Balance sheets and pap smears

9 August 2010 at 10:04 8 comments

by Magdalena Malinowska, KF11, the Dominican Republic

While providing capital to micro entrepreneurs so that they can expand their businesses is the primary goal of micro credit, it is not the only way micro finance institutions (MFIs) help their customers. Many go beyond money and worry about other aspects of their lives, turning into a one-stop community help center, offering a broad range of services.

For Esperanza International in the Dominican Republic the first step is in the word “asociada”. This MFI is an NGO rather than a bank, and so it’s perhaps for that reason that it prefers the term associate instead of client, as it better reflects the sense of community they strive to establish amongst their employees and those they assist. But it’s beyond the financial transactions that take place here. With borrowers turned into people in need of help, Esperanza sets out on its goal of helping improve the lives of the poorest of the poor. Yes, firstly by making money available to them given that they cannot get it in bank, but the loan is only the first step in their mission. Once you become an “asociada” you get much more than money.

And it all starts a week before you get it. As a new member of Esperanza’s “solidarity groups” (groupings of 5 borrowers), in the two weeks preceding your loan disbursement meeting you would be required to attend five “capacitación” (training) workshops on the following basic business skills:

1. Micro-business

  • The role of micro business in your family and community
  • Family and Micro-business financial management
  • Work capital management

2. Business Planning

  • Importance of planning
  • Reasons for planning
  • Establishing and evaluating work objectives, strategies and limits.
  • Creating a business plan
  • Business development strategies

3. Production and sales strategies

  • Quality control
  • Employees
  • Prime materials
  • Machinery and tools
  • Physical space in the workplace

4. Marketing strategies

  • Development of marketing strategies
  • Design your product for the client
  • Changing your products
  • Business growth

5. Balance sheet

  • Crating a balance sheet
  • Components of a balance sheet
  • How to formulate a financial strategy

The above training (more information on Esperanza website) would be followed by a thorough explanation of your loans terms and their functionality within the solidarity model. And it is only after completing these steps that you’d receive your loan. Fortified by training and capital, you are ready to strengthen your existing business or start a new one.

But what if you grow ill?  Well, basic vaccinations for your children as well as complimentary medical screenings and preventative health care services are available to all new families entering the Esperanza community free of charge (in most areas) or at a nominal fee of under a dollar per month (for extended services). The MFI is able to offer these services through partnerships with public and private health care providers, including one larger one – an Esperanza-run clinic in the city of San Pedro, the Clinica Esperanza y Caridad (Hope and Charity Clinic).

Another health service works in a similar way – each of the 9 Dominican Esperanza offices arranges cervical cancer screenings of their female associates (more than 90%) in local clinics at a negotiated discounted rate subsidized by each office, resulting either in a free Pap smear test or one charged as a nominal fee. Services are announced at repayment meetings by the loan officers and associates are encouraged to utilize the services. For many, these are first cancer screenings of their lives.

While on a repayment meeting for a group in Monoguayabo, near Santo Domingo, I witnessed another health-related service this MFI provides to the members of its community. That day I noticed that I was not the only visitor to the meeting and a bit after all passbooks were signed and payments were collected, a woman who had been sitting next to the loan officer introduced herself as a “promotora de salud” (health promoter). She passed out sheets to the associates with a large drawing of a river illustrating several different uses of it and their consequences. There was a factory dumping waste into the river and children playing in it half a page down and women taking out water to drink at the bottom. The “promotra” described the drawing, asked everyone to think about the importance of water in their lives and for their health and then assigned some of the questions on the sheet as topics for discussion during next repayment meeting. After the meeting she explained her role: she’s a volunteer, works with Esperanza by promoting awareness of several health or health-related issues like malaria and yellow fever precautions, instructions for proper hand washing, channels for reporting domestic abuse and many other topics. She attends repayment meetings and holds free workshops in communities. Most Esperanza branch provides this type of additional service to their asociadas, hoping to improve their well being.

And the ways in which this MFI (along with many other ones all over the world) sets out to help their clients in more ways than the one, do not stop here: through one of their US partners, Esperanza runs a dental program called “Smile for life” which brings doctors from the US to run clinics during short periods of time in key communities. There is a similar orthopedic program called “Arcoiris” (picture below). There are literacy programs and vocational training programs (picture below). And of course, many baseball-related charitable activities and (picture below) given that the founder is former Major League baseball player: David Valle.

Esperanza's Vocational training center in Samana.

Esperanza's ortopaedic short-term project "Arcoiris".

Within micro finance activities, there is a conscious effort to reach one of the most marginalized sections of the society on the island – business skills are promoted and loans are extended in a special program run in the HIV positive community. Finally, there is a special loan product offered for home construction – qualified multiple-loan associates with outstanding repayment record and healthy businesses have access to this type of non-income generating loans.

These are some of the many ways this MFI works on fulfills its goal of improving the lives of the poor communities in the Dominican Republic and Haiti. All this, in addition to providing an opportunity to establish micro-businesses in form of micro-credit, because Esperanza International is a micro finance organization which strives for “long-lasting solutions that enable families to help themselves.” Allowing the MFI to speak for itself by quoting from their website: “Esperanza centers on a micro credit lending program to equip the poor with the financial tools to cross the poverty line.” This is achieved through the “Integral Development Model (IDM), which consist of four strategic programs for human development and transformation: 1) Micro finance Services, 2) Education & Vocational Training, 3) Health Care and 4) Social Mobilization.”

Perhaps it’s all best expressed in Esperanza’s motto: “Working to change lives, one family at a time”.


Click here to help Esperanza Internacional to help the poor of the Dominican Republic and Haiti -via micro-lending and beyond- by making a loan to one of their associates.

Entry filed under: KF11 (Kiva Fellows 11th Class). Tags: , , , , , , , , , .

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  • […] attempt to address health and education issues (by providing training and medical camps, such as Esperanza International) but releasing people from the clutches of poverty is like walking up a steep hill, which makes it […]

  • […] to properly diagnose and treat any disease or illnesses clients may suffer from. As an example, Esperanza International, which is a microfinance provider in Dominican Republic, runs short dental and orthopedic programs […]

  • 3. Fehmeen  |  17 August 2010 at 08:53

    Hi Magdalena,

    Thanks for the details. I’ve read a lot about why MFIs need to charge high interest rates, but it would be been exceptional and an excellent benchmark for other MFIs if Esperanza really charged 2% per annum. Or even if the rate was close to the market interest rate.

  • […] MFIs should offer trainings/assistance related to business planning (as NGOs usually do). These trainings do not necessarily result in higher interest rates as Esperanza International as showcased. Milford’s argument against microfinance: Microfinance results in de-industrialization and […]

  • 5. Fehmeen | Microfinance Hub  |  10 August 2010 at 01:42

    Honestly, I’m shocked, but in a good way. In my excitement, I checked up Esperanza’s website and read they charge a 2% interest rate, and I was shocked again. I cannot help but think there’s a catch. Is it really 2% on an annualized basis? How are they able to keep this rate so low?

  • 6. Dan  |  9 August 2010 at 20:34

    Well, your day is made! Esperanza is a non-profit and often is able to obtain these extra services without any increase in interest rates.

  • 7. Fehmeen | Microfinance Hub  |  9 August 2010 at 11:12

    It was pleasant reading about the diverse ways MFIs can impact their clients, i.e. the true potential of MFIs as social uplifter. What would make my day is to read that this MFI is a non-profit firm, because I can already imagine the cost of providing these additional services being adjusted in the interest rate. It’s a sad reality, but MFIs don’t have the money to provide these life changing services without charging extra for it, … or do they?

    • 8. Magdalena Malinowska  |  17 August 2010 at 08:14

      Hi Fehmeen,
      Thanks for reading.
      Esperanza International IS a non-profit organization. Most of these services are donated from other NGOs specialized in these fields or heavily subsidized by the MFI itself via grants from various sponsors such as INDOTEL, Seattle Mariners, Hope International, Grameen Foundation and several others. Check Esperanza’s website here and here for a complete list.

      Regarding the interest rate they charge it all depends on how you look at it. For this MFI it is currently 48.5% annual interest rate (calculated on a declining balance scale for the duration of each loan) which translates to 8%/month for a 6-month loan and 4%/month for a 12-month loan. To learn more about the interest rates MFIs charge in developing countries, check out other blogs. There are several that discuss the reasons why it costs more to make credit available to small-scale entrepreneurs as compared to the rates charged by commercial banks.

      Saludos! Magdalena

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