Monthly Archives: December 2009

Beard Difficulties

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In my previous life, I worked at a job that made growing a beard difficult.  Every time I’d let it grow on vacation, I’d get close to an acceptable length, but still below the threshold of respectability.   Naturally, when I learned I’d be working with Negros Women for Tomorrow and Kiva here in the Philippines, I looked at it as a great opportunity to reinvent myself as a man with a beard.  On the street every day, people walk around with beards knowing that they are part of an exclusive fraternity, having chosen to distinguish themselves from the rest of the clean-shaven world.  On this trip, I would not pass up the opportunity.

The process began on November 18th, two days before I left work.  I had two weeks before work began in the Philippines, a narrow window for a full bloom.  The above photo was taken on December 20th, showing a month of unchecked growth.  In the first two weeks, I already had a nice base, extending from my sideburns, down my cheek, and underneath my chin.  Halfway down my face, the pattern forms a right angle, before dropping precipitously past my mustache and down to the area below my chin. Continue reading →

25 Years and Counting

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In August of this year, Negros Women For Tomorrow celebrated its 25th anniversary.  The organization commemorated the occasion with an extravagant party titled “Handum” (Dream) with 6,000 attendees, including staff, borrowers, partners, and a pre-recorded message from the godfather of microfinance himself, Muhammad Yunus.  Yunus catapulted microfinance into the mainstream in 2005 when he won the Nobel Peace Prize for his work with Grameen Bank in Bangladesh.  Naturally, most people (including myself until a few months ago) think that it is a fresh, new approach to economic development and poverty alleviation.  At 25 years old, however, NWTF is hardly fresh or new.

As a means of immortalizing the 25-year anniversary, the organization created a book of 25 of the most inspiring stories from its borrowers.  In this blog, I’ve tried to lay out the history and mission of the organization to frame or provide context for other stories.  The foreword to the book, written by the founder of the organization Dr. Cecilia del Castillo, offers a much clearer description of the organization.  I quote it in its entirety here: Continue reading →

Mr. Inasal and Me

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The food in the Philippines garners mixed reviews from expats, but, as with most things, they might not be eating the right things.   Beef is harder to come by here, and usually much more expensive.  Fish, white meat (chicken), and the other white meat (pork) are the meats of choice in the country.  And everything comes with rice.  Rice and eggs for breakfast, chicken and rice for lunch, rice and anything else for dinner.  When in doubt, I know I can’t go wrong with old faithful – grilled barbecued chicken on a stick.

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Yunus v. Compartamos

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The following is an article I wrote for The Inductive.

Within the international development community, a debate for the heart of the movement recently came to the fore with the IPO of Compartamos, the largest microfinance institution in Mexico.  Divisive and controversial, Compartamos’ decision to sell shares and publicly list on an exchange is perhaps the clearest manifestation of where the two sides diverge.  One side, led by Muhammad Yunus, founder of the Grameen Bank and winner of the Nobel Peace Prize in 2005, contends that, at its core, the sole fundamental mission of microfinance is poverty alleviation.  The other side argues that the goal must be maximizing profit and, more specifically, ROE (return on equity) – extending services to a previously unbanked population and expanding via revenue growth.  Just about everyone has an opinion on the decision and, at the very least, it allows for a great philosophical and economic debate about the most effective way to assist the billions of people who live below the poverty line.

It’s necessary to first give a little background on microfinance and its role in economic development.  Without going into too many specifics, microfinance describes the provision of financial services to individuals below the poverty line with no material collateral.  Microcredit, specifically, refers to the disbursal of small loans – generally between $50 and $1,000, depending on the sophistication of the institution and the industry in general (average loan with Compartamos is $623) – to individuals that cannot access credit via the traditional banking system.  Given their small size, the cost of servicing these loans, as a percentage of the total, is high.  Remember: it costs the same amount to service a $10,000 loan as it does a $100 loan (salaries, office materials, etc.), and these microfinance institutions often have to track down the borrowers on a weekly basis to collect the interest and principle.  In other words, interest on microfinance loans are higher than one might think appropriate.  In the United States, 50% for a loan may seem exorbitant.  But, when you look at it relative to the alternatives (up to 800% from loan sharks) and the fact that these loans are expensive to service, high interest rates are a necessity.  But at what level are interest rates exorbitant, even for an MFI?  This is the question at the heart of the Compartamos debate.

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Dancing for Filipinos

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In the Philippines, or maybe just here in Bacolod City, people enjoy celebrations.  Bacolod is called the City of Smiles and is known for its annual MassKara Festival held in October.  The tradition began in 1980, in response to a sugar crisis plaguing the island of Negros and a ferry-capsizing that killed over 700 Negrenses.  To pull the island out of a pervasive gloom, the government organized a weeklong festival in which the participants wear smiling masks.  The festival is a nice metaphor for the general outlook of the island and its people.

In a country that is 80% Catholic, at an organization that values family, community, and faith, celebrating the birth of Christ provides a great opportunity to let down your proverbial hair and celebrate.  A Filipino Christmas party is a highly choreographed spectacle of extravagance, filled with singing, dancing, and revelry.  Participation is required by all, including your humble correspondent.  Imagine bottling the spirit that drives some people to sing karaoke, and unleashing it on a Christmas party. Continue reading →

Grameen Bank Replication and the Principles of Microfinance

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For a brief overview of the GBR (Grameen Bank Replication) methodology and its use by NWTF/Project Dungganon, see here.

Microfinance institutions (MFIs) are often affiliated with larger networks, which help to secure funding, offer back-office services, and provide an operations model.  These organizations – Grameen Foundation, FINCA, Accion International, and World Vision, to name a few – partner with MFIs across the world to replicate the model, be it village banking, the Grameen model, or another.  These networks span countries and continents, and operate as umbrella organizations for the global microfinance community.

NWTF founder Cecilia del Castillo with Muhammad Yunus.

Negros Women for Tomorrow Foundation (NWTF) is affiliated with Grameen Bank.  Its founder, president, and CEO, Dr. Cecilia del Castillo, received her doctorate in psychology in the United States before returning to the Philippines to create an NGO that would serve women in her native island of Negros Occidental.  A meeting with Muhammad Yunus convinced her to found NWTF in 1984, with the goal to “help women achieve self-sufficiency and self-reliance, particularly in Negros Occidental’s low-income and depressed urban and rural communities.” In 1989, NWTF introduced Project Dungganon (“honorable”) and Dungganon Bank Inc., NWTF’s traditional microcredit lending program, which most people associate with microfinance.  (In reality, microfinance describes a much larger suite of financial services, including savings accounts, insurance, and rural energy delivery, capital equipment assistance, and personal loans, but that is for another post). Continue reading →

The Galvez Family, Pt. 1

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Success in microfinance is difficult to measure because progress occurs incrementally and may take a generation or more to manifest.   Usually, the benefits of microfinance – improvements in healthcare, education, and quality of life – are only visible over a longer timeframe.  For industry practitioners and evangelists, the tangible success stories among recipients of microloans are valuable proof of its efficacy.  On a recent trip to Valladolid, I was fortunate enough to meet one of the most successful NWTF clients in the foundation’s 25-year history.

The Galvez family around the dinner table

The visit to the Galvez family farm was the last stop on a three-day trek through Pontevedra and the surrounding communities.  The borrowers I’d met previously mostly operate small businesses that are reliant – directly or indirectly – on the rice- and sugar-farming industries that dominates the region.  Homes are modest in size, made from bamboo, aluminum and concrete, with few rooms and, more often than not, earthen floors.   And of course, like 80% of NWTF’s clientele, the women live below the poverty line.  The Galvez family – Milagros, the matriarch, Lorito, her husband, and their three children, Lawrence, Lori, and Lori Mae – once lived a similar life, until a loan from Project Dungganon (NWTF’s microcredit loan program) allowed them to grow their small sari-sari store into an empire.  Eight years ago, the family lived in a house made of bamboo.  With the profits of their many businesses, the Galvez’ were able to upgrade to something better.

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In The Field

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The road to a borrowers home

I spent the last three days in “the field,” a term used to describe the front lines of microfinance where the money is distributed to the clients of the banks.  Beginning early Tuesday morning, I set out for the town of Valladolid, a rural municipality about 50 km from Bacolod City.  The road snakes along the coast through increasingly less urban communities, until reaching Pontevedra, where the NWTF (Negros Women for Tomorrow Foundation) Valladolid branch is located.  Linda, the branch manager and former loan officer, took me to see the first of 15  borrowers we would try to track down over the course of the three-day trip (with a 67% success rate).  Riding in the metal grates on the back of a tricycle, where I’d spend most of my trip, we rode to small village called a barangay to interview several women about their business and loan.  The community here is small, and stopping for directions usually produced a guide that brought us directly to the home of the borrower.  Home constructions vary from 2-3 room bamboo nipa huts, to shanties with roofs of corrugated aluminum and floors of dirt, to cement frames with electricity, running water, and decorations on the walls.  Over the course of the week, I’d see all types represented.  Housing loans are popular among borrowers, and many homes have been built with loans from NWTF.

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Organized Chaos

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Here in Bacolod City, and the rest of the Philippines for that matter, traffic laws are non-existent.  There seem to be no rules governing how you act behind the wheel – only that the horn is your friend, and is especially useful for letting the other guy know that you don’t intend to stop.  Last night, I went swimming with one of my coworkers and her mother at a resort in town (with an Olympic size pool, complete with a water slide, 30-foot statue of a giraffe and an elephant, and a zoo with an old crocodile that, according to my host, may or may not be dead).  On the way to the pool, we narrowly escaped a few accidents.   When Beth, the mother of my coworker, Liz, unsuccessfully tried to pass a jeepney with a bus barreling down the other lane, she shrugged it off.  “Whoops – almost didn’t make it,” she laughed.  When I relayed the fitting description the owner of a bike shop in town used to describe the traffic patterns here – “organized chaos” – she and Liz laughed again (Filipinos like to laugh, particularly here in the city of smiles).  “That may be, but everyone knows the rules here.”  And, as far as I can tell, it seems to be true.  When you drive here in Bacolod, honk your horn when you come to an intersection.  If you get there first, or see even a slight opening, go for it.  Drivers here are masters of the quick brake, mostly out of necessity.

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