The middleman: an unsung hero
As a Kiva Fellow working in Honduras, I have had the opportunity to visit an array of impressive borrowers, a large number of whom are smallholder farmers. Although their stories are inspiring, a common theme many have shared with me is the adverse impact of the middleman.
Locally referred to as an “intermediary” or “coyote,” the middleman will often be the only viable option many smallholder farmers have for both the purchase of agricultural inputs and the sale of their crops. As a result, this middleman is well positioned to sell high and buy low, arguably fitting well Benjamin Disraeli’s definition as “…a man who bamboozles one party and plunders the other.” Given this, you may question the title of this post. Well, let me clarify. This post refers to a different type of middleman – the Kiva field partner.
As many know, Kiva has created an effective model to facilitate direct connection between lenders and borrowers, which, at times, may be so effective that we lose sight of the role that field partners play in making this connection possible. For the past month, I’ve had the privilege of working with Organizacion de Desarrollo Empresarial Femenino (“ODEF”), a great field partner of Kiva’s in Honduras. During this time, I’ve visited a number of borrowers to learn more about their experience with ODEF, and as a result, I’ve come to be inspired not only by the borrowers themselves but also by ODEF. Like countless other Kiva field partners, ODEF works not only to ensure that Kiva lenders’ money reaches those to whom it is intended but also that it is bringing quality services to its clients; a welcome change from traditional middlemen.
Specific to agricultural borrowers, ODEF tailors its loan products to meet the sector’s unique needs. According to Fernando, the leader of a group who took out a Kiva loan with ODEF for their potato crop, he has found the process of working with ODEF to be more agreeable than other institutions, stating that the process of taking out a loan is faster. “With other institutions, you have to wait eight to 15 days or sometimes a month,” he states, which is not acceptable when there is only a narrow window for the planting season.
ODEF also offers a longer and more flexible repayment period. Jose Matias, a coffee farmer, indicates that with credit from ODEF, the loan terms are more accessible. Given he may not have other sources of income during the year to cover a loan with monthly repayments, Jose Matias instead is able to take out a loan with a bullet payment (one payment at maturity) that coincides with when he sells his harvest.
Emilio, a leader of another group with Kiva credit through ODEF, states that, “Previously, we worked with other institutions, but they did not finance us sufficiently. Now, since we began working with ODEF, we have obtained sufficient funds in order to work.”
Apart from providing more timely and flexible access to credit, ODEF also strives to make the process more accessible such that borrowers are not buried under a mountain of paperwork. And where some clients may not have assets to meet basic collateral requirements, ODEF will structure individual loans as part of a group loan, where a borrower is able to draw on the guarantee of others to access credit he or she would otherwise not be able to.
Key to ODEF’s ability to deliver these services is the role of its loan officers. These individuals tirelessly hit the road to visit borrowers each day, ensuring needs are met. Having observed the first name basis relationships they have with their clients, it’s clear how important these middlemen are. As Fernando puts it, “[When loan officers] come to visit, one is going to learn more in order to continue working… we’re received with patience… and for me, it’s a great help.” Emilio adds that “[ODEF] already knows our punctuality,” underscoring the level of trust ODEF and its borrowers have in one another.
Although the term “middleman” often has negative connotations, Kiva’s middlemen are playing a key role in ensuring the success of the model. And although Kiva is pioneering an interesting model through Kiva Zip that removes this middleman from the equation, for many borrowers the role of the field partner will still be vital, and one for which I believe a lot of credit is owed. Here’s to the middlemen.