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Learning while doing: Guja’s experience measuring impact in Guatemala

As I’ve been knee deep in technical office work the past couple of weeks, I decided it would be more interesting to share someone else’s story.  My colleague Guja Lucheschi is doing a three month project with Genesis this summer and generously offered to share a bit about her experience with the blog readership.  Guja is from Italy and spent the last year getting a masters degree in microfinance at Solvay Brussels School in Brussels.  Prior to that she worked in regional politics and studied political science and international relations.  The following is an excerpt from a conversation we had discussing her time in the field:

Me: So, what attracted you to microfinance in the first place?

Guja:  I’ve always been interested in poverty and development and have been quite disillusioned with the other possibilities, so I thought I’d try something different like microfinance: selling something to the poor to make them richer.

Me: How did you end up at Génesis Empresarial?

G: My professor and another NGO from Luxembourg are conducting a research project on “green” microfinance.  They are conducting a large general research on microfinance and specifically on payment for environmental services throughout Central America.  They had already done a lot of work in Nicaragua and they wanted to evaluate how a certain project worked in other countries.  The general purpose is to evaluate the impact of the project, both for rural development and on the environment.  They had a contract with Genesis and asked the class if anyone was interested in doing this research, so I applied.

Me: So how are you trying to evaluate the project?

Yeah, that’s the big question!  I kinda work on two levels. One is how the project is implemented and the second is the effects, how have the clients been impacted: environmental awareness, changing production behavior, and diversification of income. But there could also be other effects that weren’t foreseen. It’s hard to measure the impact because it’s hard to find the nexus between one of the components of the program and the behavior of the clients. I think about things like is it because there is money that they change their behavior? Will it have long term effect?

What do you see you  final deliverable looking like?

For Genesis it will be, here is what happened and here are my recommendations for the future.  For my thesis, it’ll be more complicated.

What did your typical day look like when you were in the field?

I would meet up with an asesor (loan officer) or a facilitator sometime between 6 and 8 am depending on how far the community was.  It would be between 1-3 hours of travel, mostly on motor bike.  We’d have a list of clients that we had prepared the day before and we’d go house to house interviewing the clients.  Most of them spoke Q’eqchi, so my colleague would have to translate.  I would interview between 2-7 clients per day, depending on distance between clients, availability of clients, actually finding them, and of course the weather.  For instance, women are a lot easier to find than men since the men are often working in the campo.  Also, an interview could last between 20 minutes and an hour since sometimes the conversation would stick just to the questionnaire and sometimes they would talk a lot and offer lunch.  They like to ask me questions too like my mother’s name, if I’m married, about my family. Then I’d go back to whatever town I was staying in and would basically go to bed so early because I was so tired!  I’d put the interviews in the computer so I didn’t forget anything, and then go to bed to be ready for the next day.  We’d go out 3-4 days a week and the other day(s) I’d review what I did during the week.

Guja interviewing her first client in Caín, in the north of Guatemala.

Guja interviewing her first client in Caín, in the north of Guatemala.

Sounds exhausting!

Yeah, but it was a good exhausting. Continue reading

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Traffic and Microfinance in Lagos, Nigeria

Last Sunday, I set foot for the first time in Lagos, Nigeria, accompanied by my two great supervisors, Francis (from Uganda) and Kwashie (from Ghana ).

What a busy and lively city, was my first reaction after the 45 minute flight from Accra.

We landed to the Lagos’s Murtala Muhammed airport (MMA). MMA is a bit larger than the Accra Kotoka airport, and, according to the federal airports authority of Nigeria (2006), it is the country’s busiest airport with nearly 900,00 passengers traveling through the domestics and international wings in just a three month period. Some construction was taking place to expand the airport when we arrived, mainly to the parking lot. The city of Lagos is among the most populated cities in Africa with a population of approximately 21 million. I was in awe when I realized that the population of Lagos is almost equal to the population of my whole country, Cote d’Ivoire, which has approximately 22 million people. Lagos is made up of a collection of islands connected by bridges. You can see a multitude of transit buses called “danfo” or “molue” (like the troto in Accra) getting people from one end to the other, but also intriguing are the keke napep tricycles on the same straight roads where others wait at bus stops.

One thing that surprised me as soon as I got into the city, was how some churches and mosques are very close to each other, only separated by one street, in some cases. And, I was even more surprised when registering for a mobile sim card, I was asked to specify my religious affiliation.

Generally speaking, the financial service industry in Nigeria is very developed, with many established banks and financial institutions. I was pleased to see how the Nigerian financial institution, United Bank of Africa (UBA), where I interned last year from the Dakar office, is leading the market in Lagos with its many branches throughout the city.

But, more importantly, I was there for the Training Need Assessment (TNA) of staff in the Nigerian microfinance industry, the project that I have been working on from Accra since I arrived. It was here that I would brave the intense traffic of Lagos to conduct the assessment. The TNA consists to gathering information around the training needs of select heads of staff from leading MFIs in Ghana and Nigeria. Then, that information is used to develop new programs, customized mainly for middle management, to address the needs that were identified in the TNA. The goal is to strengthen and develop the skills and capacities of the staff at local MFIs. Better staff lead to better operations, and that is good for the clients.

The methodology for the first part of the project is pretty simple: either send the online survey by email, conduct a phone interview, or, interview the MFI staff in person. It is the latter that brought me to Lagos. As we all  have experienced, face-to-face interaction is the best means of communications. In just five short days, I visited seven different Nigerians MFIs (including Accion partner, Accion Microfinance Bank), and  interviewed staff from all areas of their work: the heads of  the Human Resources department, the Operations department, and the Credit department, and the Branch managers of four institutions. Everyone I met with was very accommodating to the project and provided great input from their personal experiences and job priorities related to their own training needs and those of the MFI in general. At some places, I was faced with additional security measures, because of the latest attack in Abuja. Roads and streets have written names, signs and numbers to ease your driving, although when driving in Lagos traffic, patience is key.

After a very fruitful five days experiencing life, traffic and microfinance in Lagos, I left and headed back to Accra. Now it’s time to get to work on consolidating all of the information I collected … Continue reading

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Getting settled in Paraguay

My wife, Karen, and I arrived in Asuncion on Sunday morning on an overnight flight from Miami. We were tired, but ready for a complete change of daily living. Our introduction to the city began with a cab ride to our hotel apartment in traffic flowing without the benefit of stop lights or stop signs, and in deference to some impressive potholes.

On my first day at Fundacion Paraguay, I met with Sara, the office director who briefed me on generalities, and then with Don Miguel Angel, Manager of the support staff of the foundation. He described his interest in having me help set up a Monitoring and Evaluation (M&E) section within the agency, identifying staff requirements and functions. Considerable research has been done on their M&E needs that will greatly facilitate addressing this task. Specifically, focusing on local requirements that reflect the staff capacities and local realities.

During the week, I spoke with most major section heads and I was so fully briefed that lunch became a welcome break giving me time to digest the information and hear remaining questions in my mind. I asked for times in the coming second week to meet again with staff to clarify, correct misunderstandings and ask questions.

In addition, I had two site visits to the field: one to a school an hour away in the ‘chaco‘ and another to a regional microloan office also about an hour out of town in the other direction. The school was remarkable: the (high-school aged) students were extremely interested and focused—no horsing around at all! They were professional and interested in a presentation on how to make charcoal briquettes from agricultural waste that can then be used for cooking in place of the use of wood. These charcoal briquettes reduce smoke, save trees, and the method can be easily taught. The method can also serves to augment family income.

The second visit, to the microfinance office, included a trip to an outlying group of women — a committee where each member receives microloans from the foundation. Each committee elects a president to lead the others, and a loan officer from the foundation is responsible for each committee. This particular loan officer (or, ‘asessor’ as they say in Spanish) is responsible for the numerous committees in her area, totaling nearly 1,000 women. Continue reading

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Loan collections: Up-close and personal

Three weeks go by very quickly in a new place, and as I was lucky enough to arrive at Swadhaar during the monthly 6-day collection period, I was eager to dive right in! For years, I have discussed and even written about the role of the loan officer at a microfinance institution – arguably the most central role in microfinance, without which none of the work that we do would be possible – and I was ready to finally see one in action.

The caution I received came as somewhat of a surprise: I was welcome to join, as long as I could keep up. Little did I know this would be no easy task!

Microfinance is a ‘high-touch’ industry. While advances in mobile banking, digital field applications, remote point of service devices, and new lending models such as Accion’s own pioneering project Avanza can significantly reduce the resources needed to offer microfinance products, the simple fact remains that we are servicing a population that borrows less, saves less, takes less insurance – and yet the cost to service this population is as high as if they were making larger transactions.

Of course, in simplified terms this is the very reason the work that we do is so important. Regardless of whether you want to borrow $100 or $100,000, the cost commitment from the bank will be the same and thus these smaller sums aren’t worth their time. So microfinance steps in to provide financial access to those who, in reality, need it most.

Pots and pans neatly stowed in the home of one client near the Borivali branch, who used her loan to finance a small cooking business.

After working for Accion for three years, I know all of this. And yet I was blown away by the sheer effort it takes to service these clients.

Collections days begin early at Swadhaar. While as far as I can tell many businesses in Mumbai begin around 9:30 am, we (myself and fellow Ambassador Alexa Allen) were told to be sure to be at the branch office in Borivali, about 26 kilometers north of Mumbai, by 9 sharp. When we arrived the office was already bustling with pre-collections activity and it was clear that those present had been on location for quite a while.

Most Swadhaar clients have opted for a monthly collections schedule, which implies that all loan officers must transact with each individual loan recipient or joint liability group ‘leader’ on at least a once-a-month basis. (There are two exceptions to this rule: some clients do travel to the branch office to make their payments, and others participate in the Airtel mobile money pilot, an important and growing service that allows clients to make loan payments on their mobile device). Even still, at the end of a typical collections day at the Borivali branch each of the 6 loan officers have visited upwards of 30 group leaders representing nearly 170 individuals.

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The Future of Microfinance: Transparency, Accountability, and Client Protection

Over the last decade, the microfinance industry has been challenged over its efficacy as a development strategy, and whether lending practices authentically reflected the needs of clients. In the Ambassador’s training a month ago (mentioned here by Kate McGrath) at Accion’s Headquarters in Boston, we discussed how the industry has changed in response to those criticisms. A major part of those changes was spearheaded by  leading microfinance organizations, institutions, and networks like Accion, who came together to create a series of principles that protect clients and institutions by ensuring that financial products enable client development and manageable risk.

The Smart Campaign was the result of those collaborations, and independently developed a series of Client Protection Principles for microfinance institutions (MFIs). MFIs now have the option of going through a rigorous certification process to improve their transparency and efficiency, and harken back to the development roots of the industry (or at least of Accion and other non-bank actors).

The seven Client Protection Principles cover all facets of the lender-client relationship, and in order to be Client Protection Certified, organizations must meet all principles (a current list of certified organizations is available here). The following is a summary of those principles (adapted from here):

  1. Appropriate product design and delivery

Organizations provide products that do not harm clients—products and methods of delivery are designed to best accommodate the needs of clients and potential clients. Continue reading

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The two things new loan officers need to know

“When you go to a new client during to gather information about his business, how do you ask him about his equity in the business?” Tito, Akiba Commercial Bank’s (ACB) Training Manager, began during the new loan officers training on repayment capacity analysis. “Most of the time the customers[clients] do not know the technical terms [like, formal financial concepts] but you need to let them understand what you are looking for, so you can get the information” Tito explained.

ACB’s new loan officers training is very extensive and is designed specifically around a common understanding of their current clients. I had an opportunity to attend a session on financial and non-financial assessment in the repayment capacity analysis session. Here are the two things that I found most important for all new loan officers to know:

1. Processes and communication must be client-focused 

Every concept covered in the training was broken down into terms and language that the client can understand. Loan officers are taught the basics of balance sheets and income statements. But those tools are structured and designed in a way that the loan officers can easily obtain the relevant information they need about the business type from the client himself. “Clients may not understand or even know what a balance sheet or income statement is, so we have to make sure that we ask questions that they can understand and answer” said Tito

 2. Non-financial assessment skills are of crucial importance

“Suppose the client’s financials are sound. How do you go about knowing if the client is willing to pay or if the client is dishonest about his willingness to pay?” asked Tito. Tito stressed the importance of understanding the non-financial aspects of the client’s application too – and how to go about collecting information that would help the loan officer assess this part of the client’s application. Multiple case studies and scenarios were used in which a typical ACB client and loan officers were each asked to decide how to assess the client’s willingness to pay. Neighborhood references at the client’s business and residence are usually very indicative in assessing the willingness to pay. “The neighbors usually know.” Continue reading

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How Zoona keeps it real

In Nyanja, one of Zambia’s 73 official languages, Zoona means “it’s real!” or “it’s true!”—an exclamation to emphasize fact.

After spending seven days in the field, traveling over 2,800 kilometers, and helping train 18 Zoona tellers, I’m noticing how Zoona is creating real results even in far-flung regions of Zambia, differentiating itself from other MNO-operated competitors. I’ll share three insights gleaned from my fieldwork:

1) Zoona is the only Zambian mobile money company that views its agents and tellers as its main customers. One of the most crucial factors in a mobile money company’s success is the quality of its agent network (source). Through its training program, Zoona seeks to sharpen the acumen of its 500-plus agents, helping agents make informed business decisions. In development speak, we’d term this as “capacity building” and “harnessing human capital.” As an intern, I will be working on this end, designing new entrepreneurship- and management-focused trainings to empower agents in their businesses.

At a teller training session in Mansa, Luapula Province: Mildred, a teller, learns how to perform a Zoona money transfer.

At a teller training session in Mansa, Luapula Province: Mildred, a teller, learns how to perform a Zoona money transfer.

2) Zoona provides unique customer-facing services to its agents. Through Kiva, crowd-sourced loans of up to 35,000 kwacha help agents add to their float (defined nicely here by a former Ambassador) or to cover sunk start-up costs, such as the cost of a branded Zoona booth. Knowing that agents in rural areas face greater liquidity challenges, Zoona is now deploying Zoona Cash, an innovative reconciliation tool that allows agents’ float levels to drop below zero so long as they re-balance within 24 hours. These are services heretofore unseen in other MNO-operated mobile money operations.

So far, Zoona’s results have been amazing: According to CEO Mike Quinn, Zoona’s transactions have grown 739% since February 2012, when Accion and others raised the first round of Series A investment.

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