Porque no todo esta tan lindito como en las fotos

Some things I have learned about FINCA Nicaragua that surprised/saddened me:

1) Collateral. In the main office of FINCA there is a medium-sized room filled with tables, sewing machines, a refrigerator, and many, many televisions.* (There is also a sign taped to the window of the room listing prices.) These objects are the collateral left by clients who did not repay their loans. "But wait!" you say, "I thought the whole point of microfinance was that the clients don't have collateral and rely instead on social capital to develop credit." Ah, how naive, how innocent you are... this leads us to the second point...

2) Repayment. I don't know where FINCA got the 97% repayment statistic in their brochure but it is certainly not from the credit officers. According to one credit officer I talked to, many people do not repay the loans, and the women who make payments on time have their savings accounts confiscated to cover the debit. This understandably makes them less willing to establish savings accounts. The basic village banking idea is that the good payers will pressure the bad payers, but, as "my" officer explained, they do not want to make enemies out of their neighbors.

The worst part is that (segun mi informacion) FINCA continues to give loans to those who do not pay, undermining any culture of good credit. That said, right after we had that conversation I interviewed by far the poorest client I have talked to so far. She and her two daughters had no bed; they slept on concrete blocks. She was going to have a growth in her eye operated on at a free Cuban-run clinic, but slipped out of the hospital at the last minute because she couldn't afford to miss even one day of sewing (on a manual machine, in a room illuminated by a single light bulb with electricity given to her from the neighbor next door.) I have to ask people if they have all kinds of domestic appliances - blender, refrigerator, rice cooker. She said no to everything, then shyly volunteered, "the only thing I have is a thermos." That thermos broke my heart. I wanted to repay her loan then and there.

3) One of Lauren's clients, who was the treasurer of her banking group, said she was leaving FINCA for two reasons: first, the Managua slums are basically small towns, where everyone knows everyone's business. Unfortunately, they're extremely dangerous small towns filled with armed robbers. So when she walks out of her house after a village bank meeting to deposit the money in the bank, everyone, including the robbers, knows she's carrying a huge amount of cash. Then when she gets to the bank - they don't let her in the building. She has to make the deposit in the parking lot.

For some reason, she objected to this treatment.


*If you want to look at things in the most positive light, you could say that FINCA's job is to convert the excess TVs of Central America into working capital for small businesses... a worthy goal, from a certain point of view...