Accion Ambassadors Blog

Experience the power of financial inclusion


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Green Light Means Go?

Around a conference table early in the morning all of the asesoras, loan officers for Fundacion Paraguaya, are huddled in big puffy jackets and waiting for their training to start. Nancy Ramos, the head of the microfinance division, begins casually at 8:15am, even as cellphone ringing and late-comers sauntering in surprisingly (to me, at least) do not seem to disturb the flow of the presentation. (I often forget that a Katy Perry ringtone playing loudly in a meeting in Paraguay is not considered rude or offensive, and if you are on time to a meeting you will be waiting for at least 20 minutes for it to begin). When the training finally did begin, we learned how to help a client develop a “Plan of Business” then moved on to modules on “Personal Budget,” “Family Budget,” and “I am an Entrepreneur.”

The value the foundation places on individual financial success is a thread that runs through all of their business models and is part of what has intrigued me so much about the organization. Their mission statement reads: Sustainable, social business that promotes entrepreneurship and innovation, allowing families with fewer resources to rise out of poverty and join the middle class. Microfinance is just one strategy to support this vision of poverty elimination – a noble task and one that is the most difficult for do-gooders like me, who dream of changing the world. Continue reading


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Measuring Microfinance Impact

As ACCION Ambassadors, our mission is to document the impact of microfinance.

Let me share with you what my first week in Fundación Paraguaya taught me. I’ll shed a light on some other experiences I had in other places as a microfinance consultant.

“Fundación en Acción”

For our readers already familiar with the Fundación, I’ll be brief on what they do.

Fundación Paraguay is a 25-years old NGO, conducting 3 main programs: microfinance, self-sustainable agricultural schools, and youth business education. I’ll only discuss here the microfinance part. I will even narrow it only to its village banking part (making the bulk of clients: 70%). The village banking consists of women committees of 10-15 entrepreneurs each. There are over 2,000 committees, representing 32,000 clients. Women receive loans, starting from 100,000 Guarani’s ($25), up to 1,200,000 Guarani’s ($300) after a few loan cycles. FP also provides them with training (ranging from financial and business education, increasing your sales, business plans to interpersonal relations). Women are required to save money in order to educate them to do so. Unfortunately that’s not a service of the Fundación itself, as it is not a regulated bank enable to take savings, but a NGO.

The traffic light (Semaforo)

Last year, Fundación Paraguaya, -like many organizations maturing-, started feeling the need to measure their impact on client’s lives and to document it. A true impact study takes time (up to 2 years) and money, and results are often disputed. FP decided to develop its own tool to assess results on clients. They developed the “Traffic light” (Semaforo in Spanish), a clear and colorful picture of a client poverty level, through 50 indicators grouped in 6 dimensions. Poverty is not only assessed through incomes generated by the client, but also through education, health, housing, participation, and motivation. 3 colors are used (green, yellow and red) to clearly identify right away areas of improvement for the client and for the group. Continue reading


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Final Thoughts: Signing Off from Paraguay

As I prepare to head back to the U.S. this week, armed with new knowledge and new questions about microfinance, poverty and how to survive the often-terrifying Asunción bus system, I’ve been reflecting on what I’ve learned during my 10 weeks here.

There were days when I felt high on the potential of microfinance, eagerly absorbing the stories of clients who could serve as poster children for the industry. She tripled her income! The kids are going to college! Health insurance for the whole family! These stories were quite common, and the overwhelming hope evident in such narratives was contagious.

Here I am posing with Isabel, another FP intern (right) and Obaldo Arellano, a model client.

But there were other days when I wondered whether microfinance was a futile enterprise, plagued by problems that nullified the benefits for too many clients, at least in the group lending model. I witnessed many comité meetings where responsible members were forced to repay loans for irresponsible members, thus eliminating any profits the former group had earned during the cycle. I heard horror stories of tesoreras, or treasurers, disappearing forever with the group’s savings or loan repayment contributions. Oftentimes, as I documented in a previous post, a few late members of a comité would delay meetings for hours, thus sapping productivity from the rest of the group as they waited idly. Continue reading


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Microloans for High Aspirations: Student Loans at Fundación Paraguaya

1,000 students achieving their dreams in 11 countries.  All they needed was a few hundred dollars.

When Fundación Paraguaya granted a student microloan last week, it was also notable for its partner organization, Vittana. With this loan, Vittana reached its 1,000th student with a microloan. Founded in 2008, Vittana combines the model of crowdfunding microfinance with the belief in and passion for the possibilities of higher education in developing countries. After conducting pilot projects to ensure sustainable repayment rates, Vittana began loaning to students throughout the globe in 2009.

While in three years they have managed to create partnerships with 17 microfinance organizations and have made loans to 1,000 students, there is a much larger goal in sight.

Much discussion and support abounds for improving access to primary education in developing countries, but there is significantly less effort around making post-secondary education accessible. Most of us that have been fortunate enough to pursue higher education were able to do so, most likely, due to student loans. However, in many developing countries student loans are not available from the public or the private sector. This is a significant barrier to entry for many students that wish to further their education and career aspirations.

As Vittana works with local microfinance organizations to make student loans available now, their broader goal is to spur the student lending market in developing countries. This is what they call their “demonstration effect.” Vittana wants to demonstrate that students in developing countries are creditworthy and an important investment for development. Their hope is that the global financial community will take note and begin to offer loan products on a large scale to willing and able to pay university and vocational students.

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The Highs and the Lows: From Mbaracayú to Asunción

Road to Mbaracayú

From young campesina students with big dreams about their future and that of their communities to women in Asunción’s most marginalized neighborhoods using microcredit to help keep their families fed, it was a week of highs and lows. A moment of personal hope for those living in poverty in Paraguay, but also of frustration and coming to terms with the great challenges Paraguay faces.

Last Wednesday morning with 3 Fundación interns, we set off on an 8-hour bus ride to Fundación Paraguaya’s self-sustaining agricultural school, Mbaracayú Educational Center. Mbaracayú is a natural reserve in Eastern Paraguay which is part of the Atlantic Forest, most of which is located in Brazil, but also extends into Argentina. It is one of the most biodiverse areas in the world. The school is located inside the reserve and houses 130 girls aged 14-20 years old who study a high school curriculum of environmental science, including hands on learning in sustainable practices of animal husbandry, farming, and ecotourism. The students are not just involved in the production process, but also the marketing and commercialization of their goods and services.

Mbaracayú Natural Reserve

Upon our return on Friday I accompanied a capacitadora to a training in Asunción. Tired but inspired from our trip, I hopped on a collectivo with her to the neighborhood of Barrio Jara. I had not been to any neighborhoods in urban Asunción, so I was eager to meet an urban comité. When we first began walking into the neighborhood, a small child of about 2 years old was walking around barefoot and crying. He headed straight for a busy street and was only stopped by a man who grabbed his jacket.  A woman from the comité met us and he took the little boy by his hand. She asked him who his mother was as we headed up the hill and turned into a small alleyway. He eventually wandered off again.

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