Microfinance.... A...+

It’s one thing to read about all of the incredible, heart-warming stories of microfinance, the Grameen Banks success in Bangladesh, and the ideas that basically praise MF as the second coming of Christ, however, it’s another thing to live among the people of these stories, watch their businesses grow (or not), and see the conditions that they live in. I have been so blessed to spend three months working for one of the best-run MF organizations in the world (Esperanza and Hope International juntos) to see their techniques, struggles, and focus. My experience here has been inspirational and insightful, but also unearthed a lot of frustrations and shortcomings that I’ve seen in the running of a non-profit and the entire concept of MF as a poverty alleviation tool. But right now I’ve just had two cups of morning coffee, watched the sunrise from the roof of my apartment, and am in far too good of a mood to address such topics. I’ll wait until I’m a little lonely or depressed (which hasn’t happened too often thankfully) or pissed off at someone who tries to take advantage of my white naivity and charge me triple the regular price for a cab or something, before I delve into such a topic. On a sidenote, I don’t get upset about much, but when people try to scam others that are not familiar with the area, usually foreigners, who are not familiar with their language or customs, it drives me crazy. It’s one thing to have sound business practices and jump on the opportunity to give some wealthy people a service for a handsome price that you are not going to get from your local patrons, but just plain ripping people off evokes this Holy rage from deep within by soul…. But I digress. All that was to say that I’d rather focus on some of the tremendous good that I have seen coming out of the work here.

When you enter into a new community to provide microfinance services, you are looking for a group of women that know one another, that have the desire to run their own show, and are driven enough to get a loan that they will guarantee the debts of their neighbor, promising to pay back any defaults that their neighbor may have. In one or two loan cycles (6 months to a year) it is rare to see a large economic impact. The recipients of such a loan are not going to go leaping from their poor state into middle-class suburban homes (or the equivalent thereof). But what I have seen change, even in a short three months here, is the dynamics of a group of women and leaders within a community. By bringing together a group of women that often have the capabilities of being leaders and thinkers, by nature of the fact that they are business entrepreneurs, a unifying of community and change in self-image is achieved. Women that were once just passive housewives tending to the needs of their nearly starving children and depending on an irregular income from their husbands, now have the dignity of bringing in an economic income to the household and the pride of repaying a loan, something most of their husbands have never even done. The entire process does wonders for ones self-esteem and perception of their role in the household, church, and community. I have heard it said plenty before, but now I have realized the importance, firsthand, of changing the repressive mentality that is embedded so deeply within the minds of many poor. So many people here have the mentality that they were born poor, will be poor, will lack the ability to ever make their own decisions, or the power to change their own situations. After a years time with an organization like Esperanza, I think these women see a new light.

The interaction with the loan officers is also a very critical aspect of the program. No matter how well-funded a program is, how well-managed, or how recent their strategies are, the greatest impact that the recipients will ever see from an MFI is a direct result of their bi-weekly interactions with the loan officers. These are the people that make the trip to their villages, collect payments, teach them basic business lessons, encourage them to spend and save wisely, pray with them, and work out difficult situations when they arise. Loan officers often are not as well educated as management in an MFI, but their critical role and importance as the connection between an institution and it’s participants should never be underestimated.
Microfinance Plus is a term that was created in the last several year in reference to all of the aspects outside of the financial realm that are brought about my an MFI. It refers to aspects such as medical care, literacy programs, business training, kids camps and other aspects that are extremely important to holistic transformation. Esperanza is big on Plus, and I have since become a fan. Some organizations focus solely on microfinance and believe that their focus should remain on the financial aspect. Even if their intention is to do this so that they may become sustainable, bring lower interest rates, and focus limited resources, it still misses the point of, or perhaps I should say that it just fails to complete many aspects of holistic transformation. As I mentioned earlier, I really don’t think that we can plan on seeing a large transformation in lives, economically speaking, after one, or two, or even three small loans. What we see is that a family is now able to eat a bit better, they can depend on a small but steady income from avocado sales (that’s an example there are many other products sold/businesses run), their children might be able to attend school because the now have just enough to buy a uniform, and the woman (the true head of the household) now has a new dream and hope for her children. But this dream for her children doesn’t stem from having a few more pesos to toss towards their education, it comes from the fact that she now has the belief that she will be able to provide for them, she now has a stronger involvement in the local church (that’s where meetings are usually held and often times local pastors are involved in loan process and many women are involved in the church) which provides communal support, and she has established stronger relationships with women in the community that will now trust and make sacrifices to help one another, a step that may have been unthinkable before the loan process.

One example of MF Plus that I saw a couple of weeks that made an impact on me, was not so much in an established medical program or education center, but in the true dedication of a loan officer to the well-being of her clients. In an organization that is focused solely on giving loans and collecting them, this aspect would have been overlooked as the loan officer hurried off after doing their financial duty. In a bank of twenty women in a nearby community there was some hostility among several of the associates and members of the group had approached Dilcia to speak poorly of others in the group behind their back. Recognizing this dilemna that was occurring, she brought the problem to the attention of the group and all those involved. We spent an extra hour and a half after the normal meeting listening, encouraging, and working through the problem with the women. Several were indebted to others, one was on poor terms with another’s husband (from business dealings), several wanted others out of the group, etcetera. While things got a bit heated at times, each woman had an opportunity to share her input to a listening audience. Some women tried to leave but were scolded by the others. If they were going to do this, then it would be done as a group together. Dilcia continually reminded them that they were now like a family, they had solidarity, they shared one another’s joys, burdens, and responsibilities. By the end of the session the women had come leaps and bounds from where we’d begun. Watching these women struggle through these challenges, overcome problems themselves, and form stronger community bonds because of it is one of the greatest impacts that I have seen come out of microfinance. That was a looong entry. I’m going to stop writing.

If you want to check out Esperanza's website Click Here.