Microfinance by Land or by Sea
By Kate Bennett, KF16, Peru
I spent last week at the beach. But from my resiliently pasty skin, you wouldn’t have guessed it. For better or worse, I wasn’t in Camaná, Perú to suntan and lay by the ocean, but in fact to visit borrowers with Kiva Field Partner Caja Rural Señor de Luren. Camaná was founded in 1539 under the name “Villa Hermosa de Camaná,” a name that hardly does it justice. Camaná, propped on the edge of the Pacific Ocean, is an oasis in the otherwise long, dry Sechura Desert that dominates the coastline in Southwestern Perú. It has historically served wealthy Peruvians as a respite from the city and thrived as a summer beach resort. However, the last decade has seen a downturn for Camaná’s tourist industry and an upsurge in microfinance.
Southwestern Perú has a history of very large earthquakes, and the 2001 quake was no exception. In June of 2001, an 8.4 magnitude quake rocked the city of Camaná and the surrounding area. The tsunami that followed shortly thereafter was at its worst in Camaná, where heights reached up to seven meters and extended more than one kilometer inland from the coastline.
A beachfront formerly occupied by restaurants, bars, and top-notch hotels was devastated. After seven years of reconstruction, Camaná was struck by another earthquake and tsunami in 2007 that measured 7.9 on the Richter scale (this earthquake also decimated the nearby city of Ica, where Caja Rural Señor de Luren is headquartered). After the second catastrophe, investors pulled out of Camaná for good and left the city to fend for itself.
Which it has. When the tourism industry in Camaná dissolved, jobs vanished as well. But the one upshot of unemployment is that it creates an environment primed for microfinance. Microfinance allows a jobless entrepreneur to realize their would-be microenterprises.
This is where Caja Rural Señor de Luren and Kiva enter the picture. Caja Rural has been providing affordable microloans in rural Perú since 1994 and partnered with Kiva two years ago in order to support the extension of their services to the highest-needs areas of the country- to cities like Camaná.
I had the good fortune to meet one of Caja Rural and Kiva’s clients in Camaná last week to talk about his loan, his work, and the reality of sustaining a micro-enterprise in rural Perú. We visited Rulo at the home he shares with his wife, children, and mother-in-law, set in the dry, dusty hills above Camaná. Rulo, his wife, and two children were all at home for lunch, which is usually a three-course and three-hour affair in this part of Perú.
Rulo is a motorcycle taxi, or mototaxi, driver here in Camaná. Mototaxis look just like the tuk-tuks common in India (in fact, most of them are made and manufactured in India), with a motorcycle up-front and a low bench-seat in the attachment on the back. At 4,600 Peruvian soles (about US$1654), mototaxis are an inexpensive capital investment comparable to a regular vehicle. Though the demand for mototaxis is relatively dependable, as the common person in Camaná does not own their own vehicle, any routine repair can put a driver out of work until he can afford to mend it.
On the day that I visited, Rulo’s mototaxi was parked outside the home and looked like it was in terrific shape. In fact, Rulo used his loan to buy new tires, spokes, and perform some engine maintenance on the vehicle. He gave the tire a tap with his shoe to indicate their newness. Rulo said he usually has to do some routine maintenance each month- change the oil, rotate the tires, etc. But he takes as good of care of it as he can, to keep it in the best possible condition. Rulo also used his loan to buy his “soat,” which is motor vehicle insurance obligatory for taxistas, and to pay a fee to join the local association of mototaxi drivers.
His income breaks down like this: on a given day of work, Rulo makes about 60 soles. Gas costs about 13 soles per day, and his monthly routine maintenance costs break down to about 2.5 soles each day. His soat, which cost 145 soles to renew each year, costs about .5 soles/day (per working-day each year, assuming 28 work days each month). Many taxistas rent their mototaxis, which costs about 50 soles a month, but Rulo is fortunate to own the one he drives. Nevertheless, at the end of the day Rulo makes about 44 soles, which come out to US$16.18/day. This, of course, is before the costs of renting his home, covering the costs of food, education for his children, occasional health expenditures, and basic water and electricity costs in his home. As you can see, it is difficult for Rulo to accumulate savings, though he has the potential to do so.
This is income his family- his wife, 7-year-old daughter Abish, and 4-year-old son Alexander- depends upon. Being able to make capital investments in his vehicle is invaluable to Rulo. It also makes it possible for Rulo to pay 50 soles a month to send Abish and Alexander to school, and hopefully soon to install a basic telephone line in the home. Rulo told me he’s making more as a taxista than he probably would have working in the Camaná beach tourism industry- but more importantly, he feels more accomplished as a small business owner. Even better, he says, is that he is able to come home every day to have his three-course lunch with his wife and kids.
Kate Bennett (KF16) is thrilled to be working in Ica, Peru with Kiva Field Partner Caja Rural Señor de Luren. For more on Kate’s experiences with Caja Rural Señor de Luren or life in Peru, follow her work here.