I recently returned from a fellowship with Esperanza International. This Microfinance institution serves over 18,000 clients in the Dominican Republic and Haiti.

I had been conducting interviews with loan recipients for a few weeks and had met many inspiring associates; one in particular stood out to me:

Armando was eight months old when his legs stopped functioning. His family was very poor and couldn’t access the high quality health care that he needed. As an adult, he was stigmatized for his disability and relied on the kindness of neighbors and fellow church members to provide for his needs. However, with the help of microloans from Esperanza, Armando was able to become self-sufficient. He opened an electronics repair shop out of his home and began repairing motorcycles and cell phones as well as selling refurbished parts. As his business grew, he took on three young apprentices. He showed me two textbooks that he used to teach the boys math and chemistry because he wanted them to succeed in case they decided to attend high school in the future.

Armando is a shining example of what a real hero is made of. He refused to let his disability define his life and with the help of microloans he used his skills and talents to provide for himself but also mentor and educate the youth in his community. Imagine how quickly the world would change if we all “pay it forward” the way Armando does every single day.

I have repeatedly wondered this question with respect to natural disaster since I have begun working in Santiago with Esperanza International and Kiva.  What happens to microfinance bank members when natural disaster strikes?

In the case of the Dominican Republic, natural disaster comes often and in the form of tropical storm and hurricane activity.  Since arriving two months ago I have come across the stories of two individuals, each effected by natural disaster.

Gladys, mother of three, lost everything to tropical storm Olga in December of 2007.  Around midnight on a December evening the Tavera Dam collapsed on the Yaque River and allowed 1.6 million gallons of water a second to enter the surrounding communities.  According to Gladys, hundreds were killed.  She declared everyone was sleeping; it was  unexpected.

Due to the failures of the government infrastructure, the Dominican government has built a housing development for those affected by the collapse of the dam.  Gladys has now been living for nine months in this development and is beginning the process of re-establishing her nail salon with her first microfinance loan from Esperanza International.  In additional to free housing, Gladys is also receiving 300 pesos a month for each child living at home, four gallons of gas a month for cooking purposes, and insurance.  Despite the government’s efforts to aid this population it is clear it is a long road ahead.

Olga, mother of four children, has also suffered the effects of flooding and tropical storm activity.  In February 2009 tropical storm activity passed through Santiago and relentless rains persisted for seven days.  Flooding was inevitable.   Olga, as well as her neighbor and fellow member of her microfinance bank, lost their homes due to the flooding.  In the case of Olga and her microfinance bank, unlike the story of Gladys there is no government assistance.  Olga, on her third microfinance loan with Esperanza, is beginning the process of rebuilding.

Countless stories can be told of the effects of natural disaster amongst other cities in the Dominican Republic and throughout the world.  A trend appears to be evident however; the poorest of communities, due to financial restrictions, live in those areas most prone to the sufferings of natural disasters.  According to the UNDP 2004 Reducing Disaster Risk: A Challenge to Development report, “85 percent of the people exposed to earthquakes, tropical cyclones, floods and droughts live in countries having either medium or low human development”.  A cycle of disaster, recovery and disaster can often be seen that leads to the question of how microfinance organizations can best work in these communities.  It is a question I hope to learn more about as I continue to interact with these two women.

I wanted this post to be deep, intellectual thoughts that would blow all of your minds, but realize with only a few weeks of experience, I realize I don’t have any of those thoughts.  What I can offer is some observations I have about microfinance and poverty. It seems so two-dimensional to learn about something through a book or in a classroom when you can see it first hand.  Microfinance is no different.

One thing I have learned is part of the premise of microfinance: handing out money can many times be detrimental. On one occasion when confronted with a handicapped woman unable to work and buy her own food, a group receiving loans decided to support her with their savings.  Since their savings is a great sacrifice for that group, a wealthy businessman offered to cover her food expenses for a whole year.  Initially it seemed like a great idea but is not the best option.  The right motives can sometimes foster dependence and steal dignity.

Another thing I have learned is that we can all make a difference.  If you are reading this blog, that means you have a computer and the internet (or at least access to both).  That means you have money.  There are websites that allow their users to contribute money to directly fund loans for microfinance institutions around the world.  One such site is Kiva.org.  Members can contribute any amount that they want in increments of $25 and have the choice of getting their money back at the end of the loan, contributing to other groups, or donating the money to Kiva to cover operating expenses. Esperanza International works with Kiva but there are alternatives including LendforPeace.org, which was mentioned this past week on this blog.  For those who want to help poverty and make a difference have this opportunity to make a direct impact.

It seems like poverty can bring the worst out of people.  Poverty is a cause of theft, school delinquency, and even racism.  The Island of Hispaniola is comprised of the Dominican Republic and Haiti, which is the Western-hemisphere’s poorest country.  Many Haitians emigrate to the DR because of the greater opportunities not only in work, but also education and other areas.  The Haitians work for less and are often hired over Dominicans to save employers money.  In the Dominican Republic there are similar sentiments towards Haitians as there are in the United States towards Mexican immigrants.

Loans can spur growth and friendships.  One of my main duties is to interview clients about their life situations and see how a loan will affect them and then post that information on Kiva for the lenders.  Esperanza follows what Grameen Bank does in that we have individuals in groups that cross-guarantee each others’ loans, so when one member cannot pay the others cover for him or her.  This provides camaraderie among group members and is a great way to start friendships.  Between being grouped geographically, seeing each other at biweekly meetings, and the sense of a team working for a goal, these loan groups are a great way to develop friendships.  In every meeting I have attended I have seen a lot of laughing among attendees.

Little things we take for granted can drastically affect the way of life.  The best example I can think of is rain.  This past week it rained everyday.  Most of our clients do not own cars and have to travel by foot to get to meetings.  When it rains a lot, the dirt roads become mud roads, making travel difficult.  This can cause meetings to start late or be canceled; pushing back the whole day’s schedule for loan officers who often rely on public transportation or a motorcycle for travel.  A fellow myKRO blogger and HOPE/Esperanza intern, Krista Hoff, told me about a time she saw countless houses built under a bridge swept away due to the growth of the passing river.  A Kiva fellow I have worked with told me that traffic troubles caused by a mudslide cost her four hours traveling!

My experience here has been eye opening and I am really excited to see what else I will learn in the coming months!

My name is Kevin Halloran and I’m a new contributor here at myKRO.org. Ever since hearing about microfinance my freshman year in college I have been interested in exploring it further.  I decided to look into a internship with a microfinance organization and found an opportunity to work with a partner of HOPE International (Esperanza International) in the Dominican Republic for the next 3 months.

I am working closely with Kiva by updating the stories and information on the Kiva web page, making sure all of the loans and journals are posted.  In addition, I will help in the office wherever needed.  I will have the opportunity to interview clients and travel with loan officers to get first hand experience interacting with clients of microfinance.

So far I have been here a little over a week and have already learned so much.  I’m excited to see all that I will learn and experience in the next few months and will keep everyone updated on my experiences!

I took a trip to the Dominican Republic to visit my friend Kayla, who works for Esperanza International in their Santo Domingo office, about a month ago. For starters, I can’t believe it took me so long to finish this post, which I’ve had in a draft state for a few weeks, but that’s neither here nor there. The trip was my second time in the Dominican Republic and, as I said before, the county is gorgeous and rich in a culture worth experiencing. The trip included some fabulous beach time that I sorely needed (I’m from dreary Seattle after all), visiting with borrowers, and experiencing Dominican culture.

One of the great things about the third world is the kids. They are so happy and innocent. Coming from a culture where kids just seem to want the latest toys and gadgets, it’s refreshing to see children happy with what they have — or, more likely, don’t have. While in the DR, we visited two schools — one in San Pedro run by a lady named Milan and a smaller one (photo shown below) in Hata Mayor run by Sophia. Both Sophia and Milan are amazing women who have given so much back to their local communities. Their love for children is undeniable, and what they mean to their respective communities is nothing short of amazing. They are the true heroes in this world.

I had the chance to attend a Bank of Hope weekly meeting in Boca Chica and was extremely glad I did. Funding a Bank of Hope, which is a $5,000 commitment, is one way that individuals or  groups of individuals can donate to Esperanza. For those interested in donating smaller sums, you can do so through Kiva. Anyway, attending the meeting was a great way to get a better feel for how microfinance really works and to see the unbelievable things that microfinance institutions around the world are doing to help alleviate poverty. At the meeting, there were about 15 borrowers in attendance, roughly 11 of them women and a few men. The meeting consisted of an opening prayer, the loan officers (the ones sitting in the picture below) distributing and collecting funds, and some instruction regarding business and preventative health care. After the meeting, we were welcomed into the homes of a few borrowers to see what types of businesses they were running; everything from colmados (small stores) to sewing logos purchased in the city onto shirts to making shoes. These borrowers wouldn’t have the opportunities they do without organizations like Esperanza on the ground.

I also planned to pour a few concrete floors on the trip, but the admin component (transport, materials, lining up a family and date) didn’t quite get completed in time to make it happen on my trip. For those of us from the states, we take for granted how easy it is to arrange transportation, materials, and labor — in the 3rd world, a lot more planning is required to complete projects and bring them to reality. Regardless, the money I raised still went to a good cause — the kids in this video at Milan’s school in Hata Mayor now have chairs and desks for their classroom in the works.

To conclude my thoughts, I have absolutely zero doubt that microfinance is a key to alleviating poverty worldwide. Seeing the impact small loans have on the lives of real borrowers affirms the need to increase awareness for the benefits of microfinance, which was part of why I started myKRO.org. My apologies for taking so long to write a recap post of my trip, but at least I finally finished it. If you are at all interested in microfinance, I would strongly urge you to visit the 3rd world to see the real impact — once you see it with your own eyes, it’s impossible to ignore the opportunity to give people a hand up, not a hand out, and help individuals bring themselves out of poverty.

My name is Kayla Villnow, and I work for Esperanza International down in the Dominican Republic.  I have left a couple of posts, but not nearly as many as I could!  Being that one of my New Year’s resolutions is to contribute more frequently, I thought I’d start off with a question for the Mykro community… what do you think is better, a simple micro credit model, or a micro credit-plus model?

Just in case there are some of you out there who don’t exactly know the difference, I’ll start by explaining the primary differences.  First off, a micro credit institution (more commonly referred to as MFI’s) will administer micro loans to borrowers in both a group-lending model, as well as an individual borrower model.  The loan officer works with the borrower to collect payments and help the business along– and that is that.  This breed of MFI typically secures more outside funding, breaks even sooner, and even begins to turn a profit after a few years.

Moving along to our second point though, what is a micro credit-plus institution?  A micro credit-plus institution still will do the credit administration first,  but then after the credit, this breed of MFI believes that the poor need more than just money to tranform their lives.  Typical services to supplement the credit include discounted health care services, preventative health care education, literacy courses, vocational training courses, technology courses, youth programs for children of borrowers, life/disability insurance, and savings programs. The goal of providing this package of services is to help the  borrower acheive economic as well as spiritual transformation; the poor often suffer from low self-esteem, illiteracy, and many more issues that can be just as detrimental in their transformation as lack of capital is. Micro credit-plus institutions look to implement holistic and sustainable change in the lives of their borrowers.

Providing all of the above services definitely takes a toll on the particular MFI’s ability to reach self-sustainability.  But then you have to wonder, is that necesarily the  purpose of microfinance and microcredit?  Should the focus be to provide credit services to the world’s poor contingent only upon breaking even in a business model?

I worry lately that with academic giants like Stanford and Harvard chipping in their two cents on micro finance, things will move too far into the modern business mold, and too far away from the people microfinance should be helping.  Maybe because I work for a micro credit-plus institution I  am biased, but I believe that the benefits our model gives to the borrowers — the actual people we are working to help — far outweighs the negatives of not breaking even.

Microfinance was  born out of a dream to allow the poor to participate as productive members of modern society, and I believe it’s important to keep micro fianance human.  I worry that too many bottom lines, industry jargon, and stuffed up academians will take the plus right out of micro finance…

As so, in conclusion, I personally believe that micro credit-plus is a better model.  Although its merits will surely be deflated by hard numbers, theories and profit-minded people, I have seen the differences that it makes in real people down here in the Dominican Republic and Haiti, and those differences my friends, are how a micro credit-plus model keeps micro credit human.

The following story is submitted on behalf of Esperanza International, the interview was conducted by volunteer Travis Vaughan. Shely comes from a highly impoverished community on the north coast of the Dominican Republic; she is a Haitian immigrant.

Shely Perez has been an extremely influential leader her community, encouraging other women and small business owners to become involved with Esperanza. She says that in the past, many of her community members have been tentative about taking out loans due to the usurious interest charged by local loan sharks, but that they have all been appreciative and grateful for the opportunities Esperanza has brought them.

Shely has been with Esperanza for a bit more than a year, and has been an example of success and hope for many of the women her community, La Cienega, located on the North Coast of the Dominican Republic.

When Shely is not out selling clothes, she is attending the many needs of her seven children. She shares the responsibilities of earning an income for the family and caring for her children with her husband Chichi — as such, when Shely is at home taking care of the kids, Chichi works in construction, building small homes in their community. Shely has found that she has best been able to give back to her community by teaming up with other women from her Bank of Hope to provide business mentoring to those living nearby.

While receiving only a middle-school education before becoming a mother at the age of fourteen, Shely nevertheless has a natural knack for understanding business. The concept of profits and losses, recognizing a market, keeping detailed records, and the importance of savings all seem to come naturally to her. While thousands of women sell clothing in the streets of the Dominican Republic, Shely has found her niche selling used men’s clothing. By selling used clothing that consistently looks new, and for a lower price, she has been able to rise above the majority of the competition and be one of the most successful clothes vendors in her community. A recent loan enabled her to purchase a motorcycle, which in turn has vastly increased her ability to reach new communities, and attract more customers. Her wise investment in a motorcycle coupled with her ability to secure a niche in the used clothes market has allowed her to establish relationships with clients whom not only expect her regularly, but whom also bring new business to her and bolster her reputation. This type of success and growth has set her apart from the many competitors in the clothing sales industry.

Shely was elected as the bank president (which is now at 25 members) one year ago. At each meeting, she opens the group in prayer, organizes all of the payments, does the final count of the money before passing it to the loan officer, and translates between Spanish and Creole. The majority of the women in her particular group are Haitian, and many do not speak Spanish yet. Shely’s dedication to her peers and their success is evident as she diligently reads them their responsibilities and rights as Esperanza associates at every meeting. As questions arise amongst her peers, she diligently seeks out the answers from her loan officer, striving to thoroughly facilitate communication between the loan officer and her group members. Shely is a true leader, and will undoubtedly play an important role in helping others to improve their own lives.

One of the unique ways that Shely shows compassion and empathy for others is through her sales on partial credit. While some may discredit this act of compassion as nothing more than strategic business, Shely has altruistic motives for offering clothing to clients when they can’t pay. She recognizes the poverty that surrounds her and is quite familiar with what it is like to be short of money, she believes is her duty to offer a necessity such as clothing to those who don’t have the means for paying for it upfront; when possible, Shely does not deny someone the dignity of being clothed. Through her due diligence and the strong relationships she has formed with her customers, she consistently recovers all of her debts while providing a basic service to those who otherwise would not have the means to pay for clothing articles in full.

Shely’s greatest challenge has been her living situation. Several years ago, Shely found herself living with her husband and, at that time, five children in a tiny rented home. Not only was there not enough room to sleep, but fighting and conflict between neighbors was constant and made for an unsafe environment — it was not a suitable place to raise children, she said. Leaving that home and purchasing the land to build their first home was no easy feat on her husband’s small income. However, today she stands with pride next to a home that she calls her own and gets even more excited as she points to the back half of her house that is partially completed, and constructed entirely cinder-block. Her own dream house is becoming a reality as we speak (s house of cinder block and concrete withstands the hurricanes and tropical rainstorms that leave so many poor families homeless in the Dominican Republic every month).

Shely has risen up as a true community leader in her church and community. She attributes much of her new found success in the last year to the confidence and sense of purpose she has gained as a small-business owner and president of the local micro-bank. Two years ago, she said that she was depressed and felt helpless as she and her husband struggled to feed and clothe their children on his salary alone, not being able to participate as an earner for her household was frustrating and demoralizing. Now, Shely not only stands with more respect in her house, but also stands as a respected recognized leader in her church and community alike.

Shely, her husband and their 7 children

Shely’s family standing in front of the new house they are building out of concrete block, which the income from their loans is helping make possible

It’s a blistering hot day. A child runs by you, nearly naked, his skin smeared with mud and powdered by dust, his bare feet pattering down a road littered with garbage.

Under the shady branches of a mango tree sits an ebony faced woman, fanning herself, rearranging the countless pieces of gum and candies she has for sale in a deteriorating wooden briefcase.

You look over your shoulder. Now you see a lightly-framed man atop a rickety old bicycle, his face worn by years in the sun. He pedals slowly towards you, dragging behind him a cart full of brightly colored peppers, squashes, carrots and eggplant.

Now you look forward, and you realize that on just this one road people are running all types of businesses—they offer candies, vegetables, used clothing, tires, gasoline by the quart—you realize that you can change the faces, and you can change the country, but the micro enterprises you see on this very road, and the poverty you feel are commonplace to at least 90% of the world’s population. The very thought that so many people live so meagerly bears heavy on your heart, but then you realize that although their businesses are small and they are poor, these people are using their skills and creativity to make a living, and that they have the same potential to succeed as you do, the only difference is that they do not have the same access that you do, to education and credit.

In today’s world, in a modern and developed world, credit is an undeniable necessity. To say that credit has played a central role in the development of the richest nations, companies and entrepreneurs is indisputable. But what about the poor nations, the 90% of the world who lives outside of that ‘developed’ realm of life? We talk and debate year after year about how we can help our worlds poor, how we can eradicate hunger, how we can lift the poor out of poverty—and as we spin in circles trying to find the answers, we forget that the answer is actually very simple, that the answer lies in the potential and abilities of each individual out there, that it is not us, the ‘rich’ who are going to change their lives, but rather they themselves. The vast majority of the poor are intelligent and creative individuals, individuals that when given basic skills and tools that the ‘developed’ world has at their fingertips, prove that they too can excel as entrepreneurs, and productive members of their societies.

At myKRO.org, we believe that micro credit, the extension of small and manageable amounts of credit, and business training to the worlds poor is a dignifying, sustainable, and realistic way of alleviating poverty and extending the opportunity to a better future to our world’s less fortunate.

We invite you to read more, and to share your thoughts on how we can use this wonderful tool to make our world a better place. If you are interested in helping out, there are a couple ways to help:

• If you know anyone passionate about microfinance, let them know about myKRO.org
• For those who are interested in contributing as authors, please see our “Write for myKRO.org” page.
• Spread the word with your blog or other social network