Moldova, Microfinance and Happiness
Upon receiving news of my placement in Chisinau, a friend of mine recommended I read ‘The Geography of Bliss’ by Eric Weiner. This New York Times bestseller detailed Weiner’s journey throughout the world to find what made countries happy. To truly know ‘happiness’, Weiner decided he needed to go to a very unhappy country: Moldova, which ranks near the bottom in most national happiness studies. After reading his depressingly pessimistic account of the country, I can say my enthusiasm for the Fellowship dropped slightly, but I was still interested in seeing it for myself.
So, what have I learned about Moldova in the time I have spent here during my Kiva Fellowship? Certainly a lot more than I knew before I came.
Moldova is a complex country in spite of its small size. It is caught in a gray area between the EU and Russia, with a mix of both Russian and Romanian speaking populations having different political orientations. Its breakaway region, Transnistria, has Russian ‘peacekeepers’ that just never left after the Cold War. Many Moldovans act as de facto Romanian citizens carrying passports and voting in Romanian elections thanks to heritage laws. There is a lack of a common, shared understanding on what a ‘Moldovan’ is. This was apparent in the 2009 ‘Twitter Revolution’, in which many Moldovan flags were ripped down and replaced with Romanian national flags following disputed election results. The Communist Party had supposedly won 50% of the national vote, and the younger, more western oriented voters were not happy with the results. Recently, people have started to vote more with their feet than with ballots, as studies indicate approximately 25% of Moldovans now live abroad trying to earn a living.
This is the challenging political environment in which microfinance institutions (MFIs) in Moldova operate; however, a challenging environment does not mean there is a lack of MFIs willing to lend. There are 17 MFIs in Moldova competing over an ever decreasing borrower base. This fierce competition has led to an over indebtedness by many individuals who take out multiple loans from all too willing MFIs looking for customers.
Going into my first borrower interviews, I was questioning the role of microfinance in ‘alleviating poverty’ in Moldova. The boon in microfinance loans and accompanying interest rates seemed to have caused many problems during the recent economic slowdown. I frequently asked myself “How effective is microfinance in this country?”
My first borrower Maria answered that question in a short few moments. Maria sells clothes in a local market that she buys in neighboring Ukraine. A few times a year, she is able to buy merchandise in bulk thanks to her loan. When asked directly about how this loan has benefited her, I was surprised by her genuine happiness. She has been a client for 6 years, taking many new loans for her basic working capital needs. Admittedly, she has not moved up the socio-economic ladder very much, but her microfinance loans have given her the ability to provide for herself. This self-empowerment brought out a genuine happiness that I witnessed in talking to her.
Microfinance is not a panacea for all of the issues facing this country. I still hold some doubts about its role here, and how to improve the industry going forward. I do believe people like Maria can be the best testimony to microfinance’s benefits in making Moldova a happier place to be.
Kevin is currently working in his fellowship in Tbilisi, Georgia after moving on from Moldova recently. He is looking forward to experiencing microfinance in another country during his fellowship.