Tag Archives: microfinance

Leadership: If we don’t do something about it, who will?

28 May

Microfinance in Nepal

Leadership to me is all about a choice.

The choice to take responsibility for the world in which we live.

It is about doing something (as Margaret Thatcher would say) to make the world a better place – taking a stand, being indignant, and sometimes being difficult:

Every great figure who has contributed to the human race has been hated, not just by one person, but often by a great many. That hatred is so strong it has caused those great figures to be shunned, abused, murdered and in one famous instance, nailed to a cross.

I am working here in Nepal with Nirdhan Utthan Bank Limited, the largest microfinance organisation in the country – with 108,000 loan clients and 168,000 members at last count. An inspiring man named Dr Pant started the organisation after visiting the Grameen Bank in Bangladesh.

How many countless others have gone to visit the Grameen Bank and have done nothing?

I remember in Australia my experiences working in the green building industry with the Green Building Council of Australia. There were those who put in countless hours to make the organisation better, more effective.

And then there were those who spent countless hours complaining about it.

There are those who complain “there is no market for my product”. And then there are those who are “entrepreneurs of will – even without a market or economically viable business (they) would have grown (their) businesses through will alone.”

I am working on an energy access project in India and my friend Jamie recently put together a pitch for the project. In the reasons why he listed this first: there are 280 million people in India who lack access to electricity.

If we don’t do something about it, who will?

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Lovings of the week: Margaret Thatcher, and innovations in financing small scale renewables

10 May
  • I watched “The Iron Lady” – a film about Margaret Thatcher’s life. What an amazing woman. Upon finishing I decided that I also think “One’s life must matter. More than the kitchen and the children”. I also liked her version of The Secret:

“Watch your thoughts, for they become words.
Watch your words, for they become actions.
Watch your actions, for they become habits.
Watch your habits, for they become character.
Watch your character, for it becomes your destiny.”

  • I’ve spoken here before about the difficulties surrounding micro-energy and carbon credits. It was interesting this week to read about Citi Microfinance – who have “agreed to purchase 1.17 million metric tonnes of carbon credits over the next seven years from Seattle-based social enterprise MicroEnergy Credits. This deal also combines microloans in Mongolia with the sale of carbon credits on the European Union Emissions Trading Scheme (EU ETS).”
  • Finally, my most recent article in a series on the UN’s Sustainable Energy for All is here. I wrote about some innovative financing models which I’ve learnt about since moving into the small scale renenwable energy space. One of my favourite is Fabio Rosa in Brazil. They’ve moved on from a  loan for products – instead charging for services rendered.  Rosa’s company operates on a pay-for-service model for solar home systems. He doesn’t believe people should pay up front, or even own their energy systems. “Who buys food for the next 25 years? You buy food for the next week or month. It should be the same with electricity,” Rosa says.
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Image: Some rights reserved by daveograve@

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Microfinance – does it actually work?

30 Jan

A village in Nepal, only accessibly by foot, that asked to be provided with remittance services

Microfinance is the provision of basic financial services to people who might not otherwise be able to access these services.

Winner of a Nobel Peace Prize in 2006, microfinance has long been lauded as the ‘silver bullet’ to poverty. But the industry has come under attack for failing to produce outcomes – and in some cases making matters worse – in the case of mass suicides of supposed overly indebted farmers in northern India.

Two recent books have studied the case for microfinance in detail – and have reached much the same conclusion. Portfolios of the Poor and Due Diligence: An Impertinent Inquiry both argue that microfinance allows the poor to better manage their lives – providing a safe place to save, smoothing income, and allowing them to acquire useful ‘lump sums’ of money.

But despite these benefits, both books point to a lack of evidence that microfinance itself reduces poverty. No study has successfully proven that microfinance alone has shifted any community out of poverty. In Portfolios of the Poor, the authors argue that microfinance needs to move from traditional rigid loan products to flexible savings products*. And interestingly, Roodman in Due Diligence argues that the real strength of microfinance is in the creation of a new industry – driving economic growth and creating jobs. Not necessarily lifting people out of poverty.

In my own experience with Good Return’s microfinance partners, I have seen examples of the benefit microfinance provides.

In the Philippines, women use ‘emergency’ loans to rebuild homes after storms and to pay for healthcare costs that might otherwise send a family to ruin. Others told me they only joined the institution to access life insurance that they wouldn’t otherwise be able to buy – “for my family, when I die”, they told me.

In Nepal women asked our partner microfinance institution to come to their village so they could access remittance services. Family members could then send funds home, without the time and security risk associated with carrying the money themselves.

And here in Indonesia, men have grouped together to take out a loan. They use the money to seize a rare opportunity – to buy land and extend their palm oil plantation. Their increased supply increases their bargaining power and means they can ‘erase the middle man’. “Now we get much better prices for our goods”.

Of course it would be easy to leave this argument as a series of anecdotes of the benefits.

And not mention the disgruntled customers who complain about significant interest rates, delinquent group members whose loans they must cover and long meetings which waste their time.

But for me, the point about microfinance is made in the developed world.

Given the choice, who keeps their life savings under a mattress? Given the choice, who doesn’t insure their property against frequent natural disaster? And who doesn’t feel nervous carrying a month’s salary on an overnight bus?

For me, poverty has many faces, many problems that need to be solved. (Lucky that there are so many of us!)

There is never going to be a single, simple answer. And we should be wary of anyone who says that there is.

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* As a point of interest – it is much harder for a microfinance institution to get permission to hold savings rather than just give loans. This is in the interests of client protection – for a loan the bank much trust the client. But for savings, a client must be able to trust the bank.

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Just do one

19 Sep

Mid Energy Needs Assessment

So I have this thing.

It’s called the “just do one” rule.

Some days it can be hard to get started. Some days it can be hard to keep going.

So I tell myself – ok, just do one.

I’m in the middle of doing energy needs assessments in Nepal. We’re going around asking people what they use for lighting and cooking to see if there is a renewable energy product which would save their money, or their lungs.

Which sounds awesome, and totally is, but like any job there are times you just don’t have the energy you’d like. Or people aren’t reacting the way you’d like.

I’ve found the assessments work best if you try and vary the questions just a little every day. This can lead to a whole new conversation, unearthing information you’d never thought to ask.

But some days I just can’t do it.

So I just do one.

And that’s ok.

Because that’s the rule.

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Kythera

5 Sep

Church across from a poppy filled vacant plot of land

Earlier this year my family and I visited Kythera, an island just south of the Greek mainland where my grandmother was born.

We saw the tiny parcel of land that she grew up on with her 8 brothers and sisters. We saw photos of the two room house – where one room was for the animals and one room was for the family.

We saw the church a stone’s throw away, just across from a poppy filled vacant plot of land, which had been seriously damaged by a recent earthquake.
The same earthquake that destroyed my grandmother’s house.

I wondered how many times the nearby fault line had managed to shake up the lives of my ancestors.

Kythera is gorgeous. The people are friendly, the climate is good, the food unbelievable.

And yet, my grandmother did not have fond memories. She only received a few years of schooling and told stories of having to line up for an entire day for a potato.

After entering into an (agreed) arranged marriage with my grandfather, she left for Australia. Where she did not speak the language. Or know the culture. Or anyone, actually.

And yet, she did not want to go back.

Australia was hard work, but she saw opportunity. She worked hard. Learnt English. Started a series of businesses. Managed to put her son through primary school, high school and not one, but two university degrees.

All things that could never have happened in Kythera.

Now looking over the Himalayas, where I see beauty, I cannot help but think how many only see hardship.

Like the two women I heard of last week – who killed themselves on the same branch. “Economic hardship” some of the townsfolk said.

Kythera was all I could think.

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A Merry-Go-Round near the top of the world (or, the value of seeing the day out)

27 Aug

A Merry-Go-Round near the top of the world

Today did not start so well.

A freezing cold shower. A 202 page biogas training manual which was read in entirety, but was not so useful. Lethargy. An entire packet of not-so-delicious chocolate biscuits. Thoughts of a meeting yesterday, which did not go so well. Thoughts that today’s meeting will be the same.

Dogs screeching and fighting outside.

The familiar feeling of being trapped. Without culture, without language, without friends. Without knowledge.

And then.

A meeting today where the village women are attentive and patient with your endless questions. They are so keen to share their beautifully made local handicrafts with you and they make you tea (your favourite!). And even though you feel as if you have wasted their time, they graciously thank you any way for coming, smiling at your feeble attempts to thank them for their generosity.

And then.

A merry-go-round near the top of the world. A market place full of cheering gamblers. A soccer match in the mud with local players as good as you’ve seen from across the region. Fairy floss. And jokes about the over exuberant calls from the local boys. (“I am alone! You are alone! Come over here!)

You remember you can take photos. And that you can stop working.

Actually, you remember how to smile.

And why it is that you are here.

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On rain and courage

1 Aug

I love the rain. I love the change it brings to Sydney.

I love how it matches my mood when I am sad. I love how it makes me smile when I am happy.

I dream of puddles I can jump in. Rivers I can kayak. (Or, at least, rivers my friends can kayak)

I actually stopped hanging my clothes out to dry because it made me stress out whenever it rained.

And who wants to stress out over the rain?

It’s the rainy season in the Philippines.

And I’m working with our microfinance partner following around their loan officers on their weekly meetings. Groups of 10 – 20 women meet each week to access basic banking services. And a loan officer visits three of these each day.

We wait for the torrential rain to stop so we can travel to the next centre. We are late, the women are waiting.

One women is soaked. She had to cross a river to get to the meeting. Another is ashamed to let me use her bathroom because the floor is soaked in mud from the rain. Some of their businesses have failed – the rain destroys the vegetables that they grow to sell and they cannot grow rice.

The noise from the rain hitting the tin roof is deafening – we have to wait for it stop to be able to speak. It is impossible to keep the rain out, everything gets wet. “This is our life” they say.

And I think of Sold by Patricia McCormick and how it would be for those that don’t have a tin roof in this rain. And actually, I see them. As we move, from centre to centre.

These women – they keep telling me I must be so brave – to travel around all on my own.

I don’t say anything.

I think about the size of their loans compared to their income. I think about how I’ve never had to take out a loan in my life.

I think about how they must cross a river without a bridge to access savings facilities and insurance. I think about how I do that at home, in bed, on the net, while eating pancakes.

I think about them desperately trying to keep the rain out. And the warm shower and dry bathroom that will be waiting for me at the end of the day.

And all I can think is that these women are some of the bravest people I know.

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Why I left a job I love (or, the value of still not knowing)

23 May

I have wanted to work in developing countries since forever. I don’t know why, I can’t really explain it, other than to say it was one of the things that kept me up at night.

(In the words of Steven Pressfield: I had no choice).

But when I finished university I had a boyfriend I adored, no money and a fantastic job I totally loved in Sydney. I wasn’t ready.

Four years on and I was single, about to be promoted and still not ready.

I could feel the draw of what I wanted tugging at the edges, but I just was not ready.

I never thought I’d say this: Anthony Robbins changed my life.

In Robbin’s book Unlimited Power (yes I know, best title EVER), he takes his readers through a goal setting exercise called “Limitation Disengage” (yes, yes, it gets better).

The first time I did this exercise I came out with a whole heap of useful information about how I wanted to be a professional surfer. (Especially useful for someone who has never graduated out of the beginner category in any sport).  Being a surfer had never, ever kept me up at night. I had no idea where this came from. I laughed at myself.

I just was not ready.

The second time I tried it, something happened. I came out with a heap of interesting ideas. Stuff that really did keep me up at night.

I realised I wanted to work on things that I could see were real. I wanted to actually see things get built, to see how people really did things.

I wanted to spend time one step closer to the process.

I also did not want to spend my entire career working for people at the top of the food chain – the likes of the big banks and law firms. (This is despite totally respecting these people. These people will probably contribute more through their income taxes then I EVER will through my work).

I wanted to see what I could do to work directly for those at the other end.

Enter Mohammad Yunnus

I did a heap of reading. And found Yunnus’ Banker to the Poor.

I have never had a book make me cry so, so much. But this crying was not just out of sorrow. Many times I cried out of joy.

It showed me microfinance in a way I’d never seen it before. It showed me its humility – the way it said to people that they themselves knew what was best for their lives. It showed me how I’d be able to see how the smallest businesses operate, how it is that they do things.

A long period of thinking, reading, job applicating (!) and speaking to people led me to what my potential contribution could be. My experience with renewable energy coupled with my desire to travel to work overseas.

So I’ve taken a job with Good Return, starting in exactly one month. I’ll be rolling out a microfinance program involving solar lanterns throughout South East Asia for the following 12 months.

That’s it. That’s all I know so far.

So, you want to learn?

I know what my brother is going to say – there are no “take aways” from this post. And I know that’s what people want from blogs. They want to learn.

Well, what can I say?

Stay posted.

I’m still learning.

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(1)    I am told if you are interested in microfinance and only want to read one book, make it this one. It is brilliant, informative, simple and funny.)

(2)    One of my favourite extracts from Yunnus’ Banker to the Poor (apologies for its length):

I was walking along a village road alone to get to our branch after attending a centre-meeting. After a while I met a young man (around 30) who was walking along the same road. He greeted me, I greeted him. We walked side by side.

“Are you with Grameen Bank?” he asked. “Yes”, I said, “but how do you know?”

“I saw you at the centre-meeting in the village. My wife is also in the group.”

This immediately changed my relationship with him. I became interested in him. He told me his name was Joynal. He was an agricultural labourer. His wife Farida had joined the Grameen Bank eight months earlier, and they had a little daughter of five.

“Farida works very hard to make sure she pays back every single weekly installment on time. She has not missed a single instalment yet.”

“Did she have consent before she joined Grameen”

“She did. But in the beginning I was not sure I was doing the right thing. Then the other women in the village were also joining Grameen. She kept asking permission. Finally I gave in.”

“Are you happy that she joined? Or looking back to you think it would have been better if she did not?”

“No, no, I am happy that she joined. She used to complain that we didn’t have enough food, but now she does not complain. We have enough for the three of us”

For me this was like getting good grades in the final exam. I was pleased that things were working well. Both Joynal and I kept walking silently.

The long silence was broken when Joynal spoke out in a negative tone: “There is one thing, however. I used to enjoy beating my wife. But the last time I beat her I got into trouble. The women in Farida’s borrowing group came to be and argued with me and shouted at me. I did not like that. Who gave them the right to shout at me? I can do whatever I want with my wife. Before, when I used to beat my wife, no one said anything, no one bothered. This is no longer going to be true. Her borrowing group threatened they will get really mean if I beat my wife again.”

I tried to console Joynal:

“Well, maybe it is time you left your wife alone. After all, she is working very hard. She needs your support. You can find something else to do to release your tension.”

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