When Microfinance Isn’t Enough: Thoughts from the Rough Roads of Ecuador

22 February 2010 at 04:18 10 comments

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 flag of Ecuador

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.

How does this rich countryside...

...translate into such poverty?

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.

Showing off Ecuadorian tourism

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: , , , , , , .

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  • 1. Christina  |  28 April 2010 at 08:04

    great piece, very insightful when thinking about government capacity in mf.

  • 2. Darlene  |  5 March 2010 at 20:36

    Excellent writing, Leigh, particularly the descriptive bus ride! Stay safe, my friend.

  • 3. Wendy Lynch  |  26 February 2010 at 11:13

    What a wonderful experience and a great opportunity to make a difference in one part of the world. Look forward to reading your next blog.
    Aunt Wendy

  • 4. Marlene Halligan  |  25 February 2010 at 15:52

    Hi Leigh–great, very informative and well-written article. Is there any type of educational system there? Without that there won’t be much advancement for the people. Are their natural resources being exploited by other countries?

    Keep the emails coming.

    Marlene & Tom

  • 5. Marlene Halligan  |  25 February 2010 at 15:47

    Leigh–very informative and well done article. Is there any educational system for the children? Without that, they won’t be able to advance very much. Are foreign governments taking advantage of their natural resources?

    Take care and keep the email coming.

    Tom and Marlene

  • 6. kathleen  |  22 February 2010 at 16:18

    Sounds like you are already getting so much out of this experience…and agreed you may have a great future as a writer!

  • 7. joshpwilcox  |  22 February 2010 at 12:33

    Very nice, you already know more about Ecuador than I do. And you must have a great photographer, by the way…as do I.

  • 8. Stephanie  |  22 February 2010 at 11:47

    Great writing Leigh! I like how you tie in the flag… very cool, I felt like I was reading an editorial:)

  • 9. Kerri Kirkland  |  22 February 2010 at 09:48

    I love your blog! I have never been to Equador but it one of the many places I want to visit. I visit Mexico often and have been to South Africa and Brazil so I have seen drastic poverty, something living in the US we rarely see.

    Keep the blogs coming and I will pass it onto my friends if you dont’ mind.

    Take care,

  • 10. Todd Leigh  |  22 February 2010 at 09:34

    Leigh – thank you for the update. Sounds like you are glad you made this move. Keep well,


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