Microfinance in Micro-Practice

By Virginia Green 

My three co-workers and I make up the entire micro finance team of Manna Project International.  We first arrived in Ecuador nearly nine months ago, wide-eyed and eager, fresh off the boat college grads.  Our lending capacity at the time was around $3000.  We arrived in the middle of the second loan cycle in the history of MPI’s micro finance program.  The Program Directors of MPI before us created essentially out of thin air and in a very short amount of time an entire micro-finance program with the help and guidance of the Oxford Microfinance Initiative.

When we arrived in the midst of the second 9-month loan cycle, we had everything to learn about not just micro lending and finance education, but also about the loan recipients we had inherited; their businesses, their objectives, their ambitions and not just that, their families and personalities as well.  If it had hit us over the head with a frying pan we wouldn’t have learned it faster- the clients are the heart and soul of micro finance.  We also quickly learned that trust is one of the most valuable assets a MFI can possess with its clients.

One unfortunate requisite of a MPI loan is that it is given as a group loan.  Because we are not an officially recognized micro finance institution (you could essentially call our MF practice a hobby), we therefore cannot operate as a financial institution would with some kind of collateral or fall back should someone falter on repayment, we therefore can only rely on the agreed shared responsibility of every loan recipient to recover what, if anything, may be lost.  I say this is unfortunate, only because it always seems to draw some hesitance from prospective loan recipients when reviewing the fine print.  This is funny to me, because they are usually all neighbors, or at least acquaintances.  We have been practicing micro finance in the same tiny neighborhood, Jatumpungo, since the start of our program two years ago.  And any mistrust a prospective client may have over a group loan usually stems from a “well he shorted me on my fertilizer last month” or “she promised me two chickens in February and only brought me one” type of situation.  All of this is to say that in practicing micro finance, especially on such a small scale as what we do at Manna, trust is the most important factor with the clients.  Not only the ability to trust, but to confide in us as well, to see us not as authority figures or new-age colonizers, but as friends.  Cultivating this relationship with our clients has definitely been both a challenging, but very rewarding experience thus far.  We have also achieved 100% repayment every time.

After finishing out this past December the second loan cycle that had been completely structured by the former Program Directors, we decided that not only could Manna’s micro finance program use a little re-vamping, we also decided it was time that we expand the opportunity to small businesses other than just the agriculturally inclined.  Our first step was to raise money.  $3000 certainly wasn’t nothing, considering our lending abilities in general were a little limited, but it was restricting.  So we made it our goal to double our lending capacity.  With a well-timed Indiegogo campaign that launched just a month before Christmas we raised just shy of our goal of $3000.  With just little extra we were able to do so much more. With the help of a range of volunteers, from an accountant from Deloitte, to a husband and wife team who run a small CSA in the valley where we live, we held weekly mandatory “capacitaciones”, or classes for those interested in a loan.  The classes ranged from themes like marketing your small business to moderate level accounting, to money saving.  After a month of classes and a lengthy round of interviews with every applicant, Manna embarked on our third loan cycle with seven new chosen recipients running the gamut of small businesses, from chicken producers to artisanal hand-painted boxes.  Only two months in now on our third loan cycle and things are progressing smoothly.  The loan recipients have been very creative with their loan expenditures and are already talking about their plans for their next loans including one, Mariyuri who currently sells seafood she purchases from the coast and brings to the sierra, whose plan is to open up a cevicheria in Jatumpungo, a would-be first of its kind in the area.

MPI’s micro-finance program is overall still in its infancy stage of development.  Our team though couldn’t be more enthusiastic to continue to develop our MF program and in turn, the community.  We are currently scouting out a second site within the valley where we work to begin a new set of loan cycles that will hopefully be as successful as our previous ones.  As my co-workers and I have learned over these last nine months since we started with MPI, micro finance can be one of the most rewarding methods of holistic community development.  It is the opportunity to provide the tools for personal and sustainable development within a community.              Although it is small-scale development, it is the kind that makes truly lasting differences in both the lives of individuals and the prosperity of communities as a whole.

 

Manna Project International is a 501c-3 non-profit organization with three locations in Latin America (Guatemala, Nicaragua and Ecuador).  Our focus is holistic need-based sustainable community development through health and education.  Our Ecuador site includes programs such as small business development and microfinance, preventative health, environmental health, and classes including English for children and adults, nutritional cooking, exercise and art.  All of our programs and classes are run by a team of recent undergraduate university graduates.

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