(meant to be sung, complete with hand movements:)
The Itsy-Bitsy Spider climbed up the water spout
Down came the rain and washed the spider out
Out came the sun and dried up all the rain
And the Itsy-Bitsy Spider climbed up the spout again …
This song always comes to mind when I meet clients who seem to be trapped in the vicious cycle of poverty, loan dependence, and over-indebtedness. Meeting these clients makes me sad and disappointed. Sad that they are usually reluctant to talk to me although I try to tell them that I am not there to charge them money, only to charge a “plática”, or conversation. Disappointed that they are in such dire economic straits (whether by personal mismanagement of funds, or by a bad turn of the cards), that they can not make their payments. These clients are a statistical necessity, I suppose, representing the small industry-wide percentage* of micro-loan recipients who do not (or cannot) comply with their loan obligations.
There are other clients who, over many years and multiple loans manage to sustain themselves, but whose businesses grow meagerly if at all. It is clear that not everyone is an entrepreneur, and that not every business can succeed, but I still squirm in frustration for these itsy-bitsy spiders, who “luchan y luchan” (struggle and struggle) to climb out of the slippery spout of poverty, only to be inundated with bad sales or a family illness and washed right back down.
Then there are other clients on whom the sun shines brightly, like “Paty”. I met Paty last month when I wrote a journal update for her loan, and I was amazed by her story so I asked loan officer Manuel if we could make a special trip to meet with her again.
Paty is a married mother of four, who used to work in a cigar factory, but saved bit-by-bit and took out a Prisma loan to start her own “pulpería”, or small grocery store. Paty filled up her store with everything from basic household goods to bicycle repair parts to sodas, and because the store is right off a busy highway, business was good from the outset. After successfully repaying her first loan, she took out a second loan to begin purchasing sodas in bulk. She was selling a great deal of soda from her store, and decided to start acting as a soda intermediary, warehousing crates in her shop and saving up to buy a truck to distribute them herself. Saving up with these ventures and taking out yet another Prisma loan, Paty decided to take advantage of the vacant lot behind her home to build a hotel to house passers-by. Now that the five-room (five-star, if you ask me) hotel is built, Paty has used her most recent Prisma loan to start a “comedor” or restaurant to feed the hotel guests, and anyone else who stops by hungry.
After she gave us a tour of all the different projects, we sat in the shade of the comedor; I wrote my notes and impressions while Paty and Manuel talked-shop. Manuel made the observation that the comedor looked pretty empty (stock-wise and customer-wise), and Paty admitted that she has been trying to think of ways to promote the restaurant but that she is short on energy and time because she has been juggling all of the businesses. If you can believe it, Paty and her husband are running this four-business conglomerate on-their-own. Despite their success, Paty says she still has a lot to learn about business, which is why she likes chatting with Manuel when he stops by.
Manuel’s official duties as a loan officer are to find new clients, evaluate them, distribute the credit, and make follow-up visits to delinquent clients. But his title as “asesor de crédito”, which translates to credit advisor or credit consultant, better reflects his informal responsibility to share business tips with his clients. Manuel comes from a family of entrepreneurs and farmers and spends his 55-hour work-weeks observing and analyzing business best-practices, so he’s a great source of knowledge on everything from business administration to settling employee disputes to maximizing crop harvests. His is notably proud of clients like Paty, but his urgent piece of advice to her was to “HIRE AN EMPLOYEE!”
This super-star self-taught businesswoman has an inherent understanding of good business practices, like detailed bookkeeping, diversifying her products, and seizing good opportunities when she sees them. But Paty admitted being guilty of certain oversights, like tarrying so long in hiring an employee. She also said that she is having trouble navigating the stricter regulations and higher taxes being placed on the restaurant and hotel. She looks to advisors like Manuel for suggestions, but says she wishes that she had access to professional development programs or classes.
Though Prisma does not, there are many microfinance providers that do offer these services to clients; some even require clients to complete a series of training courses as part of the loan agreement. Such projects and programs, in conjunction with access to credit (and maybe a sprinkle of Paty’s entrepreneurial fairy dust) might just increase a microfinance client’s chance of success. Though recent press points out that micro-credit is not actually the magical development solution it is sometimes promoted to be, if these itsy-bitsy spiders can develop the know-how to secure their safety nets against unexpected downturns, they can focus on spinning their webs UP, ever-closer to the sun.
*as of June 2009, the overall percentage of loans past due > 30 days was 4%
Kati Mayfield is serving her first Kiva Fellows placement with Prisma Honduras. Check out the Prisma entrepreneurs currently fundraising on Kiva.
