Tuesday, June 23, 2009

Microlending in the Dominican (What I'm doing!)

Hey everyone!

As you see above, I’m living in quite the beautiful location – I took all these pictures from my house here in the DR. It’s on this beautiful near the ocean and its gorgeous. Although the house lacks some amenities – such as a faucet upstairs, air conditioning, and power in the afternoon (the power turns off between 8am and 5pm) – it makes up for it in location. It’s a beautiful place to wake up to.

I wanted to give a little bit of an update regarding what type of work I’m doing here. I’m working with a Microfinance institituion, or an MFI. Microfinance, for those who might not know exactly what that is, is essentially the giving of credit to very poor people who don’t have access to the standard credit markets in their area. This is usually due to a lack of collateral, which banks demand in case of default. Muhammad Yunus came up with the concept in Bangladesh a couple decades ago, starting the Grameen Bank, and recently was awarded the 2007 Nobel Peace Prize for his efforts. If you want more information regarding microfinance, and its history, his book Banker for the Poor is his explanation and history of the concept. It’s interesting to note that the fear of default is something which MFIs don’t deal with – at the Grameen Bank, between 93-97% of loans are repaid. That’s a pretty incredible statistic, especially to those who might not be as familiar with microcredit!

I am working with a group named Esperanza International, which is a partner of Hope International, here in the Dominican Republic. Esperanza was founded by Dave Valle, a former Mariner’s catcher, here in the Dominican in the late 1990s. They are now in various cities around the DR, and have recently opened some offices in Haiti.

Within Esperanza, my internship calls me to help the organization with its relationship with www.Kiva.org. Kiva is essentially a peer-to-peer lending service, which connects borrowers in countries all over the world, to people who want to help support their entrepreneurial activities. That is, you can go to www.kiva.org, find a borrower whom you want to support, and then give anything from $25 on up to the full amount of the loan. Usually, many people end up giving to the same borrower until the full loan is paid. It’s a fantastic idea, and those who give money receive it back as the loan is paid off by the borrowers. That is, you are giving a loan, and you’ll receive the full amount back (the interest from the loan doesn’t go to you – you don’t earn any profit from being on Kiva).

So, with Esperanza, my job is to set up these profiles on Kiva for groups of borrowers, so that they are connected with those who want to help support the little businesses they run. I am going to, and have already begun, to interview groups of five women (every loan comes for a group of 5), about what they are doing with their loan, why they chose that specific type of business, what they hope for the future from the profits from their new business, etc. I just get to sit and hear stories from the most interesting people, attempting to escape from the poverty around them. It really is very inspiring. One woman I talked to yesterday got the biggest smile on her face when she was talking about how eventually she can have a home of her own for herself and her 8 month old child if her business continues to succeed.

That’s much of what I’ll be doing this summer – going with bank loan officers from the office her to go and interview those who will be receiving loans. It’s all in Spanish, and my study abroad trips of a year ago are really paying off now. It’s very rewarding to be a part of this process, and I’ll forward some of my favorite stories to all of you as I hear them!

I’ll try to get a link up on the blog sometime soon so you can see the profiles of the people that I interview, as I put them up. I also encourage you to go check out www.kiva.org, and see if you want to be a part of that community too! It really is an integral way in which people, mostly women, are finding a way to have a consistent income to support their family.


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