Rosario

Thank you for your loan. It has been disbursed to Rosario by EDAPROSPO in Peru. We are excited to watch this business grow. Over the next 3 months, EDAPROSPO will be collecting repayments from this entrepreneur and posting progress updates on the Kiva website.

Mrs. Rosario Roca runs a bodega in the front of her house on a quiet street in Comas, a northern suburb of Lima, Peru. After giving an EDAPROSPO loan officer and I Inka Colas (a yellow soda with the taste of bubble-gum, widely considered the national drink of Peru [nonalcoholic, the alcoholic distinction belongs to the Pisco Sour]), Mrs. Roca gave us a snapshot of what it meant to be a small business owner and resident of her neighborhood in Comas. The hospitality gave it away.

She has spent four years receiving loans from EDAPROSPO and this was her first loan financed by Kiva lenders. To receive loans from EDAPROSPO, a person normally forms a group of neighbors and entrepreneurs form a ‘banquito’ (little bank). From this position, EDAPROSPO lends a large amount to the group, split among the members according to their requests (which is the amount you lent), and the group members then cross-guarantee each other’s loans. This approach to microfinance, stemming back to Muhammed Yunus’ approach in Bangladesh in the 1970s with his Grameen Bank, has the effect of building or, at the minimum, reinforcing trust among a small community of neighbors. Mrs. Roca thrives in this atmosphere of trust and is known as a prompt (and sometimes early!) payer of her debts. While most communities could stand a little boost of the interpersonal trust that ‘banquitos’ give, in Mrs. Roca’s case, it seems more like a natural extension of what the community already does.

On the lefthand side of the front counter of her bodega, Rosario keeps a handwritten ledger of credits that she extends to her neighbors who frequent her store. She says that she has always let her clients pay her when they could; in theory this means that a person will build a tab of 20 or even 50 soles and then pay her in a lump sum when they get a paycheck or have enough money. More often, however, her system of credit has led to very late repayments or none at all; time accumulates, people move out of the area and she is left with having to eat the debt that she extended in trust. The picture, though, is not as bleak as that anecdote makes it out to be. Next to her ledger of customer debts and credits is another sheet with handwritten names and figures. This sheet is a community chest that helps neighbors when a family member gets ill and racks up a hefty medical bill or is kept from work for an extended period of time due to illness. 13 years ago, her husband had a serious injury and her neighbors collected money, each what they were able, and helped them pay for the medical expenses. Now, a neighbor has been bedridden and she is returning the favor; a finely woven web of trust has been spun in terms of medical insurance, without any outside organization acting as an impetus.

Her store, despite the frequent occurrence of ‘eating’ bad debt, continues to make a profit. She uses the profits to re-invest in the store, slowly building her stock of available goods for sale. Her stock of capital has grown to the point that she is considering expanding her store. Rosario’s husband, recently retired, is slowly learning the trade his wife has been perfecting over the past 25 years. He laughs often, still has trouble finding some snacks in the shop, supports his wife in her many endeavors, and seems to enjoy his new role as the helpmate to his wife, the boss. Rosario does not just run a bodega though; she also cooks lunches on request (and there are plenty of requests) and Sundays makes soup. On the weekends and holidays, she cooks hundreds of tamales that her neighbors, passer-bys, and relatives clamor for; she has even been asked to cater for several weddings (which take 200+ tamales). With her husband now available to help run the store, Mrs. Roca is likely to expand in her burgeoning food sales network. For the upcoming Christmas season, Rosario is stocking up on panetones (Peruvian fruitcake), milk, and sugar. She has timed her next loan from EDAPROSPO well so she will get the full dispersal a month before Christmas to temporarily boost her capital for the busy season (she wanted to do this last year, but her group needed experience [in the form of regret] rather than foresight to agree to pay their loans off early to start a new cycle in December rather than February like usual).

The community bond of trust is undoubtedly strengthened in the formal setting of microfinance. However, in Rosario’s case, the bonds existed before the ‘banquito’ even started. Six years ago, an event that could have easily broken the virtuous circle of trust occurred. Rosario had been running low on supplies and needed to go to a discount superstore to stock up on new items. With 1000 soles on hand, she went to a place about thirty minutes away by taxi to buy items for her store. After she had collected all the merchandise she needed in several large bags, she hailed a cab. The cab arrived, she filled it with all of her goods (her store was basically empty so the items she’d bought represented all the capital she had accumulated over many years), and they drove back to her street. The cab driver suggested he back up to her store so she could more easily unload the heavy bags of merchandise. After doing so, she stepped out of the cab and walked around to the trunk to begin unloading her goods. The cab driver then hit the gas and swerved out of the street and neighborhood with a thousand soles worth of merchandise, never to be seen again. When everything is taken, something is returned. Mrs. Roca was financially ruined; the bodega she had been building up for many years- gone – in a blink of an eye. But then something inspiring happened. Her neighbors, not wealthy people themselves, decided to hold an event in the street. With their get-together, they raised enough money to replace everything that had been stolen.

(I have another editorial paragraph that I included in my blog but not in this update. To view it click here.)

If you would like to support other clients of EDAPROSPO currently fundraising on Kiva, please click here.

During a routine audit of Field Partner EDAPROSPO, Kiva discovered a number of discrepancies between the information posted to the Kiva website and what actually occurred on the ground. Specifically, many loans uploaded to the website before December 2008 contain inaccurate loan amounts, terms and/or loan uses.

This is in violation of Kiva policy, and as such, as soon as we were alerted to a possible violation we placed EDAPROSPO on "pause." After placing them on pause, Kiva proceeded to execute a complete verification of every loan EDAPROSPO posted to the Kiva website; in total we examined 757 loans.

As a result of our audit, we have discovered that 52% of the loans posted to the Kiva website by field partner EDAPROSPO contain data inaccuracies. 98% of these inaccuracies pertain to loans posted to the Kiva website before December 2008, when EDAPROSPO was under a different management team. After significant management turnover at the end of 2008, almost all loans on the Kiva website contain complete and accurate information and these loans comprise only 2% of the total discovered inaccuracies.

You are receiving this email as we wanted to alert you that, after our verification efforts, Kiva cannot confirm that the specific loan you funded was actually disbursed. We can, however, confirm that the person you lent to is an EDAPROSPO borrower. Because EDAPROSPO has decided to guarantee all loans made on Kiva, you have continued to receive repayments on schedule.

Because the new management team has proven that they are committed to providing accurate and transparent information to the Kiva website, and because they have repaid almost all of the inaccurate loans on-time, Kiva has decided to re-open the Kiva-EDAPROSPO relationship. During this new "pilot" phase on Kiva, we will be working closely with the new EDAPROSPO team, including their internal and external auditors, to continually verify new EDAPROSPO loans posted to Kiva, and if we are alerted to any new inaccuracies we will pause their relationship with Kiva and follow-up accordingly.

If you have any questions, please visit Kiva's Help Center at http://www.kiva.org/about/help.