The Tropical Depression

After hearing about the tropical depression that hit Honduras and seeing pictures of the flooding in El Progreso, I was up late last night really worried about our clients. Thousands of people are displaced in El Progreso and I had no idea whether or not that was any of the women we work with. Thankfully I got an email from Yapa this morning assuring me that they all were fine, but I still felt that I needed to call a few of the women to make sure.

Catching Up

I just got off the phone with Karen and Natalia. They both said their houses only had minimum flooding and it was the homes on the other side of the river that were the worst hit. Natalia’s sister lost everything–her house, clothes, and belongings. As Natalia said, “God has the power to take away anything at anytime. Thankfully we were lucky.”

We spent a few minutes catching up on what was new in our lives. Karen told me that her daughter Jessica was sick again and she had to take her to the clinic. On a positive note, however, she told me that she still gets together with Abigayl, Keyla, Reyna, and Jazmine every day to make eco-friendly bags to sell. Natalia seemed to be busy helping to take care of her sister.

La Ceiba

I then asked each of them a couple things about La Ceiba. Karen assures me that her group of Abigayl, Carmen, Maria, and herself are still ready to work together. I also asked her to do me a favor and get the missing contact information from a couple of our clients.

The big microfinance news, however, was with Natalia. She has formed a new solidarity group consisting of four women that are moving to Villa Soleada and two remaining in Siete de Abril. Natalia has had prior experience working with microfinance institutions and understands the committment it takes to be in a group. Therefore, when a few women told her that they wanted to be in her group but not until the loans arrived she said that was unacceptable and began to form her own group. They are having their first meeting together tomorrow and she said they will be ready to work with Laurie in a couple of weeks in order to prepare for the loans. I was very excited to hear the initiative Natalia took to organize the group! Tomorrow I will speak with the members of her old group to see if they would still like to work together.

Back to the Real World

The reason I mention all of this is that I think sometimes it is important to take a step back from our work in the classroom and realize how real our clients are. It seems silly, but it is something that is easy to forget when we are physically so far removed. Personally, I was busy with other things this past week and didn’t have time to call the women. It took a tropical depression for me to realize how much our clients mean to me and how much I want to see them succeed if they are willing to work hard.

The Realization

The Super

The storm also made me realize how strong of a supporter I am of our default policy. We have been going back and forth lately between a strict zero tolerance policy versus a policy where clients who default on their loans have the option to appeal to us to try and get another shot at becoming a part of a solidarity group. Ultimately the decision lies in our hands, but the idea is that if their excuse is “acceptable” then we will let them try again (with a punishment of course).

As Natalia said today, they got lucky this time. However, in the event that a natural disaster were to hit again it could very well be our clients who are suffering. Our default policy may be more costly to us, however, I think it is a cost we should take on. In the end, it is the policy that I believe gives our clients a better shot at success and at actually improving their standard of living.

On Thursday we had a guest speaker in class, Mr. Steve Meeks. He’s a business man who has had a great deal of success in economic development since retiring from his tv network. He’s done a lot of work in Sierra Leone, and has been recognized by their government for the MFI he started there, and he spoke a great deal about animal multiplication programs he’d run in New Guinea. He has a very different take on microfinance and development work than most of the people we’ve spoken to and I think there are a lot of things we need to really reconsider after speaking with him. During class he emphasized the importance of distinguishing between a business model and a charity model and realizing which side your organization was on. After hearing our plans for La Ceiba he told us we were falling squarely on the charity side and would have difficulty running a charity like a business and being sustainable. I think he’s got a point, but I still disagree with some aspects of his analysis. He said that if you go into a community and bad things happen, you can’t blame yourself for those things because you’re still doing lots of other good, and the good outweighs the bad. I agree that sometimes bad things happen that are beyond your control, but I also consider it to be our responsibility to take those things into consideration and minimize their effects. I’d like to think  that we could find a happy medium. 

Something else he discussed that really made a lot of sense was the importance of “spinning your money”, meaning getting through loan cycles quickly and getting money into the hands of other entrepreneurs right away so that you’re getting a higher return on that money over the course of a year. He said that shorter loan terms help to increase the impact of the money and reduce the default issue. His organization has loans between 2 and 6 months… we were setting ours at 6 months… but maybe we need to reconsider that… and the interest rate needs to be set by the people in the program… The case he presented for that point was strong, and I think there was a great deal of validity to it. He also said that it’s really important to be hands on in a community because people need to have constant contact with the MFI in order to maintain a sense of ownership and obligation to the organization. Interestingly, his MFI has a lot of repeat loan recipients, but he aims for  a “6 and out” philosophy, meaning that after 6 loans they’re able to seek loans from traditional banks. Apparently, this is a complicated process, but they get the real loans at the end by guaranteeing the loans for the lendees at the formal bank. Mr. Meeks said that this was a really important aspect of that transition because it helped to deal with the lack of formal identification and it prevented the person from having to offer all their property as collateral then losing it. He cited an example where a country had dismantled its hacienda system to give people land, but those people lost it back to the same people who’d had it before anyway. 

 After class I spoke to Mr Meeks a bit more about some of our concerns with defaults, domestic violence and other issues. As to domestic violence, he admitted that it was a legitimate concern and expressed an awareness of violence that has resulted from mfis, but said that we needed to realize that it’s not our fault, it will be triggered one way or the other. He also said that only by being a sustainable presence that community leaders and the government can’t ignore can an mfi have a serious impact on familial issues. We need to be sustainable to have that kind of economic power. He also said that information can be presented through videos, literature or some kind of media outlet (a popular TV show in South Africa was a successful program of this sort). He also said that we have to remember that educating the women can only do so much. It’s not women who are choosing to be assaulted or beaten or disempowered in any way. It’s the men around them who are doing it, so it’s the men’s problem. They must be dealt with if the issue is going to be affected. He said that finding a way to give the husbands an incentive to embrace positive behaviors was the key. One program that he was proud of was a goat program. Children who had perfect attendance at school would receive a goat at the end of  the year. Because the goat was valuable to families in the community, parents pushed their kids to attend class even when it was harvest season or the child was a little sick. They would get the child vaccinated and the child would see the school nurse before illnesses became severe. By giving the family a reason to send the child to school, the program ensured that the child remained healthy and got an education. By hiring a local to raise the goats during the year, the program also gave someone a job that would support their family. This is the sort of incentive structure we need to create to deal with the issues we confront in Honduras… we’ll see much better results with positive reinforcement then we can get with punitive measures. You can only do so much to punish, but there are near limitless ways to reward. 

After talking with Mr. Meeks for awhile, I really think that we need to look at the way that we approach microfinance once more. I want to be holistic and responsible, and I want to remain client-driven… but I also think that we need to put sustainability first. You can’t have an impact if you don’t exist. 

There was a lot covered, and I may have missed some, but I’ll update if there’s anything else that comes to mind. I think he’s a very valuable resource and I’m so glad he shared his perspectives with us.

I have recently all-but finalized the Customer Information Packet, or the paper we can give our customers so their questions about our program are answered.  This seems straight forward, just decide on our policies and then we can put them together.  However I have found this has turned into several packets:

1. Short Run Customer Information Packet - this is the packet we give to our customers for the first round.  Because our first round (or two) we will have limited and foreign staff and a smaller client base we cannot provide all our services and things will not be as streamlined as they will be after the transition.  This needs to be an easy-to-read document that answers people’s questions without it being a daunting amount of information.

2. Short Run CIP for La Ceiba Staff

Boarding Gate download

• The Company of Wolves hd

- Here we need to include as much as possible so that after a potential client learns what they can from the original CIP they can ask for more information.  But should this include long term goals, or does that run the risk of “making promises” we’re not sure we can keep?  Are we obligated to include the reasoning for our decisions?  Even if that is information we aren’t going to share with clients, does that help our on-the-ground staff?  I haven’t come up with the answer yet. 

3. Incentive Page - This is a brief and strong document which emphasizes the incentives to pay in full and on time, as well as the consequences of not.  Though this information should be included in the first document we want to really emphasize this since one of the largest risk factors for default is clients not knowing the reasons they shouldn’t.  If we provide and make sure this information is clear we can make sure this program is a success.

4. Long Run CIP

- Here we include how we envision everything happening after the transition is complete and we are more streamlined and flexible.  At the end of this I plan to include sections on possible future financial services we may provide. 

I have also frequently had to remind myself who will be reading these packets.  This is not an academic paper where I show my knowledge of economic theory, this is not designed for our donors or support here, this is designed for our customers who want to know why they should give us their time and effort.  We have to make it clear and concise, a bit of an advertisement while providing as much information as possible (without overwhelming with unnecessary information, of course!), not to mention keeping in mind that everything you write has to be easily translated into Spanish. 

I think that is one of the biggest things we, and any start up organization, has to keep in mind.  Constantly remind yourself who you are writing for and the purpose of any particular document.  As long as they’re all named properly it makes it so much easier to get the right information to the people who need it most.

• Cobra movie

• Forbidden Planet movie download

Take a look at Men’s violence against women in rural Bangladesh: undermined or exacerbated by microcredit programmes? It’s a 1998 article by Sidney Schuler, Syed Hashemi, and Shamsul Badal that seems ultimately inconclusive but still raises some important questions that we have to consider.  You can read in the bulk of it some of the observed relationships between domestic violence against women and their participation in microcredit programs, but I want to specifically discuss the final section.

Grameen and BRAC, in this study, did nothing to attempt to stop domestic violence in the target villages, preferring instead to let cultural changes take whatever natural course and admonishing abusive husbands only when their actions were completely blatant and disruptive to the program.  Were they right in doing so?  Is it appropriate, let alone wise, to directly confront the issue of domestic violence within the target village and risk undermining a husband’s perceived authority over his wife?  What is our role?

• Boarding Gate video
  • The Cycle (aka The Devil’s Ground) film

   Today’s class was one of my ultimate favorites.  It always amazes me how alive and passionate everyone is at eight in the morning.  I always leave class feeling a little on fire-in a good way.  Today was the final, final day for deciding a mission statement.  Dr. Humphrey really wanted something that “made your hair stand on end,” but we kept coming up with phrases like “overcoming the indignity of poverty” that we found were too epic and grandiose.  It was so difficult to find the balance between realism and emotion, or to avoid sweeping, idealistic statements like “We believe in a world where hard work lets an individual reach their full economic potential.”  I was initially really into this statement, but as I sat with Katie and Dan in a separate classroom, Katie burst out, “That world doesn’t exist!”  It felt like everyone was having some sort of crisis between realism and idealism, all from creating this mission statement.  

      We hadn’t even though about changing the word “poverty” in our mission statement, until the last ten minutes of class.  I suddenly realized that this mission statement wasn’t just for our donors.  I kept thinking in my mind, while I was editing this mission, of a donor behind the computer screen.  However, this mission statement was just as important to our customers in Honduras.  How could I have overlooked this?  I imagined saying to the women, “to help overcome the poverty,” and for some reason the word poverty really bothered me.  This might sound trivial, but imagine yourself standing face to face with a La Ceiba client.  You’re standing in her home made of iron sheets and newspapers, and you blatantly say in more or less words, “You are in poverty. You are poor.”  Although this fact is obvious, we’re trying to move away from this identity as a “poor person.”  I rather address our clients with the same respect that a commercial bank would give a upper-middle class or middle-class client. When the group thought of this, we decided to change the word poverty to inequality.   The classroom went into a total debate match between poverty vs. inequality.  Someone made the point that La Ceiba was not just dealing with the inequality of poverty, but also the inequality of being a woman in Honduras.