The day after mañana

By Sally Bolton, KF11, Mexico

Mañana holds a special place in Mexican culture. The frustrations of mañana (tomorrow) when it comes to dealing with mechanics, tradespeople, the phone company or any branch of Mexican bureaucracy are well documented. When will the internet be reconnected? Mañana. When will the doors be put back on my apartment? Mañana. When will this rubbish be collected? Mañana. Just about the only time when mañana won’t cut it is when you are asked to pay a ‘fine’ to the traffic police. Your suggestion that you pay the ‘fine’ mañana at the police station will not be well received.

But instead of complaining about mañana I actually want to celebrate it. Sometimes mañana can be a great thing, particularly when it comes to microfinance.

Kiva’s field partner CrediComún seeks to distinguish itself in the crowded Mexican microfinance marketplace by offering a very fast turn-around on loan requests. The average time from receiving a loan request to disbursing the loan is two days.

A quick response to loan requests is extremely valuable to micro-business owners. It allows them to take advantage of new business opportunities, respond to spikes in demand or fill custom orders.

Niño de los Milagros in the uniform of the Mexican Football Team World Cup 2010 at the Parish of Tacuba, Mexico City Source: WikiMedia Commons, Photographer: AlejandroLinaresGarcia

Let’s say you’re a seamstress, and you receive an order for 50 pint-size Mexican football uniforms for Niño Dios (Child Jesus) figures (not a hypothetical situation, people really do dress up religious figures in football gear). They need to be ready in time for Mexico’s next game in the World Cup (well, this part of the scenario is hypothetical, sadly Mexico is not progressing to the quarter-finals). You don’t have enough material on hand to fill the order. The fabric supplier knows you are under time pressure, and offers to extend you credit at an effective annual interest rate of over 500% (not at all uncommon). You could turn to a pawn shop for instant cash, having to leave a sewing machine as collateral. Or, if you were guaranteed a response within two days, you could take out a microloan at a much, much lower rate of interest.

CrediComún’s two-day turn-around is extraordinarily fast by any standards. Most microfinance institutions (MFIs) in Mexico take between seven and 15 days to disburse a first loan. But it doesn’t mean that CrediComún is cutting corners when it comes to vetting the loan. Each group loan request goes through a thorough evaluation, starting with the loan officer who collects the required information and official documents. The loan officer then presents the loan request to a committee at the branch office, and has to argue the case for why a loan should be offered to the group. Once approved by the committee, the administrative support staff scans the documents and enters the loan information into a custom-designed management information system.

Instead of waiting for documents to arrive mañana, the head office instantly has access to the loan request. They run credit checks through the two consumer credit bureaus in Mexico, and they give final approve for the loan cheque to be issued. Thanks to CrediComún’s strong partnerships with five commercial banks in Mexico, borrowers can request which bank they want their loan cheque to be issued through. Being able to cash their loan cheque through the closest bank offers borrowers added convenience, and means they can invest their microloan in their business even faster.

CrediComún ultimately wants to reduce the loan disbursal time to one day. Imagine applying for a microloan today, and being told you can have the cheque in your hand mañana. That’s something that is sure to be popular in Mexico.

To lend to a micro-business owner today, visit the Kiva website: www.kiva.org

A small sample of competing credit institutions in Tierra Blanca, Veracruz