Bringing you more than just credit
I have written a lot about the auxiliary services offered by microfinance institutions in Guatemala. One blog, Going Above and Beyond, reflected ASDIR´s additional services from insurance to bill pay, and my last blog, Good Medicine, spoke a little about FAPE´s new medical services program. Why do you care? As other Kiva Fellows have stated, microfinance is not the silver bullet that will knock out poverty, it is merely the start. This being said, it will be microcredit coupled with access to basic services such as health, insurance, savings, and education that alleviates poverty, not just microcredit alone.
Another one of FAPE´s stand out “auxiliary services” is offered through a strategic alliance with the Rotary Club here in Guatemala. The project, Namaste, brings basic financial and business education to FAPE´s clients in coordination with the loan cycle.
A number of FAPE´s village banks voluntarily participate in the Namaste project: about 150 clients in total. The client´s commitment to the program must be substantial because over the course of the loan cycle—one year—each village bank member receives six individual, in-house trainings, the village bank receives six group trainings, and at least one vocational workshop is offered over the course of the loan cycle.
This past week when I saw the loan being disbursed, I also got a chance to sit-in on the first group training. To coincide with the loan disbursal, the topic was “invest wisely”. Three stories were told.
Maria receives her loan for Q2000 ($250) to buy ingredients to use in her restaurant. When she goes to the market with her daughter to buy rice, she passes by a stall selling beautiful dresses. She thinks of how nice it would be to have a new dress to go to the market this weekend, and when she buys the dress, her daughter also wants one. When it comes time to make the first payment, she is unable because she spend most of the money on her new dresses.
Sara is a tailor. She takes out a Q3000 ($375) to buy beautiful bolts of cloth, thread, and new scissors to make traditional clothes to sell in the market. However, the weekend after she receives the loan disbursement, her only daughter announces that she is getting married and asks if Sara can help throw her the best wedding the town has ever seen. Sara sells her sewing machine to help pay for the wedding, which is one the town will never forget, but when it comes to her first payment, she doesn´t have the money or means to pay the loan back!
Teresa receives a Q1500 ($187) loan to buy more vegetables to sell in the market. She goes to the farms in the surrounding areas to buy vegetables in bulk, and uses part of the loan to buy a table to display her produce on. At the end of the month, she has more than enough to pay the loan.
The moral of the stories is obvious: you should use the loan for productive purposes, but what is so unique about this project is its accessibility to the clients. These are stories they can relate too and the lessons they learn, although basic, are invaluable. The project, before the loan is taken out, helps the clients put together a business plan, and as I witnessed, works with FAPE and the client to alter the loan amount if inappropriate. In their individual meetings, the Namaste project leader comes to their houses or places of business and helps them specifically with budgeting, marketing, business administration, and client relations so that their businesses can grow. The vocational workshops are also valuable to clients as they help to teach them productive skills they can use when their primary business is slow.
Microfinance is often compared to the metaphor of teaching a man how to fish. However, microcredit without educational projects like Namaste is like shoving a fishing pole in a man´s hands and saying figure it out. Cheers to the institutions like FAPE that are going above the call of duty!
Below is a short clip of the Project Namaste village bank’s loan disbursement.'
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Eric Burdullis is a Kiva Fellow working with FAPE in Guatemala City, Guatemala. He is currently battling the office’s fading wireless, and in his free time, he plays basketball in the rain. He wants to encourage Kiva lenders to lend to FAPE and ASDIR in Guatemala as both provide wonderful services like Project Namaste to their clients!