and interest payments for existing loans are collected, while money for new loans is solicited and disbursed.

Homeward Bound:

Road to Cedral de Cajón, Región Brunca, Costa Rica

After the 3-4 hour bank meeting ends, we bid warm farewells, with new loan profiles and hopes for better futures in hand (thanks to the generosity of Kiva lenders).

By the time the loan officer and I reach home (FUDECOSUR headquarters in San Isidro), a 10-13 hour day will have passed.

Once I reach my cozy, tin-roofed apartment, echoes of “Bump-duh-duh-thump-thump WHUMP!!!” serenades will lull me to sleep, and ring out again at the start of my next adventure.

Other Blogs:

• Village Banks BY Farmers FOR Farmers:  A Micro Credit Labor of Love

Upcoming Blogs:

•  Jungle Journals – Adventures in the Wilds of Región Brunca
•  More Than Microfinance – FUDECOSUR’s Free Community Development Courses

How YOU Can Help:

• Lend to a Kiva entrepreneur today!
• Apply for the Kiva Fellows Program!
• Join the FUDECOSUR lending team!

Julie Kerr is Kiva Fellow serving in San Isidro, Costa Rica. She currently supports FUDECOSUR  (Foundation for the Development of Southern Communities). FUDECOSUR is a non-profit microcredit provider, dedicated to empowering Southern Costa Rica’s disenfranchised agricultural sector.

A Consumer, not a Recipient

By Brandon Vaughan, KF12, El Salvador

There is a lot of debate in the world of international development about the role, both positive and negative, that multinational corporations play in developing countries.

Nicaragua’s Caribbean Coast – Sociolinguist’s Paradise, Electrician’s Nightmare

By Dan Tulchin, KF12, Nicaragua

What do Miskito, Rama, Garifuna, Spanish, Creole, and English have in common? Well, nothing really, besides the fact that you can hear all of them within a block in Bluefields, on the Caribbean coast of Nicaragua – a place where international organizations and tourists rarely venture. While a number of these languages are, in essence, subsets of others, I am hard pressed to come up with another place of such linguistic variety (no, Times Square doesn’t count). Bluefields is, without question, a sociolinguist’s paradise.

Moving Forward in El Salvador

By Brandon Vaughan, KF12, El Salvador

Whether it’s the memory of a drawn-out civil war, stories of gangs and violence, or the influence of one of Central America´s most prolific emigrant communities, El Salvador´s complex past directly relates to the challenges it faces today.

Reading the Economic Chicken Bones

By Ilmari Soininen, KF9 in Thies, Senegal

Christmas kicks off a serious week of celebration for Senegal’s Christian minority. Dispersed families unite, meaning a series of sept-place, clando and bus rides from the capital. Like in many parts of the world, roasted chicken (or turkey) is an important part of the Christmas menu here. The bird is carefully prepared, and cooked to tender perfection. Chicken is not an everyday treat for most of Senegal. Indeed, it is quite a luxury item. But why is this so? And can this tell us something about the country’s future?

A Holiday luxury - but hopefully not forever

Les bijoux en toc au service du développement économique ?

By Thomas Gold, KF9 Dominican Republic

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

Après quelques jours dans la province de Samanà, une péninsule qui se situe au Nord-est du pays,  je n’ai pu m’empêcher de m’interroger sur l’utilité réelle et les bénéfices concrets du travail réalisé par mon institution hôte et surtout par la microfinance en général.

En effet, après avoir passé ces premières journées à faire de longs trajets, dans des conditions difficiles sur les quelques routes bosselées et mal entretenues de la péninsule pour assister aux réunions bimensuelles de remboursement des prêts, j’ai constaté que la majorité des commerces tenus par les clients d’Esperanza, sont en tout points identiques : il s’agit de femmes qui vendent de manière ambulante des vêtements, chaussures et bijoux fantaisie (en toc), et dont la situation n’évolue pas vraiment, même après plusieurs cycles de prêts.

Different ways to get from one borrowers meeting to another

A Road Is Paved, A Mall Opens

By Sloane Berrent, KF8, Ahon sa Hirap, Inc, Philippines

A Center Meeting in San Jose, Antique, Philippines.

“How has Ahon sa Hirap, Inc.” (ASHI and my host microfinance institution) “being here in your barangay or in your town helped your community?” I ask the women from ASHI during each Center meeting that I attend. There are a few variations on this question. I ask how their lives have changed and what the Center means to them.

“My husband had a stroke and couldn’t work anymore. I worked as a domestic in town and had to travel very far every day for not a lot of money. I joined ASHI 7 years ago to start a buy and sell fish business so that I could stay closer to home to take care of my husband and help my children.”

“After my husband died, I was so lonely. My children are all grown up and out of the house. I was sad. I joined ASHI 13 years ago and now my life is so different. I laugh. I come here every week to see my friends.”

“My house was very bad and made from old bamboo. When typhoon season came, my family had to run to our neighbors because we were scared our house would collapse. With my ASHI loan, I was able to move my Sari Sari store to a busier corner where workers pass by on their way to the fields. I open at 4AM and close at 8PM but am very happy. Now 10 years later, we now have a house made of stone and we don’t run from the typhoons anymore.”

But has it changed MORE than that? What about an entire town?

I had heard that seeing microfinance in action could be like watching grass grow. So gradual, so slow. How could I say that there is indeed a larger change in the landscape of where microfinance sets up shop?

I turned to the ASHI staff. It was a Saturday night and we were going to go out to dinner together. The two Kiva Coordinators asked me if we could stop in the new local mall that opened so that could grab a few things.

“Sure,” I said. No problem.

We walked to the end of the drive and hopped into a tricycle and took off towards the mall. There was light traffic, the road wasn’t too bumpy, we arrived to throngs of people gathering outside the mall, in the entrance, more teenagers and families gathered.

“This has been huge for our town,” the one Kiva Coordinator said.

The One Thing

By Alison Carlman, KF8 – Kenya

As a graduate student of International Development at an African university, I wish that the answer was as simple as finding the “one thing” to alleviate poverty.  For marketing purposes, NGOs and “experts” tell us that the answer is so simple, whether it’s access to clean water, economic liberalization, universal healthcare, education, modernization, or microfinance. But 50 years of “Development” in practice teaches us that it’s not so black and white.

Kiva will be the first to tell you: microfinance is not the solution to poverty.  Provision of financial services is simply an important part of helping people improve their lives; microfinance is only a “tool” that can help people to meet a portion of their basic physical, social, psychological, and spiritual needs.

Alison at K-MET with Deborah, the Coordinator of the Food Security Program.

I’m working with Kisumu Medical & Education Trust (K-MET), a reproductive health organization in Kenya.  One of the many services that K-MET provides is reproductive health education and life-skills training to at-risk young girls ages 10-24.  These girls are often young mothers, survivors of rape and unsafe abortion, children of polygamous families, girls who had to drop out of school and work as prostitutes in order to meet theirs and their families’ basic needs.

A loan alone won’t solve these girls’ problems; they need counseling, support, marketable skills, food, daycare, education, encouragement, mentorship…. the list goes on.

The Cost of Doing Good

By Nancy Tuller, KF8, Ghana, Africa

I have a professor and mentor from my undergraduate days whose advice and thoughts I value and respect so much.  I still communicate with him regularly, and over the years, the topic of interest rates in microfinance has come up repeatedly in our conversations.  This is the man from whom I first learned about community currency, an alternative exchange system used alongside national currencies.  He is knowledgeable about micro and macroeconomics, as well as finance.  However, our conversations about interest rates for microloans always end the same way:  with me, for the most part, defending the rates charged for microloans, and with him maintaining that the rates are most often too high.  I think I finally have the words to support my position, and I offer them up to you all.

It seems I’ve always intuitively known that if you want to be in the business of giving very small loans to the poor, your expenses are going to be higher than if you are a financial institution that works with middle to high income clientele.  If you want to continue providing basic financial services to the poor you must have a sustainable operation, with an ability to cover all your expenses and generate funds to lend as well.  Many microfinance institutions (MFIs) rely on donor funds to stay sustainable, and I would even venture to say, without the statistics at my fingertips, that the majority of MFIs begin operations this way.  Many are not able to wean themselves from donor funds.  But relying on donor funds has its own cost, in terms of meeting donor needs, reporting back to donors, and the very real threat of MFIs losing sight of their own missions by putting their financial viability (and sometimes donor missions) at the top of their priority list.  The more recent trend in microfinance is to move away from donor funds and seek financial sustainability as quickly as possible.  Scaling up the business by adding more borrowers is a step in this direction, and there are certainly MFIs, who once they have reached a financial comfort level, have lowered their interest rates.  However, that comes with time and sustainability.  The first goal, before lowering interest rates, is financial self-sufficiency.

One thing that is really important to acknowledge is that different country contexts present different challenges to meeting financial sustainability for MFIs.  For example, Kiva recently launched its first loans to borrowers in the United States.  One of the MFIs offering these loans, ACCION, charges an interest rate of 12% APR.  That may seem on the reasonable end to many from the US.  However,

Ghanaian Reality Check

By Nancy Tuller, KF8 Ghana, Africa

“Akwaaba!”  (Welcome!), I heard, over and over in my first few days here in Ghana, and what a wonderful welcome it has been!  When I stepped outside the Kotoka International Airport in Accra, my heart lept at the feel of the warm and humid summer night clinging to my skin and the cacophony of voices in Twi, which is the most commonly spoken language here in Ghana.  It sounded to me like a kind of chaotic harmony, blending perfectly with snatches of disparate Ghanaian music coming from various vehicles as I left the airport for my hotel.  Every face I encountered could only be described as friendly, every voice warmly welcoming me!

Now I have been in Kumasi, the city of about three million residents, where Sinapi Aba Trust (SAT) has its headquarters, for four whole days as a Kiva Fellow.  That is enough to know that I am exactly where I am supposed to be!  One Kiva staff member told me that she felt that Africa was her home.  I wonder if I will be next to express that sentiment!   Already I am calling the apartment where I am staying with one of the SAT staff members and his wife “home”.  Joshua, Nana and I live in a two bedroom apartment on the third floor in a complex that at one time was a prestigious address, but has lost the right to that claim since the corporation who owns the complex decided not to maintain the roads, lights, security or even the reservoir that should be pumping water to the complex.  The apartment itself is modest, simple, clean and lovely, and I am very comfortable here, but all residents suffer a lack of running water.  A water truck brings water, and persons are paid to carry water in 20 liter buckets on top their heads, up the stairs (no elevators) to each apartment.  Water is used very sparingly, and of course the water problem is not just in this complex, it extends all over Africa, and much of the developing world.  The effects of climate change are very real-time here.  Nana says the monsoon season definitely is bringing less rain (it’s only rained briefly one time since I’ve been here and it is monsoon season now), and the large river that has always supplied the Kumasi area with water is low.  Though there is a large water table beneath Kumasi, very few can afford to bore a hole to access it.  This is a country where almost everyone, and perhaps especially the poor, have to pay market prices for clean water or make do with polluted water, increasing their exposure and vulnerability to illness and disease.  Add to this the absolutely alarming rate of inflation (currently 20.6%), in which the price of a banana or a cassava (and water) might go up by almost 0.66% overnight, and where unemployment is (depending upon whom you ask) between 30-40%!!  Such are some of the most visible factors of poverty here in Ghana, making microfinance,the provision of basic financial services such as savings, loans, and insurance, all the more crucial to the ability of the poor to weather such tumultuous financial storms.

If you would like to learn more about Sinapi Aba Trust and the provision of microloans to Ghanaian entrepreneurs, go to:  http://www.kiva.org/about/aboutPartner?id=88&_tpg=fb

Browse through SAT borrower profiles, make a loan, and and make a positive change in someone’s life at: http://www.kiva.org/app.php?page=businesses&partner_id=88&status=fundRaising&sortBy=New+to+Old&_tpg=fb

I am living in Kisumu, Kenya

I am living in Kisumu, Kenya. Here is a picture of the street where I volunteer, in the Nyalenda slum.

Walking around the slum, one quickly comes across evidence of the post election violence.  Burned buildings are common.  As are random herds of goats.

White people in Kisumu are usually in self-contained SUVs.  Not too many ever enter the Nyalenda slum.  As a result, as I walk, I am usually chased by children.

If I stay in one place for too long, they gather to stare.

In the slum, you find many teenage girls.  Their stories show a lot of common themes.

I am 20 years old.  My parents passed away when I was 14.  A lack of school fees made me leave school.  We were left 10 children.  Everyone searched for places to stay but I was left alone and went to be a street girl.  A guy hired me as a maid but forced me to have sex.  Within one month he raped me and I was pregnant.  I went to the Kenyan police and they did not take any action about that case.  They wanted money but I didn’t have even a single cent to give them.  I became a mother of a child but there was no job or anything to do.  I wake up early in the morning to wash clothes for people.  They only give me 50 shillings (*equivalent of less than $1USD) in order to get food to eat with my child.  Without washing clothes, we go to sleep hungry. If I can get someone to take care of me and return me back to school, then I can be proud and be happy as some people are.  Maybe my life can change and I can be someone different.

I’m a girl of age 20 years.  I dropped out of school in 2005 because I did not have money to continue my education.  I have been staying at home doing nothing.  I have no money to start a business.  I have no knowledge of anything.  I tried to convince my father to look for money to take me to high school but he did not.  I have been walking day and night to look for employment even as a housemaid but the salary is as low as 100 shillings a month (*$1.31 USD per month).  There is a time I succeeded in getting employment in a rich man’s house.  He promised to pay me well but was exploiting me sexually.  When I threatened to report him he sent me away.  I was frustrated beyond words.

I am 22 years old.  I am the first born in a family of five.  I live with my mother and step-father and dropped out of school.  I used to go clubbing and really had a bad company.  I got pregnant and now I have a kid, he’s 2.5 years old.  Life has been so hard I even tried marriage to find happiness and comfort.  I was married to a young man who gave me everything but mistreated me and my kid.  I had no choice but to stay with him since he provided me everything.  Nobody cared about me.  My husband was cheating on me but there was nothing I could do.  Now I am HIV positive.

A Sisterhood for Change participant posing with her child

Kisumu Medical and Education Trust (“KMET”) is one of KIVA’s partners.  In 2006, KMET created a program to address the seemingly hopeless situation for teenage girls.  KMET recruited orphans, single mothers, high school drop-outs, HIV/AIDs patients and commercial sex workers for a program called Sisterhood for Change.  The stories above are taken from profiles written by the girls recruited by the program.

At the Sisterhood for Change center, the teenage girls are taught about reproductive health and family planning.  For the first time, the girls learn about menstruation, pregnancy, sexually transmitted diseases, and how to use a condom.

At the center, the girls are also trained for 6 months in vocational skills, like cooking, hairdressing or tailoring.  Experienced tutors work with them from 8 am – 5pm, making sure that they have the skills to find legitimate jobs.  This is a huge opportunity – before they joined SFC, many of the girls had supported themselves and their children by “getting a boyfriend.”  These “boyfriends” are rarely monogamous and they rarely use condoms, contributing to the high rate of HIV infection in Kisumu (15%).  In the 1990s, the rate of HIV infection reached as high as 38%.  Along the streets, you can buy shirts, mangos, and coffins.  Funeral processions line the streets every weekend.

Susan teaches tailoring skills to an SFC girl

When Sisterhood for Change began, KMET expected that upon graduation, the girls would immediately get jobs in local communities.  Unfortunately, Kisumu just… doesn’t have jobs.  So even with their new vocational skills, the girls were still unemployed and relying upon men for income.

So KMET conceptualized an idea for Safe Spaces.  KMET has purchased a building in the Nyalenda slum and stocked it with the equipment needed to run tailoring, hairdressing and catering businesses.  KMET will train the girls in business and entrepreneurship, and then they will be free to work in the Safe Space for as long as they wish.  The girls will be purchasing supplies using KIVA loans.
For a long time, I wondered whether it could work.  We held a lot of preliminary meetings to discuss our plans for the Safe Spaces, and the girls usually yawned in indifference.  I would smile. I would pump my fists in excitement.  I would lure them with cookies.  Still, they seemed disinterested.

But now it’s actually happening! They are working in the Safe Spaces, selling french fries, avocado juice, and sassy hairstyles. Training takes place from April 29th-May 7th, with the generous help fof the Child at Venture Foundation. I still sometimes wonder if they are ready.  I still sometimes wonder if Muhammad Yunus would approve.  These girls really are the poorest of the poor, and we are trained that microfinance is not always effective with that group.  Will high school drop outs be able to run their own businesses?  We’ll find out…

Would Muhammad Yunus lend to us?

Milena Arciszewski is a year-long Kiva Fellow.  She has been in Kenya since January 2009, helping to develop the Safe Space initiative.  She loves getting emails, and can be reached at milena.kathryn@gmail.com.