When Microfinance Isn’t Enough: Thoughts from the Rough Roads of Ecuador
By Leigh Madeira, KF10, Ecuador
Have you ever thought about what the red, white and blue in the American flag represent? While there are many theories, the most popular seems to be the following: white signifies innocence, beauty, and purity (they clearly had the cast of the Jersey Shore in mind when coming up with this one), red for valor and hardiness, and blue for vigilance, perseverance, and justice.
The Ecuadorian flag, however, has the following meaning: the large yellow band represents “the country’s mineral and agricultural wealth, and its extensive natural resources”, the blue signifies “the ocean, and the clear and clean Ecuadorian skies”, and the red symbolizes “the blood spilled by the heroes who died in the name of their countrymen’s Fatherland and Freedom.”
The significance of the yellow in the flag made me pause…if the country has such mineral and agricultural wealth, why is there so much poverty? According to The World Factbook, over 38% of Ecuador’s population live in poverty (compared to 35% in Cambodia, 30% in the Philippines, and 12% in the USA). The fact that Ecuador’s terrain is so “wealthy” seems to directly contradict the amount of poverty seen here.
As we were told in Kiva Fellows training and have now witnessed firsthand, microfinance does not reach the poorest of the poor. A borrower must have some kind of economic opportunity in which to invest the loan, which the poorest people usually do not have. But here in Ecuador, with the rich terrain, natural resources, and opportunity for tourism (if you have never been to Ecuador you MUST visit) I think microfinance is and will continue to be very successful.
So then why is there still so much poverty? The problem is that microfinance alone cannot solve these problems. Infrastructure, labor laws, and fair governments to enforce such laws are just a few examples of what many developing countries lack…what I took for granted until I moved to Ecuador.
Why did it take my bus 8 hours to go 180 miles? Lack of infrastructure. Why do entrepreneurs here have to worry about daily power outages? Again, lack of infrastructure. Why does a worker in a banana plantation make $2 a day? The same reason I saw a 9-year-old boy working at the bus terminal at 2:00 am the other day. While I am sure this is illegal, what good are the laws if they are not enforced?
We have to keep in mind the other factors at work here in the developing world because they are real obstacles that affect the lives of Kiva borowers…factors that we, unfortunately, do not have much, or any, control over. (Kiva Fellow Anna Cleal recently wrote a great blog about the poor being exploited due to circumstances completely out their control)
I greatly believe in the power of microfinance, but how far can microfinance reach without some development from the country’s government? What responsibility do outside governments have to countries like Ecuador? Should the United Nations be involved? Should we place economic sanctions on countries that do not enforce child labor laws or will that only make the problem worse?
I am certainly no expert on this topic so I do not pretend to know the answers to these questions (would love to hear your thoughts). What I do know, however, is that even though microfinance alone cannot eradicate poverty, it is a step in the right direction. With a multifaceted approach to economic development, I hope to see Ecuador able to fully capitalize on all it has to offer: all yellow, blue, and red!
Leigh Madeira is serving in Guayaquil, Ecuador with Kiva Field Partner Fundación D-MIRO as a member of the Kiva Fellows 10th class. Please join D-MIRO’s lending team, make a loan on Kiva or donate today!
Entry filed under: blogsherpa, Ecuador, Fundacion D-MIRO Mision Alianza, KF10 (Kiva Fellows 10th Class). Tags: blogsherpa, Ecuador, KF10 (Kiva Fellows 10th Class), Kiva, Kiva Fellows, Leigh Madeira, microfinance.