Repayment Rates

This post is written by PHPG's summer intern, Charlie Bates. Charlie recently finished his sophomore year at Villanova University. Majoring in economics, he is spending the summer in Granada working as a microfinance intern with PHPG and also volunteers at a local elementary school with La Esperanza. 

Charlie Bates - PHPG's Summer Intern

Microfinance has often been termed a miracle. While I don’t seek to address such a bold claim, I would like to draw your attention to a characteristic of microloans that is indeed surprising: their extremely high repayment rates. Unlike traditional banks, most microfinance organizations (at least those that are truly mission-focused) do not require collateral, nor do they have the legal protection from bad debts that traditional banks enjoy. But according to the Grameen Foundation, a pioneering microfinance organization, microloans to impoverished clients have a higher repayment rate than both US student loans and credit card debt.

In PHPG’s case, this translates to a repayment rate well above 90%. How is it possible to give a loan to someone who lacks many resources, except for business skills and a will to succeed, and continue to retain such a high repayment rate?

An easy start is to focus lending efforts on women, who are consistently marginalized in less-developed countries like Nicaragua. The Grameen Foundation points to numerous studies that demonstrate that women are far more likely to invest loans in their businesses and to use the proceeds for their children’s education and health. The fact that 78% of PHPG’s clients are women partially explains our high repayment rate.

Another way that microfinance organizations ensure repayment is by working with clients in “solidarity groups”. Forming groups encourages collaboration and mutual support and provides some healthy peer pressure to repay.

PHPG has seen a tremendous improvement in repayment rates since it started working exclusively in groups. We designate an especially qualified community member as a group leader, and he or she is responsible for collecting the repayments of the other group members and reporting any concerns. Being a group leader is a huge responsibility; if one of the clients does not repay his or her loan, no one in the group is eligible for an additional loan. This sense of responsibility helps increase repayment rates.

Juan Carlos & Juan Carlos Jr. collecting from a group leader

Since microfinance is very relationship-based, a key part of ensuring repayment is to establish and maintain relationships with the clients. More difficult in larger microfinance institutions, this is one of the hallmarks of PHPG’s operations. At our weekly collections, we visit the houses of the individuals and group leaders. Juan Carlos, our professional yet good-humored field manager (he’s an important part of the organization - you’ll be hearing more about him on this blog soon), is the point person for discussing repayment issues with clients. By making an effort to understand their situation and taking whatever steps we can to help, PHPG’s forming of relationships through consistent visits is vital to improving and maintaining our high repayment rate.

On a personal level, repayment comes from the clients’ gratitude for their loan, their dedication to their businesses and families, and their desire to see others in the community succeed using the same funds. It has been interesting to see the effects of PHPG’s measures to ensure repayment, and I look forward to seeing how they develop throughout my time here.

--Charlie

Sum of my experience with PHPG in Granada by Lana Balyk

It is hard to believe that I already find myself back in Canada, since it seems like just last month I wrote my last blog entry while preparing to depart for Nicaragua. Five months have passed since then, during which time PHPG has continued to move forward with strengthening its micro-loan programs, and also has seen the arrival of new and talented interns and employees.

The first part of my time in Granada was mainly spent getting to know the program, which was transitioning in a new direction with new ideas and new staff, as well as getting to know the city of Granada itself. The Granada based employees are great staff, and PHPG lucked out finding such great workers who really believe in their organization. If I did not already have an idea about the difficulty of getting set up in a new city and getting work underway during a holiday period in Nicaragua (most of the month of December), I would have learned that very quickly! However that is a very special time to experience Granada, which still holds to the tradition of everyone lighting off their own fireworks intermittently throughout the month, and of course all together at once for hours on Christmas and New Years in a midnight symphony of exciting and slightly dangerous mayhem! I always enjoy a warm Christmas, and the temperature is great in Granada at this time of year.

Juan Carlos, Lana, & Kyle conducting a PHPG informational meeting

Into the New Year another intern arrived, Kyle, and we set out gathering information and making observations about PHPG’s clients and current loan program, as well as planning and delivering a workshop to educate clients on our loan procedures, and prepare them for when Alex and Isabel would arrive in February to organize more loans. During this time the heat continued to climb, and working outdoors in our communities gave me a new appreciation of how people are able to spend all day working outdoors in tropical countries. If Canada had that kind of heat, I think the ongoing highway construction and maintenance that goes on every summer would come to a halt!

Once Alex and Isabel arrived then all of us coordinated, shared ideas, made adjustments and moved forward with preparing PHPG’s clients for the next installments of loans. It was especially great to see our Granada employees have a strong role with the planning as well, as I really feel that they know their communities and their cultural contexts best. The interviews were one of the most interesting parts of my time in Granada, and it was so interesting to see the different businesses our clients have, and what they wanted to do with them. Some of the clients we normally visit are ambulatory vendors who do not necessarily sell their wares or products from their home or have them on hand to view, so the interviews were a great chance to see some different businesses in action, such as people producing leather shoes from scratch, or creating silver jewelry. Once the first loans were dispersed, it was interesting to see what clients used them for, how they modified their businesses, or how one even built a clothing shop in front of her home to display her wares. Unfortunately I returned to Canada before the next round of loans was handed out, so I was unable to take part in that work, but I am glad to hear that it went just as well.

The PHPG team reviewing & signing disbursement documentation

I am very glad that I was still in Nicaragua to be part of the interview and initial loan disbursement process, since that was one of the highlights of my job in Granada. The communities that PHPG work with are very lacking in resources, including regular electricity or in-home running water. However most of the clients I spoke with seem happy with their lives, and feel positive about their children’s prospects. It was really great to see how some people worked really hard to grow their businesses, and how proud they are of their efforts.

My experience in Nicaragua with PHPG was very valuable to me in that it allowed me to learn more about micro-finance in general, as well as gain practical experience about the workings of a small micro-finance NGO. In addition I was able to meet some wonderful people, gain some different perspectives and contribute to an organization that continues to grow and develop.

Intern #5...!

Hello! 

I’m Alex Bergonia and I will also be working as an intern for PHPG this summer in Granada! I am currently finishing up the last few weeks of my junior year at Claremont McKenna College where I am studying government and economics with a concentration in international development. I am originally from Kenilworth, Illinois and went to high school at Phillips Exeter Academy in New Hampshire. Since high school, I have had the opportunity to embark on numerous adventures abroad, and have come to know many diverse cultures around the world. I have traveled around Europe extensively and have also been to China. I have spent six-weeks living and working in the Salta region of Argentina and have visited Brazil, Mexico, and several Caribbean Islands; however, I have never visited Central America.

While I have been interested in international development since I began college, my desire to work in microfinance was cemented over the past year. I spent a total of six months abroad – four in Cape Town, South Africa where I was also able to visit Zambia, Botswana and Zimbabwe. While there, I conducted an independent study that sought to uncover the reasons why the post-apartheid government’s system of affirmative action, Black Economic Empowerment, has failed to empower the majority of disadvantaged South Africans. I discovered that BEE was based on corruption, favoritism and political patronage, and had only succeeded in empowering crony capitalists and creating a wealthy black elite. There is enormous entrepreneurial potential prevalent in South Africa’s townships and cities. The absence of successful government systems of wealth redistribution necessitates the involvement of outside actors to fill the void. This is where microfinance comes in. My studies and experience in South Africa cemented by belief that a small amount of capital invested in individual business ventures is the most effective way to combat poverty. After my experience in South Africa, I knew that I wanted to learn more about the grassroots implementation of microfinance, and how foreign aid and charity can be sustainably invested and maximized abroad.

I am so excited to have the opportunity to study microfinance this summer with such a young and vibrant organization. I can’t wait to meet my new co-workers and the people of Granada, improve my Spanish and come to know a new part of the world.

I’m counting down the days and can’t wait for this summer!!

See you soon!

Alex

Intern #4!!

Hey guys!

I am so excited to be working for People Helping People Global this summer. Aside from a brief trip to Mexico to fulfill the quintessential college spring break experience, I have never traveled anywhere in Central America.  The chance to work and live in Nicaragua for two months will be a new and adventurous opportunity for me!

A little about me… I am currently a junior at Claremont McKenna College studying International Relations with a focus in third world economic development.  Coming originally from the east coast, I am absolutely loving the California lifestyle – it’s active, endlessly sunny, and teeming with cheery, happy people.  My interest in working for PHPG is directly related to my academic concentration and my future career aspirations, both of which are manifested in past travel and work experience.  I am fascinated by the so-called ‘culture of poverty’ that exists throughout the world and the seemingly unanswerable questions that often inhibit progress.  As a result, traveling  and experiencing new and diverse cultures has become one of my passions in life – and one of the ways in which I have attempted to gain insight into the mystery of perpetual poverty.

In addition to living and working in Fiji for a short period after 9^th grade, I recently returned from spending a semester abroad in Madagascar where I gained first-hand experience living with local Malagasy people, some of whom live day-to-day off of less than the equivalent of $2 dollars per day.  It was a crazy experience, to say the least, and one that taught me a lot about Malagasy culture, about personal relationships, and about life in general. In terms of development, my experiences have taught me that every situation in which poverty is a pertinent problem in any given community is caused by factors that are not consistent throughout the world: people are poor, become poor, and arise from poverty for different reasons. I have chosen to pursue this internship because I believe that grassroots microlending targeted at specific communities is the most efficient way of tackling the issue of poverty in the particular case of Nicaragua – and I would really like to be a part of that effort.

Thanks so much and I can’t wait for this summer – counting down the days!

All the best,
Emma

And the third intern is...

Hello all!

My name is Corie White and I will be interning with People Helping People Global this summer for 3 months. I’ll be arriving just after my graduation from the University of Oklahoma (Boomer Sooner!) this May, and leaving in mid-August to begin my legal education at the University Of Oklahoma College Of Law, where I will pursue a joint degree of  Juris Doctor and Masters of International and Area Studies.

My undergraduate degree is in International and Area Studies with a minor in Spanish. My focuses have been Latin America, international development, and trafficking, specifically human and organs trafficking. As a junior, I spent 6 months living, studying, and teaching English in Vina del Mar, Chile. While there, I traveled extensively throughout Chile and Peru, with my highlight being hiking the Inca Trail. I have also traveled throughout much of Central America and the Caribbean.

I have a craving for travel and adventure that can rarely be satisfied, so I am thrilled to be heading to Nicaragua this summer- particularly since I will be buckling down for law school in the fall. I am a huge fan of Mohammed Yunus and the micro-loan model and am excited to see it in action first hand.

I am looking forward to the summer of a lifetime!

Best,

Corie 

New Summer Intern

Greetings from Austin, Texas!

My name is Becca Moore. I will be interning with PHPG this summer (from mid-may to early August) in Granada. Less than 2 months until I'm in Nicaragua!

I am in my second year of graduate school at the LBJ School of Public Affairs at the University of Texas at Austin. I will be graduating with a masters in Global Policy Studies with a concentration in International Development in December. I'm really excited to get out of the classroom and put my education to the test.

As an undergraduate, I studied environmental engineering at Rensselaer Polytechnic Institute in Troy, New York. My junior year, I studied abroad in Monterrey, Mexico. While I was there, I traveled extensively throughout Mexico- I actually traveled more in Mexico than I have in the U.S. (I hope my Spanish returns quickly!)

After graduating, I was itching to travel again, so I went to Thailand to teach English. I absolutely loved Thailand. I taught English at a high school in Lampang (a city in the north). I taught about 24 classes a week and had over 800 students! It was a bit overwhelming, but an amazing experience. While I was in Asia, I was able to visit China, Laos, Cambodia, and Nepal.

In Nepal, I volunteered for a month at an NGO called Environment and Public Health Organization, working on designing decentralized wastewater treatment plants on the Bagmati River in Kathmandu. It was there that I knew that I wanted to work in the International Development field. Volunteering in Nepal led me to grad school in Austin and eventually this internship with PHPG. I'm really excited to be working with PHPG this summer!

A New Intern Joins the Team

Hello PHPG enthusiasts!

As one of People Helping People Global’s newest interns, I will be living in Nicaragua from mid-May through August 2012. And I couldn’t be more excited! The more I learn about PHPG, the more I feel as though my values align with those of the organization, and the more passionate I become about helping this amazing cause.

As an undergraduate student at Skidmore College, I am dedicated to the study of Anthropology and Latin American Studies, both in the classroom and in my extracurricular activities. While building an academic foundation in fields that will aid me in my pursuit of international community development, I have found external outlets to apply all that I have learned from my professors, and to gain field experience. In an effort to improve the lives of my neighbors, I am currently administering needs-assessment surveys to the residents of local mobile home communities so that the Saratoga County Economic Opportunity Council can improve and broaden their services. I am also volunteering at a medium security correctional facility as a workshop leader to open up dialogue among inmates on issues such as employment, stress management, conflict resolution, and family reintegration. These opportunities have awarded me the chance to work with unrepresented and undervalued populations living right next door, and soon (although not soon enough), I’ll learn how to do the same in Nicaragua.

While my micro-lending internship with PHPG in Nicaragua will be a new and exciting experience, I am no stranger to the non-profit sector. From my collaboration with many different NGOs while living in Mexico, Peru, Ghana, and the United States, I have learned a good bit about how different organizations function. And People Helping People Global already strikes me as one of the most organized, well-intentioned, and efficient NGOs that I have encountered thus far. Their dedication to promoting sustainability, empowerment, and cultural pride is refreshing and inspiring. I can’t wait to meet everyone and to be a part of this incredible mission.

Thank you for this wonderful opportunity, and I look forward to helping others to make a difference in their lives through People Helping People Global.

Take care,

Phoebe