PHPG's Partnership with the Pulsera Project

This post is written by Trent Shelton, the new Program Coordinator in Granada. Trent has taken over for Kyle Engelken, who had the position from January until July of this year. PHPG would like to thank Kyle for all of his hard work and dedication to the organization the past six months. Kyle’s passion for microfinance and his desire to help others showed through his high quality of work. Kyle will continue to stay active with PHPG while completing his MBA at William & Mary in Williamsburg, Virginia. 

Trent Shelton - Granada Program Coordinator

It is an exciting time to be part of PHPG! We have many projects in the works and a few more that have recently hit the ground running.

In June, the PHPG team conducted several business training sessions with current clients. Reviewing business concepts like basic accounting and inventory management, the clients left with new accounting notebooks and ideas to implement into their businesses.

Another exciting project is our new partnership with the Pulsera Project. The Pulsera Project’s mission is to educate, empower, and connect Nicaraguan youth with US students. They accomplish this by taking in street kids, teaching them the skills to create bracelets and other artisans, and finally selling the products through their fair-trade business in the US. The project has been hugely successful and the artisans are sold at over 350 schools in the US.

Many of the Pulsera Project’s clients have the desire to start their own businesses, to go off on their own and become entrepreneurs. Combining Pulsera’s successful clients and PHPG’s microloan expertise, a partnership was created.

On June 17th, our team headed over to Pulsera’s beautiful office, located just half a block east of Parque Central. Having already received the loan solicitations and business plans, we met with all 10 potential clients to discuss the microlending program. Juan Carlos, our head loan officer, walked through many examples showing the amount of the loan, the monthly payment, what the entrepreneur would need to earn, etc. The group of borrowers consists of young adults between the ages of 20 and 30, and the businesses rang from making hammocks, to buying and selling cheese, to creating a chicken coup. The entire group was very involved in the discussion and had many great questions. There is no doubt that this discussion made the loan seem more real for the entrepreneurs. The group was excited. They know that this is an incredible chance to create something new; an enormous opportunity but also a huge responsibility.

Pulsera Project clients reading over the terms of their loans.

After conducting interviews with each client, our team evaluated the loans and made decisions on the terms of each loan (total loan amount, repayment period, collection dates, etc.). To continue with our group lending strategy, the clients created three different loan groups named Pulsera 1, Los Colores, and Los Hamaqueros.

On July 1st, we distributed the loans to the excited group. After reviewing the loan terms and having each individual sign the loan contract, Juan Carlos dished out the money. Some, being the joking types, used this as an opportunity to act like they just won in the gameshow “The Price is Right”. All in good humor!

Juan Carlos (left) distributing the loan payment to Carlos Meneses. Carlos has started his business repairing and selling cell phones.

Living just a few blocks away from the Pulsera Project office, I often see the entrepreneurs. Out of curiosity, I asked around just a few days later if they’ve used the money yet to start the business. Within 48 hours, everyone I asked had already purchased tools, inventory, etc. The hammock makers had purchased the tools and materials needed to start producing hammocks. Another gentleman, named Marcos, had already started his business of selling artisans on La Calzada, the main pedestrian street in Granada. He had already purchased a table and a solid selection of inventory to sell to tourists looking for a souvenir from Nicaragua.

I truly look forward to keeping in touch with the clients to see how their businesses are going and to work with them in the process. The exciting partnership between the Pulsera Project and PHPG has now officially hit the ground, and we look forward to working with their incredible organization more in the future.

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.

New loans, improved businesses, and more help in Nicaragua

Kyle and the PHPG team just finished distributing to six new loan groups in Granada (28 individuals in total) for a total of 117,000 Cordobas or around $5,000. The average loan was roughly $175. For folks living on close to $2 per day, these loans are quite significant. As we’ve mentioned in previous posts, PHPG assists these families by providing them enough working capital to increase confidence and financial transparency to a point where that they can focus on medium to long term goals of taking their business to the next level. It was great to see a handful of repeat borrowers this time around. The individuals that successfully completed a prior loan with PHPG have access to more credit and enjoy a faster turnaround time to receiving their loan.

One repeat borrower stood out. Her name is Gema Lisseth and she received her second loan with PHPG for 5,000 Cordobas. When the PHPG team arrived at her house to check on her inventory purchases before distributing the second half of the loan (she sells new and used clothing), we were blown away by her brand new store-front constructed in front of her home. She mentioned in her interview that she wanted to create a little “tiendita” but we weren’t expecting such a quick turnaround. Gema had been selling clothing from a cart that she takes around the neighborhood, but with another loan and more confidence she decided to sell some out of her home too. We could tell how proud she was to show us her new shelves and clothing rack.  Kyle looks forward to stopping by her house each Friday for payment collection.

Gema Liseth & Isela in front of their new storefront

Next week PHPG will be distributing a new round of loans to repeat borrowers on Las Isletas in Lake Nicaragua. A total of 112,000 Cordobas will be distributed across 26 individuals that qualified. The majority of borrowers in Las Isletas are Pescadores (fishermen) requesting loans to fix their boats, purchase new nets, and buy salt for preservation. Many of the fishermen aspire to save enough money to buy their own boat in the future. For now, most loan participants rent their boats and pay the owner in fish after the day’s catch.

PHPG team disbursing new loans

Kyle is keeping busy with all of this, but luckily he will have a few new volunteers joining him over the next month. A few university students are coming down in May for summer internship positions and Kyle is excited to put them to work. There are a lot more improvements to be made and it will be nice to have a fresh set of eager eyes on the project.

January 2013 Update on Nicaragua Happenings

Wow...where do we start? Things have been really hectic with end-of-year fundraising, but we had another great New Years Eve event in Richmond, VA and received tons of generous donations to our holiday drive. Thanks to all of you who donated!

Damaris & Regional Coordinator, Chris Fay,
in front of Damaris' brand-new fuel-efficient oven

While Isabel and I were working state-side on the fundraising, our three Regional Coordinators, Lana, Kyle, and Chris have been doing all sorts of good work in Nicaragua.

Lana and Kyle have been tag-teaming our larger base of operations in the areas surrounding the colonial city of Granada. They both bring strong skills to the table, and they both have hit the ground rolling. Lana joined us in December right before the holidays (which as she found out is an incredibly impossible time to get things done, but they're fun nonetheless), and Kyle arrived in Granada a couple of weeks ago.

They've been visiting all of our communities and soaking up all there is to know about PHPG's presence there. They've been working with our Nica employees, Manuel, Juan Carlos, and Tatiana, to come up with ways to improve our current systems and provide more services to our clients. They have some great cost-effective ideas about how we can provide more than just capital to our clients, which include business trainings and partnerships with other NGOs. We'll keep you updated about their progress as they continue their good work over the next few months.

After observing and training with us for a few weeks in Granada, we sent Chris up to northern Nicaragua to head up a couple of projects there. He's been working on tightening our connection with our clients in Piedras Coloradas and spearheading a partnership with a sustainable technologies organization, named EOS International.

Things are going quite well in Piedras despite a horrible growing season last fall. Our clients have replanted and maintained good repayments. With the coffee harvest in full swing, things should continue to get better. Chris will be interviewing potential clients over the next month or two in order to expand our services to others in the same region.

Lorenzo & Chris in front of the newly-installed
drip irrigation system in Soledad de Cruz

Our most exciting new project that Chris has been working on is a partnership with EOS International. Nine new clients from the town of Soledad de Cruz (in the department of Matagalpa) have had new fuel-efficient ovens or drip irrigation systems installed at their homes. These new technologies are being used to help our clients start or expand small businesses.

The way it works is that the clients receive the technologies upfront, along with some start-up capital (ranging from $50 to $65, depending on the technology). EOS is responsible for creating and installing the technology as well as following up with the clients to make sure it's fulfilling their needs. We are responsible for facilitating the lending and collection process. The technologies have been installed and the first month of collections went quite well.

All-in-all, things are going incredibly well right now. I can't wait to update you on the new projects that we're working on!

Thanks for reading,
Alex