A closer look at microfinance:  HOPE International takes us to two different bank meetings in San Pedro.


When you give it creates dependency, but when you loan it creates responsibility and independence.
HOPE International


Some community bank meetings have a public health component. Here is some footage from one such workshop on HIV/AIDS.


Meet Solya Javier, a microentrepreneur who started a colmado with her microloan.


You’ll notice that most members of the solidarity groups featured here are female. HOPE/Esperanza in DR strives for approximately a 10:1 female/male ratio. This allocation of microloans is fairly similar globally ~ 80% of microloans are made to women. 
“Women are more likely to use services in a way which will promote family well-being. They are more reliable borrowers in that they tend to return anything they have borrowed and are less likely to try to cheat. They tend to be more careful with the resources they have, using money more wisely, and are more likely to serve. Moreover, they are generally supportive creatures, especially in a group, which is good for the overall morale of the poor to lift themselves out of poverty.”
-Robert Hickson, http://english.handan.edu.cn/english/2005/Nov/150021.htm (July 29, 2008)

You’ll notice that most members of the solidarity groups featured here are female. HOPE/Esperanza in DR strives for approximately a 10:1 female/male ratio. This allocation of microloans is fairly similar globally ~ 80% of microloans are made to women. 

“Women are more likely to use services in a way which will promote family well-being. They are more reliable borrowers in that they tend to return anything they have borrowed and are less likely to try to cheat. They tend to be more careful with the resources they have, using money more wisely, and are more likely to serve. Moreover, they are generally supportive creatures, especially in a group, which is good for the overall morale of the poor to lift themselves out of poverty.”

-Robert Hickson, http://english.handan.edu.cn/english/2005/Nov/150021.htm (July 29, 2008)


How do microfinance institutions (MFI) work? No MFI is exactly like another, but the general structure is similar: MFIs like HOPE/Esperanza provide loans to the poor (w/ interest rate of anywhere from 30 - 50% annualized— think 10-25% interest plus rate of inflation). Sounds high, but much lower than what prestamistas or loan sharks charge, which can be up to 20% per day!

Not anyone can receive a loan. Interested candidates must form a “solidarity group” that will be accountable for one another. Solidarity groups are comprised of individuals who know one another: family members, friends, or neighbors. After completing several training sessions on basic business principles, loans are made. Loan recipients (or as HOPE calls them, “associates”) then use the money to start businesses or expand existing ones. Every two weeks or so, community bank meetings are held in which a portion of the loan must be repaid. The loan officer and associates (or a representative of the associate) must be present, and at the time of the bank meeting all loans must be repaid before meeting dismissal occurs. If any one associate does not have his/her portion, the solidarity group must come up with the resources to pay his/her portion. This social pressure results in higher repayment rates. Additionally, prompt loan repayment builds credit for associates, and qualifies them to take out larger loans the next loan cycle. These incentives result in high repayment rates, between 95-98%! Default on a loan is very rare.

In addition to providing loans, MFIs offer other helpful services for associates.

One highlight many associates noted as a positive was that HOPE/Esperanza offers them the opportunity to save. In the communities we visited, each loan repayment included payback of interest and principal, but also a portion of “dedicated savings”. A certain amount was mandatory, but several associates would put in more depending on their profit that month.

Associates may have access to a clinic and health services for little to no cost.

Additionally, in the case of HOPE/Esperanza in DR, during its 1 hour bank meetings, time is set aside for spiritual devotional and songs [they are Christian-based microfinance organizations], as well as a seminar on a public health topic of interest. For example, in the two bank meetings we attended, associates learned about preventative measures for HIV/AIDS and dengue.


The Unintended Byproducts of Charity

An illustrative example of the unintended byproducts of charity follows, taken from The Poor Will Be Glad, by Peter Greer and Phil Smith:

After the genocide, Jean (a Rwandan) seized an opportunity to begin a small poultry business to provide his neighborhood with eggs. He managed to scrape together funds to purchase several fowl, and his business grew. Later, a church in America “adopted” the village where Jean lived and worked. The church decided to donate clothes and supplies. They also imported eggs from a neighboring community and gave them away. Suddenly, this one village was flooded with surplus eggs. It is not difficult to imagine what happened to Jean’s business: people went first to collect the free eggs and bought Jean’s eggs only when the supply of free eggs was depleted. The market price for eggs plummeted in Jean’s village and, as a result Jean was forced to sell his productive assets, his chickens.

The next year, after Jean had left the poultry business, the church that had supplied the free eggs turned its attention to another disaster in another part of the world. Jean’s community had no capacity to produce eggs locally and was forced to import eggs from a neighboring town. The cost of these eggs was higher than the eggs Jean had sold, so both Jean and his village were hurt economically by the good intentions of one American church.


Deep in the bateyes of San Pedro, microfinance is hard at work, transforming the lives of many of San Pedro’s poor. We had a chance to visit several of these rural communities within San Pedro today, thanks to the generosity of HOPE and Esperanza International (two microfinance organizations with branch offices in DR). We would be remiss if we didn’t name several of their incredible staff (Claire, Liz, Max, Alejandro), who we were privileged to spend the day with.

Before we delve into details of the day, we just want to say: truly, seeing is believing. Sure, we had read and heard about microfinance’s wonders from developmental economic textbooks and even funded microloans on kiva.org. But nothing compared to seeing it and feeling it for ourselves. The gift of a microloan is truly empowering and transformative. These microentrepreneurs are hard-working and innovative. They glow when they talk about their businesses. They have made a better life for themselves, and we can find nothing wrong with that.

Microfinance has changed the way we think about charitable giving. Many times charitable donations go to fund one-time events (food and medical care after a natural disaster or clothing to weather rough winters). But while a gift to a microfinance institution may be one-time, it is one of only a few one-time charitable options available that can provide for a permanent, sustainable improvement in another’s life.


A Dengue Scare…

After a few days of reading multiple front page stories about dengue fever afflicting an increasing number in Santo Domingo, we (OK, Wendy), started fearing she might get “the dengue”. Her concerns were not completely unfounded. We both had been a nice source of sustenance for mosquitoes over the past week, and dengue is passed through mosquito bite. Read more about dengue here

Lo and behold, today during school, Wendy became noticeably fatigued. After a walk home in the hot summer sun, she fell ill to a fever / chills / nausea, which lasted through the night and into the next morning. It wasn’t clear what had brought it on, but the mosquito bites seemed a likely culprit. 

Thankfully, Wendy is over it now, and at worst, she suffered from only mild dengue fever if at all…but

postscript—-> July 30, 2010: It turns out that today we learned that a fellow student studying at our language school actually had dengue but did not know so! He attributed dengue’s symptoms to other sources. So dengue’s red blotches he thought were from heat rash or bed bugs. Dengue’s extreme pain behind the eyes he thought were from migraines, and dengue’s severe back/muscle aches, he thought were from a poor mattress. He actually endured it for a week and a half before the pain subsided. No one told him, even when he left his room, that he might have dengue. He just thought - Wow, this is what happens when I leave my native country! 

Ah dengue - don’t risk it: buy some insect repellent!