Violeta 1, 2 Group

Thank you for your loan. It has been disbursed to Violeta 1, 2 Group, consisting of Tomasa Disla Lao, Elva Rosario Nunez, Argentina Sanchez, Mayra Encarnacion, Adriana Nunez, Esperanza Rochet, Maria Delgado Genao , Manuel Jimenez, Juana Abreu Reyes, Jilda Henriquez Felici by Esperanza International, a partner of HOPE International in Dominican Republic. We are excited to watch this business grow. Over the 5 months of this loan, Esperanza International, a partner of HOPE International will be collecting repayments from this entrepreneur and posting progress updates on the Kiva website.

I would like to give you an update for the group loan you are helping to fund through the Kiva-Esperanza International partnership. Yesterday, I visited the Bank of Hope Violeta’s second of twelve repayment meetings. It’s frequently common for one or two members to be absent from a repayment meeting due to sickness (either personal or familial) in which case they send their repayment with a friend. However, sometimes a member will be absent without notice and fail to send the payment as well. Esperanza uses the group model of microfinance in which members cross-guarantee one another’s loans. Thus, when a member is absent as in yesterday’s case, the other present members of the group must pay the missing person’s portion and then take-up the debt outside of the repayment meeting.

Since the absence was unexpected, the group members did not have the funds to cover the missing portion during the meeting. Understanding the situation, the loan officer agreed to meet the group coordinator later in the afternoon to collect the funds, which she did. However, she also made it clear that the combination of an absence and missing portion is unacceptable and a result of poor communication and solidarity within the Bank of Hope. In the repayment meeting, the loan officer and the associates talked through ways to improve intra-group communication to avoid future problems, which ultimately cause extra and redundant work for already busy loan officers.

The group-guarantee is mutually beneficial for both the borrowers and the lenders (the microfinance institute). The members within the group typically motivate, challenge, and share advice with one another to build stronger businesses. Furthermore, if somebody has an emergency, the group can float the person’s loan payment until he or she is a bit more stable. For example, one of the women in this group owns a salon and her only hairdryer was recently stolen, certainly a negative shock that has forced her to develop a new timeline for her business’ development. However, another woman (Maria, pictured) has an especially successful and stable colmado (a small store that sells durable goods and goods). Thus, the group members function as shock absorbers for one another. Furthermore, there is a much lower probability that all members in one group will face major shocks simultaneously. Thus, investment risk is lower for the microfinance institute in the case of group lending.

If you would like to keep supporting entrepreneurial Dominicans through Esperanza International, follow this link to see loans that are currently fund raising:

http://www.kiva.org/app.php?page=businesses&partner_id=44&status=fundRaising&sortBy=New+to+Old

On behalf of the Bank of Hope Violeta and the microfinance institute Esperanza International, thank you for providing opportunities and stability to those who need it most.

Anne Cherniss

Esperanza International Summer Fellow ´09