Yvonne Chen, a Boren Fellow in Indonesia (2010-2011) and a graduate student at The George Washington University’s Elliott School of International Affairs, contacted me after reading about my experience here at TLM on the Kiva Fellows blog.  She was interested in conducting her research study in West Timor with TLM to collect data for her thesis on youth financial inclusion in East Indonesia.  Despite her busy schedule, Yvonne was able to share some findings from her West Timor research as well as thoughts on Indonesian microfinance and Kiva’s work.  Enjoy reading the interview below!

Youth borrower, Yani, and her little sister

Q1:  What initially interested you in microfinance and pursuing a degree in development?

Developing countries have always interested me. I grew up to stories about how hard life was for my parents who lived in China before immigrating to America in the 70s. It made me interested in learning about the political and economic conditions that encourage so many people to leave their homes.

I was introduced to microfinance in an international development class in college.  My first thoughts were that it is a far more effective solution to reducing poverty than traditional forms of foreign aid. Look at a country like Haiti, which has received foreign aid for the vast majority of its existence, yet remains one of the poorest countries in the world.

Research assistant, Dewa, and youth borrower, Eki

Q2:  What made you pick your research topic of youth financial inclusion?

When forming my research topic, I knew I wanted to do something that I cared about and I wanted to make a contribution to the development field.

There is not a lot of primary research about how and why poor young people use financial services. Portfolios of the Poor is a groundbreaking study that looks at the financial lives of the poor.  But no published studies to date look at the financial lives of youth in particular. So I saw an opportunity there.  In fact, I borrowed some of the ‘portfolios’ methodology of Portfolios of the Poor for my own research.

As for studying youth, I think the youth population in a country is incredibly salient to the development of a country. In many developing countries there is a youth bulge, that is, youth make up the majority of the population.  Youth movements have led to social change [or political instability depending how you like to look at it]. The Arab Spring movements are an example of the power of youth. However, youths’ needs are much more acute at this stage of their development, and unlike children, they tend to lack an accessible safety net e.g. parents, guardians, or school structure for out-of-school youth. With the pressing social, economic and health issues in a developing country, the situation of young people is more vulnerable than that of older age groups.

Youth borrowers, Yohana and Yosefina

Q3:  Can you summarize your research process at TLM?

I emailed Lisa, who was gracious enough to ask the TLM staff if I could research with them. Then, when I arrived in West Timor, Shanty, the PR Representative at TLM, introduced me to Pak Jon, one of the branch coordinators in Kupang. Pak Jon then talked with his staff and created a list of clients who fit the criteria. During the week, we went out with loan officers to meet the borrowers in their homes and interview them. My research assistant, Dewa Keta, conducted the interviews in Indonesian and I guided him when there were problems, set up the camera and recorder, and took notes about the setting and the flow of the interview. Most of the places we went to were villages that lie about 30 minutes from the center of Kupang. Some of the clients also introduced us to neighbors who fit the criteria, whom we also interviewed. We also interviewed Pak Jon and talked with the loan officers to get information about TLM and the kind of products that they offered. We interviewed a total of 15 people over six days.

Youth borrower, Gaspar, and his family

Q4:  Were there any trends or major findings from your West Timor interviews?

We have not analyzed the transcripts yet so I cannot say definitively. But I can speak about some of my general impressions from observing the interviews.

First, there is a lack of financial literacy when it comes to financial products among the youth we interviewed. Most of them have never gone into a bank and have no idea how many products work. The ones who do understand a lot of what’s out there for them are usually youth who have experience with financial products. They tend to be married, are the primary breadwinners in their households, or have run their own business for some time.

Second, location is very important. Many of the people we interviewed had no vehicle and used a bemo or ojek to get into the city, so it costs them both time and money to get to a bank, even though they live just thirty minutes outside the capital city. TLM clients liked that someone comes to their door to tell them about the product or to make transactions with them. There was only one client who was a commercial bank client, and it was for the local BRI. The other product they knew about were from the local koperasi.

Third, many of the clients used informal financial services. For example, they said they usually saved in the form of cash in their homes and in the form of livestock. When faced with a financial emergency, they said they ask friends and family for help.

Fourth, there seems to be demand for many kinds of financial products. I think this can be explained by the context in which youth live. For example, when asked what their plans were in the next five years, many said they planned to look for work, start a business, start their own families and build a house. So it makes sense that some of the most highly demanded products they mentioned were bank accounts, home loans, and business training.

Home of youth borrower accessible only by foot on an irrigation canal

Q5:  You found out about TLM from my posts on the Kiva Fellows blog – how did you first hear about the Kiva Fellows program?

Someone at a Christmas party four years ago mentioned receiving a Kiva loan for Christmas, and explained the concept to me. I also have some friends who were fellows.

Q6:  Any general thoughts on Kiva’s work?

Kiva offers a very reliable way to invest in microfinance. I like that Kiva verifies client information and takes into account their partner MFI’s financial performance. Moreover, having worked in NGOs before, and seeing how much of a budget goes towards overhead costs, I also think Kiva loans are an effective alternative to giving money to a charity. All of your investment goes towards a borrower who needs it. After visiting Kiva’s site in West Timor and seeing the good work they do, I decided to become a lender for the TLM group.

Youth borrower, Maria, and her one year old baby

Lisa Skowron (KF14) is currently working with Kiva’s MFI partner, TLM Cooperative, in West Timor.  Check out TLM’s lending team to stay tuned to the latest news.

Previous posts from Lisa Skowron:
Huh, There’s a West Timor?
Video Blog: Trek to Kanaan Village
Hear that? It’s Kupang Bemo Rap!!
A Different Spin on Mobile Savings 

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