How to be a Not-Microfinance Borrower

Recently I attended a centre meeting with one of PMPC’s loan officers. I sat down beside a woman who smiled broadly but did not want to give me her name or have her picture taken since she hadn’t prepared for it, which, in the heat and humidity of the Philippines, I could certainly understand. I asked her if she was a borrower and she said no, she wasn’t. She was a member of the centre, which meant that she was a PMPC-client but only had a savings account. She re-paid her last business loan but decided not to take another one out. When I asked her why not, she told me, laughing “Pagod! Mag-pahinga muna ako!” (Tired! I’m going to rest first), very kindly answering me in Tagalog instead of Visaya sensing I was still more with my local dialect.

That got me thinking about microfinance and its critics. We Kiva Fellows have responded in depth and with much honesty about the criticisms of microfinance and whether or not it is an effective poverty alleviation tool. One of the charges leveled against it is that the poor don’t know how to run a business: they take out loans, don’t know what to do with the funds, get over-indebted and run themselves ragged trying to repay it. Ultimately, they turn against microfinance and never want to take out another loan again. It’s true, that does happen sometimes but sometimes it doesn’t.

In this woman’s case, it didn’t. What happened to her was that she’d taken out a loan, and run a successful enough business that she could now close it down. She had her children to take care of her, as is the custom here, and in addition to that, she’d saved enough over time and through her savings account at the MFI so she could now support herself during this break. Sometimes, meeting a microfinance borrower who has stopped being a microfinance borrower is proof enough that it is working.

After reading both the detractors and the devotees, I know I can be a little of both but meeting smart and savvy PMPC-clients gives the advocates an edge this time. This woman made an active decision rather than being caught hopelessly in a cycle out of her control and she was an active member of her community, putting together the holiday decorations and always attending meetings. The chance to rest gives her the chance to celebrate the holidays. Happy New Year everyone!

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