Great Expectations, Unexpected Revelations

When Kiva asked whether I’d consider a Fellowship in the Dominican Republic, my first instinct was to head to Google. I’d never been to the Caribbean and knew very little about this small country. After my initial search, Google asked whether I’d like to view some images of the DR and lured me in with 4 or 5 thumbnails. Each contained something that doesn’t exist in my country (the UK): the sun. I don’t think I got past the first page of pictures. I sat there mesmerized by contiguous images of palm trees, white sand and idyllic emerald sea and sent my response to Kiva: “Yes!”

Okay, it wasn’t quite that simple. I actually did quite a lot of research into the Dominican Republic. I thought that it sounded like a fascinating country with a large demographic that could really benefit from microfinance. In addition, Kiva had asked me to work with Esperanza International – Kiva’s field partner on the island of Hispaniola – to develop presence in Haiti. Here, extensive research was not necessary. There was no shortage of publicity surrounding Haiti’s terrible plight and I was glad to accept a fellowship in a country that deserved all the support it could get.

Paradise Found, Paradise Lost

I arrived in the Dominican Republic ten days before the start of my placement. After spending a couple of days in Santo Domingo – the DR’s rumbustious capital – I jumped on a bus and headed to the Samaná Peninsula. I wasn’t disappointed. While a boat ride or long trek were required to reach the most beautiful beaches, I would either find myself in the company of a few or completely alone. My days were spent alternating between reading my book and swimming in the sea. It was bliss, and the Google Image imprinted on my mind had lived up to expectations.

After a week at the beach I travelled back to Santo Domingo to begin my Fellowship. From that point on, my paradisiacal image of the DR began to subside. But not in a bad way. I haven’t been here long – 3 weeks in the country and 2 weeks on placement – but the best thing about my time so far has been the surprises, the unexpected.

Esperanza International welcomed me with open arms. I spent two days at their headquarters in Santo Domingo before moving to my current location, San Pedro de Macorís, a ‘working town’ located in the south-east of the country. In Santo Domingo, it was the roads that took the most getting-used-to. On previous trips I’ve visited cities where the traffic seemed particularly manic (Bangkok springs to mind), but Santo Domingo really takes the biscuit. Not only do all forms of transport seem dangerously overcrowded but the ‘rules’ of the road appear paradoxically lawless.

I arrived at Esperanza International’s San Pedro branch on Wednesday morning. San Pedro does not appear on the first page of Google Images. My guess is that you’d have to scroll through about 100 pages to come across it. Actually, I doubt it would appear at all. But I love it here. San Pedro is a loud, throbbing, dusty market town thronged with cluttered stalls and swerving, reckless traffic. The stuffy daytime air is dominated by the raucous buzz of rattling motorbikes while barking dogs and the odd confused cockerel assume control at night. A shortage of running water is a real issue and mass electricity outages occur on a daily basis. In almost 2 weeks in San Pedro I haven’t encountered a single tourist. I don’t think that’s likely to change. This, for me, is the real Dominican Republic.

Group Loans

I hadn’t realised that the vast majority of Esperanza’s clients are not individuals but large groups, or ‘Solidarity Banks’. Bank size ranges from 10 to 40 members and they are predominantly made up of women. To make things easier, Banks are sub-divided into ‘Groups’ of 4 or 5 people. Often, when an Esperanza loan appears on Kiva.org the group will be one or more of these Groups as opposed to the entire Bank.

I assumed that individual loans prevailed at Esperanza because group loans only tend to make up around 10 to 30 percent of the total loan portfolio on Kiva.org.* Of course, this figure is somewhat misleading. Assume that there are a minimum of 4 borrowers per group (there are often many more) and you realise that, more often than not, group loans constitute more Kiva borrowers than are represented by individuals on the site.

Despite applying for a loan as a group, the request of each member of a Solidarity Bank should be seen on an individual, case-by-case basis. Individual loan amounts may vary significantly. While one member may be taking out his first loan another may be on her fifth. The members will likely be investing in different types of business. Each member will be hoping to use the loan to overcome his/her own list of challenges. Each member will have a personal set of aspirations for the future.

In the short time I’ve been working at Esperanza, the advantages of the group loan model have become clear. It’s an efficient way of distributing loans and collecting repayments. For the latter, Esperanza’s loan officers travel out to the field to meet with Banks on a biweekly basis. For loan disbursement, Esperanza actually asks that Bank members travel to the office to receive their loan, a journey that can exceed 30km for those borrowers in the San Pedro region. As such, I’ve been able to explain Kiva to borrowers by logging on to the site and taking them through it, something that would not be possible in the field. For those borrowers who have already appeared on Kiva.org, it’s been great to log on and show them their loan profile and the Kiva members who funded their loan.

Loaning to a Bank also means that delinquency rate is low. Esperanza’s Kiva clients currently have a 100% repayment record and only a 3.17% delinquency rate. The reason for this is that if a borrower has not managed to raise the necessary funds for a scheduled repayment, the other members of the Bank (or, more likely, of his/her Group) are expected to cover the loan. And they do. If they do not, members know this could jeopardize their chance of securing a future loan. This does not stigmatize Bank members. Rather, its effect is one of bolstering solidarity. Finally, Bank meetings provide a great platform for loan officers to train, educate or communicate a timely message. Over the past two weeks, loan officers at Esperanza have used Bank meetings to educate on how to protect against cholera.

There is one obvious drawback. While Bank meetings are rarely dull, they can take a LONG time. Borrowers often have to walk a long way to get to a meeting and have a propensity only to set off when the loan officer arrives! Borrowers wait until the meeting to hand their designated group coordinator what they owe, and as money is passed around the room things can get extremely confusing and squabbling can occur. Also, Dominican ladies love to chat! If one member starts off on a tangent it can take the loan officer a long time to get everyone refocused on the matter in hand. As a result, if a loan officer has 4 meetings in a day, you can bet that the last meeting will start a lot later than planned.

The ability to provide loans to individual clients is important though, and Esperanza provides this service as well. More often than not a borrower approaches Esperanza as an individual because they require a larger loan than is usually offered to members of a Solidarity Bank. Often, these individuals began borrowing as part of a Bank and then left to secure a larger loan. However, there will also be occasions when there may not be a Bank in the vicinity or the individual cannot join a Bank or attend the obligatory meetings due to personal circumstance.

Microfinance creating choice

It’s far too early for me to make any definitive judgement on the effectiveness of microfinance. That said, my preconception has already changed. Previously, I saw the benefits of microfinance mainly in terms of business growth. This, in turn, would mean the borrower could afford a more comfortable life for him/her and his/her family. As it happens, business growth is just not straightforward and other – often unforeseen – factors need to be considered. It’s wrong to think that successive microloans will always mean that a borrower can continue to grow his meagre street stall into a busy shop.

The real positive that I’ve witnessed so far is that microfinance gives borrowers a choice. One borrower I met used to work in a kitchen but, being asthmatic, the fumes from the stoves were having a degenerative effect on her health. She used her loan to set up a beauty salon and is now much happier as a result. Another borrower used to sell food but was losing money because customers who bought on credit (due to not having sufficient money at the time) were not paying her back. She used her loan to set up a fruit juice business. She much prefers making fruit juice and does not lose out because customers can always pay the full, lesser amount up front. I’ve been most touched by a borrower who lost everything when his house burnt down and used a loan to get back on his feet.

I’m really looking forward to the rest of my Fellowship and further unexpected surprises. For those of you wondering about Haiti, I’m going to remain in the Dominican Republic for the time being. I’ll be monitoring the cholera situation and will also be paying close attention to the presidential elections on November 28th.

I’ve talked a lot about pleasant surprises, altered perceptions and discovering the real Dominican Republic. That said, you can be sure that I’ll be heading back to my paradisiacal beaches come the weekend.

* I arrived at this statistic through random viewings of the site and is therefore only a rough figure.

By Nick Hamilton, KF13. Nick is serving as a Kiva Fellow with Esperanza International in the Dominican Republic and Haiti

Want to become a member of ‘Team Esperanza – DR and Haiti’? Click here.