Frigid Finance: Small Business in Cold Climates, Part 1
Most of Kiva’s borrowers are located within the southern hemisphere, where problems like sleet storms and dzuds (check back Monday!) are nowhere in sight. But in Kiva’s EECA region (Eastern Europe and Central Asia), borrowers deal with a half year and maybe more of bitter cold and all the weather problems that come with it.
Today I dragged my glamorous young interpreter, Alina, and loan officer Sergei to the frozen mud of the outdoor markets of Melitopol, Ukraine. I was on a specific mission: to find out how cold weather affects HOPE Ukraine’s borrowers. It snowed in Melitopol today, and I admit that I thought my toes were going to freeze off during one of today’s visits with a borrower. According to weather.com there was a high of 29˚F.
HOPE Ukraine’s borrowers have become intimately familiar with such weather. Most of their businesses are located outdoors in a stall at one of the many outdoor markets or rynoks. Can you imagine standing outdoors in the freezing rain, snow, bitter wind, or sleet for 10 hours a day? Inna can. So can Ludmilia, Nadya, and the vast majority of HOPE Ukraine’s clientele.
So how does this affect the cold-weather-microborrower? For one thing, all my interviewees today expressed an explicit drought in business during the months of January, February, and March. This happens to be post-holidays, which can be less impactful given the potential height in sales during December. But this year, when holiday sales were not as good as in years past, it means a very difficult few months. It can also mean an explicit need for a loan to purchase end-of-winter and spring merchandise. The triumph of microfinance is manifest in borrowers like Ludmila Larina, who says she always takes out a loan in January or February to supplement what she expects will be lower levels of cash-flow from a decrease in sales. This is the point of microlending, after all, to help entrepreneurs and their businesses be more sustainable.
Another seasonal success story is Nadezhda Zinenko, who specifically used her $1,325 loan to replace her summery merchandise consisting of ball caps and football jerseys with winter hats and sweatpants. Now she says she’s purchasing better quality merchandise and is able to repay her loan on time. Plus, spring is right around the corner (we hope!).
The other, unfortunate side of this cold-weather-coin is made apparent in HOPE Ukraine loan officer Sergei’s admission that his winter loan portfolio has decreased to 95 borrowers, where in the spring it will increase to 120 or 150. Lower levels of income mean that taking out a loan in January or February is just not feasible.
These outdoor markets are open year-round, and Ukrainian shoppers are expected to frequent the outdoor vendors in spite of poor weather. But sales go down in the winter, a fact that every single borrower I interviewed today mentioned. That said, the entrepreneurs I spoke to were unwilling to say that cold, crummy weather was the main deterrent for shoppers. Everything from holiday-shopping-season-recovery to simple, natural market fluctuations was offered as an excuse, but “cold weather” or “snow” was rarely brought up as the reason why sales always go down in January, February, and March.
I think the Ukrainian entrepreneurs I’ve spoken too are such tough-shelled, hard-working folk that they’ll never admit defeat in the face of cold wind. And as always, the borrowers I met today spoke to me with smiles on their faces and never once complained about lower sales or bad weather. There’s a prevailing attitude here that life’s fortunes and misfortunes will always fluctuate unpredictably but consistently, and that if business is good enough that your family is healthy and happy, then one should be grateful. Here’s a short video of Nadezhda Zimenko, along side HOPE Ukraine loan officer Sergei, and her response when I asked her about her hopes and dreams for the future.'
Leah Gage is a member of KF10 serving with HOPE Ukraine in Zaporozhye. Support HOPE Ukraine’s borrowers by joining the HOPE Ukraine lending team. And remember, those fur hats and big winter coats aren’t luxuries but absolute necessities when you work outdoors in below-freezing temperatures over 10 hours a week. Make an EECA loan today!