Jeremy's Journeys

Moriré con las botas puestas. That’s what FAPE’s vice president of the board of directors said while giving an award to the president of the board.  Everyone attended FAPE’s 25th anniversary celebration:  the board of directors,  the general assembly,  representatives from FAPE’s international partners (I was Kiva’s representative), and FAPE’s director, accountant, and lawyer.  Live music accompanied this slide show of pictures.

While the vice president continued, I sat in my suit waiting to receive Kiva’s award.  I couldn’t help but thinking how lavish this celebration was.  How none of the loan officers had been invited to the ceremony.  How we were patting ourselves on the back, almost forgetting the people on the ground, the reason we were in microfinance in the first place. Though you can’t deny that individual recognition is important, it’s also necessary not to get to wrapped up it.  It’s always about the people on the ground.

The vice president called Kiva’s name for the award.  I stood up and walked toward the podium.  But I saw that he was going to talk for some time before giving me the award.  So, I sat down in my seat again.  My other friend on the board of directors seemed to think that I did not understand what was happening, so she ushered me up to the front.  Little did she know, I understand Spanish perfectly.  I’m just awkward.  You know when you are exiting an elevator, and you tell the other person to get off first?  Then they tell you to go ahead.  And then you both run into each other.  It was kinda like that, except I was the only person making a fool of myself.

I guess I don’t want to say that celebrating 25 years is a bad thing to do.  Especially if you invite the people who are actually doing the work on the ground.  But I am wary of the type of hierarchy that recognizes itself, and only itself.  I guess I’d like to die walking in my boots, and not celebrating that I figured out how to put them on.

As promised, pictures from the journey. . . I mean gourney.

I have returned from a two-week vacation around Guatemala with my friends. I hope to get some pictures up of the escapade sometime later this week. I am still getting back into the swing of things around these parts, but I thought I’d leave you with some thoughts of Eirk, an Econ major at Michigan who knows much more about economics than me.  He has some thoughts about microfinance and Kiva in response to the discussion on the blog.

I have a few ideas about how you may be able to assuage your reservations about whether microfinance is truly helping to alleviate poverty.  Firstly, there are indeed many measurable ways to assess the impact of micro loans.  In my favorite econ course at michigan (development economics) we talked at length about the positive impact on health, education, and community well-being which can be seen in studies of microfinance.

To help your readers better understand why micro finance is so important (and indeed why interest rates of 30 or 50% are not as bad as they sound in the developed world), it may be helpful to give a brief overview of this basic econ principal.  The lack of available loans to poor entrepreneurs is something that flies in the face of conventional economic wisdom.  Those with little access to capital have much much more to gain by receiving a small loan.  (The return to an investment is likely very high)  Econ theory says that capital should naturally flow to those individuals who have the most use for it.  Unfortunately, the risk is often too great for a bank or Microfinance institution to make the loan.  By aggregating loans from many lenders (which kivas website does) or lending to groups of entrepreneurs instead of individuals, the risk is mitigated.  You, along with the loan officers of FAPE, are the crucial link that makes the transaction possible.   Microfinance is a relatively new concept.  Kiva has developed a loan process that produces unheard of repayment rates in areas which were previously thought of as impossible to make loans.   As the process gains credibility, the interest rates payed by entrepreneurs will go down.

As you struggle to see the positive impact you are making, remember that you are experiencing things on an incredibly small scale.  The true value of your work is yet to be seen as the slow mechanisms of a globalizing economy adapt to incorporate the process you are helping to develop.

Erik adeptly points out the niche that microfinance and Kiva fill.  They pick up where banks fail,  providing a useful service to those who do not have many options.  It’s always important to remember the scope and breadth of microfinance.  Kiva is not meant to do everything, just to fulfill a role for which there is a need.  Erik is, as am I, hopeful about the long slow processes that will manifest themselves as a result of microfinace. In theory, health and well-being of those receiving loans should improve.  Yet I have not seen evidence in the field, nor in any study to completely justify this theory.  If someone does find it, I’d love to give my hopes some statistical backing.

Putlzer Prize winner Nikolas Kristof offers his thoughts on the matter, also stating the lack of evidence of long-term, positive outcomes.