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Learning while doing: Guja’s experience measuring impact in Guatemala

As I’ve been knee deep in technical office work the past couple of weeks, I decided it would be more interesting to share someone else’s story.  My colleague Guja Lucheschi is doing a three month project with Genesis this summer and generously offered to share a bit about her experience with the blog readership.  Guja is from Italy and spent the last year getting a masters degree in microfinance at Solvay Brussels School in Brussels.  Prior to that she worked in regional politics and studied political science and international relations.  The following is an excerpt from a conversation we had discussing her time in the field:

Me: So, what attracted you to microfinance in the first place?

Guja:  I’ve always been interested in poverty and development and have been quite disillusioned with the other possibilities, so I thought I’d try something different like microfinance: selling something to the poor to make them richer.

Me: How did you end up at Génesis Empresarial?

G: My professor and another NGO from Luxembourg are conducting a research project on “green” microfinance.  They are conducting a large general research on microfinance and specifically on payment for environmental services throughout Central America.  They had already done a lot of work in Nicaragua and they wanted to evaluate how a certain project worked in other countries.  The general purpose is to evaluate the impact of the project, both for rural development and on the environment.  They had a contract with Genesis and asked the class if anyone was interested in doing this research, so I applied.

Me: So how are you trying to evaluate the project?

Yeah, that’s the big question!  I kinda work on two levels. One is how the project is implemented and the second is the effects, how have the clients been impacted: environmental awareness, changing production behavior, and diversification of income. But there could also be other effects that weren’t foreseen. It’s hard to measure the impact because it’s hard to find the nexus between one of the components of the program and the behavior of the clients. I think about things like is it because there is money that they change their behavior? Will it have long term effect?

What do you see you  final deliverable looking like?

For Genesis it will be, here is what happened and here are my recommendations for the future.  For my thesis, it’ll be more complicated.

What did your typical day look like when you were in the field?

I would meet up with an asesor (loan officer) or a facilitator sometime between 6 and 8 am depending on how far the community was.  It would be between 1-3 hours of travel, mostly on motor bike.  We’d have a list of clients that we had prepared the day before and we’d go house to house interviewing the clients.  Most of them spoke Q’eqchi, so my colleague would have to translate.  I would interview between 2-7 clients per day, depending on distance between clients, availability of clients, actually finding them, and of course the weather.  For instance, women are a lot easier to find than men since the men are often working in the campo.  Also, an interview could last between 20 minutes and an hour since sometimes the conversation would stick just to the questionnaire and sometimes they would talk a lot and offer lunch.  They like to ask me questions too like my mother’s name, if I’m married, about my family. Then I’d go back to whatever town I was staying in and would basically go to bed so early because I was so tired!  I’d put the interviews in the computer so I didn’t forget anything, and then go to bed to be ready for the next day.  We’d go out 3-4 days a week and the other day(s) I’d review what I did during the week.

Guja interviewing her first client in Caín, in the north of Guatemala.

Guja interviewing her first client in Caín, in the north of Guatemala.

Sounds exhausting!

Yeah, but it was a good exhausting. Continue reading

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The Future of Microfinance: Transparency, Accountability, and Client Protection

Over the last decade, the microfinance industry has been challenged over its efficacy as a development strategy, and whether lending practices authentically reflected the needs of clients. In the Ambassador’s training a month ago (mentioned here by Kate McGrath) at Accion’s Headquarters in Boston, we discussed how the industry has changed in response to those criticisms. A major part of those changes was spearheaded by  leading microfinance organizations, institutions, and networks like Accion, who came together to create a series of principles that protect clients and institutions by ensuring that financial products enable client development and manageable risk.

The Smart Campaign was the result of those collaborations, and independently developed a series of Client Protection Principles for microfinance institutions (MFIs). MFIs now have the option of going through a rigorous certification process to improve their transparency and efficiency, and harken back to the development roots of the industry (or at least of Accion and other non-bank actors).

The seven Client Protection Principles cover all facets of the lender-client relationship, and in order to be Client Protection Certified, organizations must meet all principles (a current list of certified organizations is available here). The following is a summary of those principles (adapted from here):

  1. Appropriate product design and delivery

Organizations provide products that do not harm clients—products and methods of delivery are designed to best accommodate the needs of clients and potential clients. Continue reading

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The Importance of Getting to the Field

“If you want to be involved in microfinance, get to the field, ” was the advice that Accion CEO Michael Schlein gave to our group of Ambassadors during training in Boston last month.   Here I’ve realized the importance of getting to the campo, or countryside, where the majority of Genesis’s clients are.  As microfinance institutions everywhere, especially in Latin America, adapt to a changing market and growing competition, it’s crucial that management “gets to the campo” as they form strategies and policies.

Last week I had the priveledge of acompanying Flor de Salguero and Diana Enriquez, the women who lead Servicios de Desarrollo Empresarial (SDE), into the campo for four days.  Throughout the week I was inspired by their leadership which shone through their empathy for both clients and employees and through their intentional feedback practices.  I was also inspired by the clients themselves as I got to know a little more about their lives and their involvement with Génesis.

Me, Flor, and Diana waiting for a training session to begin at the farm of one of the clients.

Me, Flor, and Diana waiting for a training session to begin at the farm of one of the clients.

Sunday morning Flor, Diana and I set out from Guatemala City on the six(ish) hour trek to Petén.  It didn´t take long to realize Diana was a race driver, and I had to brace myself everytime we would fly around a mountainous bend or bounce aggressively over a camoflauged speed bump, but the three of us laughed and joked and sang the whole ride so I can´t really complain.  Plus, the views were unbelievably gorgeous; Guatemala has an ever changing landscape through mountains and vallies, jungles and forests, and volcanoes and lakes.

One perk of the rainy season is the appearance of rainbows in the already impressive landscape.

One perk of the rainy season is the appearance of rainbows in the already impressive landscape.

Throughout the week the three of us attended training sessions in different villages around the region, moving from hotel to hotel every night and sometimes traveling over 6 hours a day.  Flor and Diana were evaluating the training facilitators on a new training methodology called CEFE, Competency-based Economies through Formation of Enterprise.   I was observing and interviewing clients and practitioners on various aspects of the training program.  Most importantly, I was experiencing first-hand the work of the campo, which is quite different than urban microlending.  This exposure will add validity to my recommendations to Flor and Diana over the coming weeks, as I continue to plan a proposed short and long term growth plan for SDE.

This week brought new meaning to the concept of “high transaction costs” in microfinance.  Transportation costs, for example, have long been explained as a key driver of higher interest rates.  When I was a Loan Officer for US-based clients at Accion East, many of my clients had the option of using our online lending platform to expedite the application process and save precious time for both Accion and the clients.  (Other transaction costs certainly apply to microlending in the States, but I won´t get into that here.)  Clearly, this type of technology is not an option for the clients of Génesis that live so far out in the campo where there is no running water, let alone cell phone service or internet access.  The only way to get there is (precariously) by motorcycle or an agressive 4 wheel drive, and often the final stretch must be done on foot.  Loan officers and training facilitators make this trek every time they visit a client, an important part of the relationship building process.

an example of the road through the countryside.

an example of the road through the countryside.

The rigorous commute and indigenous languages of the campo call for a strong group of loan officers and training facilitators, but of course the most noteworthy part is the clients themselves.  Many make their living off of coffee or cardamom, commodities that are very vulnerable to market or environmental changes.  For example, cardomom is experiencing a pricing crisis, leaving its farmers in a tough economical spot.  Génesis is helping with this crisis in two main ways: 1) through specific training to combat the thrips pests that are attacking the crop, and 2) a new loan product that will help current borrowers make it until the next harvest.

A training facilitator leads a training on fighting the cardomom crisis.

A training facilitator leads a training on fighting the cardomom crisis.

At the end of every training, Flor addressed the group of clients with words of encouragement and a call for questions.  She commented to me multiple times the importance of learning from the clients, and of basing the future of SDE (and Génesis as a whole) on the needs of its client base.  As Michael advised, it´s not enough to have worked in the industry for years or to have high pedigrees or a passionate heart.  To effectively innovate, management needs to jump in a four wheel drive, throw on some rain boots, and hear from the clients themselves.

Name block - Sherri 2014

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Guatemala City and Antigua: 45 minutes and a world apart

As the bus climbed the steep road out of Guatemala City, I kept my eyes on the road, in an attempt to avoid carsickness, or in this case school bus-sickness, exacerbated in no small part by the choking diesel fumes from the other buses sharing the road.

Last Friday was my first foray out of the crowded capital city of Guatemala. I was aboard an old American school bus, the vehicle of choice for public transportation in much of Latin America. The so-called “chicken bus” is highly modified, personalized, and decorated. The chicken buses are notoriously dangerous, and I had been warned against using them by my Guatemalan roommates, however with another Accion Ambassador, Sherri Lane, as well as a Génesis Empresarial employee, I felt as safe as you possibly could.

As we and at least fifty of our Guatemalan best friends careened at breakneck speed up and down volcanoes towards Antigua, I couldn’t help but reflect on how big a change this was from my fairly insulated life in Guate. Each day, I take a taxi to work, driven by the the talkative Don Raul (a voracious futbol fan, like so many here, with Brazilian and Guatemalan flags in his car), and at 5 pm or so, Don Raul picks me up for my ride back to my gated community. Understandably, my coworkers at Génesis are concerned about my safety, but it is a challenge to have my only real daily outdoor exposure be my trip to get lunch at the nearby comedor (home-style eatery), to get a lunch of comida típica (traditional food). This routine is a daily reminder of the inequality that pervades the country, and the large gap in development in Guatemalan society. This discomfort is tempered however, by the fact that I get to go to work each day at Génesis, which as an organization is working to improve the prospects of hundreds of thousands of Guatemaltecos, including the most vulnerable groups: women and members of indigenous groups in el campo (the countryside). Continue reading

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Candle Making as a Financial Empowerment Tool?

My first day in the field I learned how to make candles.

 This may come as a bit of a surprise to you, as it did to me, so let me share the story.

First thing last Wednesday morning, I took a tuk tuk out to Jocotenango, a pueblo right outside of Antigua Guatemala, to meet up with one of the training facilitator Ana Lucía (Ana Lu, for short). Facilitators are the on-the-ground staff that facilitate the business training courses designed by SDE (Servicios de Desarrollo Empresarial, or Services for [Micro] Business Development), the department of Génesis Empresarial for which I’m working this summer. Facilitators work closely with loan officers to best support the business growth of their clients. Ana Lu and I hopped on a chicken bus and chatted on our way to meet with the group of women that were going to receive the training that morning. Continue reading

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Common Denominators in Microfinance

Génesis Empresarial will be the third MFI for which I’ve had the privilege of working.  My inaugural experience with microfinance was an internship seven years ago at a small NGO in Nicaragua called ALTERNATIVA.  Upon returning to Boston, I began working for Accion East, part of Accion’s domestic network of direct lenders to local small businesses that cannot obtain traditional credit in the United States. I spent four and a half years lending with Accion before leaving to get my MBA. And now, having just graduated, I decided its the perfect time to come back to the field for a couple of months to help support Génesis Empresarial’s community development program (more on this in later posts).

When I entered Nicaragua seven years ago, I was wide-eyed and optimistic about microfinance and its role in “helping the poor help themselves.”  Now, having experienced small business lending through the financial crisis and after years of studying and working in the industry, I’m beginning this ambassadorship in Guatemala with a more realistic outlook that only experience can provide.

Given my experiences in both Nicaragua and the U.S., I am very curious to see the parallels here in Guatemala.  I´ve only been here a week so far, but I can already see that Génesis embodies many of the same positive characteristics as ALTERNATIVA and Accion East.  What stands out to me most so far are: Continue reading

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6 Tips on How to Win Over the Heart of your MFI

As in life, the key to living a joyful and productive Accion Ambassadorship is mostly based upon the relationships that you build around you. However the difference between an Accion Ambassadorship and other experiences is that you only have a short amount of life to win over the hearts, minds and respect of your peers. (I, for example, moved regions every month).

There is no other relationship more important to the success of your Accion Ambassadorship than the one your foster with your host MFI (microfinance institution). If you win them over, the details and bumps along the way will work themselves out.

I can’t lie and say that I wasn’t a little intimated at first by the challenge of how I (tall, white and gangly) was going to integrate myself with a tight knit group of inspired Guatemalans who depend upon each other to realize their work. There’s also the fact that my Spanish is not 100% fluent (like when I said “ox butt soup” instead of “ox tail soup”) and that my Q’eqchi is pretty abysmal. But after almost 3 months of working with Genesis in Petén, Izabal, Alta and Baja Vera Paz, I think that I can safely say that despite cultural obstacles, I am a member of the Genesis team.

How? I am going to share with your my secrets in the form of 6 tips. These 6 pieces of advice will help you adapt in your Accion Ambassadorship, your new job, or even score a first date.

1. Follow their Work Routine

On office days, I have worked from 8 am to when the guys leave work since the beginning. Take your tostada breaks and lunch breaks at the hours that they do. Half the battle is just showing up and being present. If you establish yourself in their routine, they will treat you less like a temporary visitor and more like a part of their team.

Going to the beat of your own clock can really back fire. For example, one capacity trainer recounted me about his shaky experience starting to work for Genesis. He was the first capacity trainer to join a team of credit officers in a regional office. Unlike credit officers who arrive at the office at 8 am and leave at around 5:30-6:00 pm every day, capacity trainers are free to create their own schedule as long they achieve their work goals.

So he decided to work on weekends and didn’t work other weekdays, or would work one week and take off another. But the credit officers felt like he was never in the office because they didn’t see him at the same time and so they called the central office for an investigation of whether or not he was actually working. Despite the fact that the central office did not find any errors, the credit officers still want him to resign. The point of this true life fable is that if you want to gain someone’s confidence, you have to be present. Continue reading