I Travel The World Microfinancing Entrepreneurs
My earliest memories are of living overseas. My parents moved to Ecuador to work as missionaries when I was two years old. We spent the next decade living in a small town on the edge of the Amazon rainforest. Our town was relatively poor and rural – no shopping malls or fast food chains. And I remember how the main roads in town changed from dirt, to paving stones, to asphalt over time. I didn’t realize it then, but my time growing up in Ecuador was central to who I was.
Even after we moved back to the United States, my parents had always chosen their jobs and where our family lived based on the extent to which they could help people who were disadvantaged. It’s not too surprisingly that this passion stuck with me.
When I went to college, I chose to study International Relations. I wanted to learn as much about the world as possible. I found that I was especially interested in the field of international development – strategies to help countries and communities improve their physical, economic, and social state with the ultimate goal of poverty alleviation and well-being – sometimes called “human flourishment.” My college internship was with Opportunity International – a non-profit network of microfinance providers in over twenty countries around the world.
What is Microfinance?
Microfinance is, at its simplest, banking for people who do not qualify for loans, otherwise. This means offering loans, savings, insurance, and more – but all on a “micro” scale – smaller loan amounts, savings balances, and insurance premiums.
Let me start by saying that not all microfinance is good microfinance. Practices such as payday lending (high-interest loans on short notice that help you make it to your next pay check) or loan sharks that often hurt people more than they help them are examples of bad microfinancing.
However, there are also hundreds of socially-conscious finance companies (cooperatives, savings and loan companies, even banks) around the world that specifically cater to people living in poverty, providing them with access to capital to grow their businesses and a safe place to save their money.
Why aren’t normal commercial banks doing this? The typical answers are that it’s too risky to lend to poor people (hard to find addresses and contact information changes frequently) and the reward is too low (the loan amounts/savings balances are too small). This is where socially-conscious companies, often partnered with non-profits (like Opportunity) come in.
Opportunity works with our partner organizations (the microfinance institutions, or MFIs) to design products and services that address the specific financial challenges facing disadvantaged people. For example, one barrier to getting a loan is a lack of collateral, or a guarantee. To overcome this barrier, many MFIs offer Group Loans, a group of people (usually women) from a single community co-guarantee each other’s loans instead of taking on the risk personally. In this situation, the pressure to repay comes more from other members of the community, who can work out more flexible repayment together were someone to default.
Also–this regular meeting time acts as a great setting for trainings on business skills, managing finances, and more. Many of these Trust Groups also take on community projects. For example, one of Opportunity’s Trust Groups in Colombia just built a school in their neighborhood. And by that, I mean literally purchasing the materials themselves and assembling a two-room schoolhouse from the foundation up–brick by brick.
A few things I love about microfinance an approach to poverty alleviation.
1.Microfinance gives people dignity.
Microfinance is not charity. It simply gives them access to resources (capital, business information, etc.) that wealthy people already take advantage of, only catered to their specific needs and demands. Additionally, many microfinance institutions specifically look for ways to help marginalized groups in their communities–whether that be empowering women, ethnic, or religious minorities.
2. Microfinance is sustainable.
A well-run microfinance institution does not need grant funding to break even. Instead, money these institutions lend out is returned with interest that covers staff and business costs–then is lent out again. Again, much different than your typical charity work. This means grant funding can get directed towards designing/testing new microfinance products and services instead of just covering day-to-day costs.
3. Microfinance is highly adaptable.
Specific products and services are created for particular countries, regions, and markets (specific businesses like agriculture, education, etc.). For example, in Ghana, our MFI partners offer Susu savings, which is based on traditional money lending and savings practices that have been in West Africa for centuries, where a money lender visits you daily at your home or business to collect saving or loan repayments in smaller amounts. The only difference is that now, these traditional practices have an institutional guarantee behind them.
But does microfinance actually work?
I think so. Small loans help people grow their businesses, and savings help people weather financial shocks. Financial measurements like “portfolio at risk” (loans that are past due on repayment) are closely monitored to make sure that clients are not being given loan amounts that will overburden them or too many loans at the same time. But I’ll talk about what we’re learning more in a minute. First, back to my story.
Fast forward to the end of my internship with Opportunity International. They offered me a volunteer position for five weeks in Ghana interviewing our microfinance clients, despite the fact that I had gotten married only four months earlier, I accepted the job and left.
The Hardships of Getting a Job Internationally
Why, exactly? Entry-level jobs in international development can be tough to come by. Most organizations value experience traveling internationally as much or more than education, meaning that even people working out of offices in cities like Washington D.C. are expected to have some experience working and/or travelling abroad. This is especially tough for students coming straight out of college, so when I saw an opportunity to travel, I jumped at it.
But what does working abroad in international development mean? Well, my time in Ghana was difficult. It was my first time traveling abroad without any expat or missionary community. I lived and worked in Kumasi, the second largest city in Ghana, where I didn’t speak to a single other foreigner–which got pretty lonely! Even though the official language of Ghana is English, most people in and around Kumasi speak Twi–one of multiple local languages spoken in Ghana. Even in my office, where everyone could speak English, most communication – especially casual chatting – was all in Twi. It felt pretty alienating at times. Despite this, I was thankful for the chance to be totally immersed in a new culture and for the many people that went out of their way to make me feel welcome.
I also got a real taste for what running a microfinance institution looks like in the day-to-day. I got to meet and interview over 100 clients, plus interview all the leadership at the institution to help them write the history of how they started the institution and how deeply embedded their social mission is. The name of the institution is Sinapi Aba, or “mustard seed,” based on the biblical parable (to have faith like a mustard seed, which grows into a giant tree). This was the faith they had twenty years ago visiting rural communities, talking to local leadership, and gaining support for their vision of extending financial services to the poor. (They’re now one of the largest microfinance providers in Ghana, and internationally recognized for their quality of services and dedication to the poor.) It’s also a vision for their clients – starting with small businesses, and watching them grow and flourish with access to capital and training.
I’ll be honest–learning how to interact with people who are disadvantaged–especially when working through an interpreter! In Ghana, for example, many of the people that I met immediately demanded that I help them or a relative move to the United States. I honestly didn’t know how to respond to this. One time, in a moment of sheer panic, I made the mistake of telling someone I couldn’t help because I was “too poor”–which I was, but only by U.S. standards. (Straight out of college living off of savings and my husband’s part time job.) Don’t worry–she gave me the talking to I deserved for this serious gaffe!
Since then, I’ve learned best how to interact cross-culturally and cross-socio-economically by watching my colleagues work in the field. It should be simple, right, just treat them like the fellow human being that they are! But it can be so much more difficult than it seems! From watching and learning, I’ve learned a few things. First, eye contact, smiles, and active listening (even when you’re waiting on a translator) go a long way. Second, talk about things that matter to people anywhere–things like family and community.
Requirements of My Job
After working for free an entire year, I eventually got a job offer within Opportunity where I am now a research associate (yay!). In a nutshell, I work on a team that’s responsible for seeing (1) If our microfinance services are working and (2) how we can improve them.
The answer to both of these questions is, obviously, research! In my role, I am assigned either a topic. Example: Understand girls’ and women’s lives in the developing world better. Or a specific research question like what are the benefits of our loan product to school owners in Ghana and Uganda, for schools and the families of children who attend?
These are topics that have either been raised as an issue by our partnering institutions, Opportunity leadership, the broader microfinance industry, or our own team. They then receive funding from a donor.
Donors range from wealthy individuals to foundations. For example the Gates Foundation or MasterCard Foundation to government organizations like USAID, UK Aid. From there, we select the best research methods to work on the question.
We either train in-country staff to run the research or hire a consultant (if it’s more rigorous and needs an unbiased research team). After the research has been completed, I analyze the data we’ve gathered, pull out the key findings, and use these to offer recommendations for Opportunity in general, and the specific partners that participated.
The process is more fast-paced than academic research, where you wait for the peer review and publishing process.
Some of the exciting things my micro financing team has learned over the past couple years:
- The amount of money someone saves with a microfinance loan cannot be predicted by their age, gender, or religion. Instead, clients chose not to save because they felt like they didn’t have enough money. The solution? Design savings products that incentivize savings, like EduSave – a savings account that provides insurance for your kids’ education (pay school expenses should a parent die or become seriously injured) once you reach a minimum balance. (Learn more)
- Financing private schools improves enrollment rates for girls. In Uganda, we gave private schools business loans. The improvements these school owners made (building classrooms, dorms, gender-separated bathrooms) improved high school girls’ enrollment by 17% more than schools that did not get a loan from us. (Learn more)
- Providing small-scale coffee farmers in Uganda with loans and access to fertilizer increases production by 58%. Over the same three-year period, production declined for coffee farmers not receiving our services. What’s more, 92% of our women agricultural finance clients say Opportunity is welcoming to women and 81% have experienced increased decision-making power at home because of Opportunity (Learn more on women and ag; agriculture)
- Opportunity is serving low-income clients. One study we did found that 80-85% of our clients in India (sampling three MFIs) lived on $2.50/day or less. (Learn more)
What I Love About My Job
At any non-profit it’s also pretty common to become involved in other tasks besides research. In the past year, for example, I’ve done everything from event planning to graphic design. Personally, I don’t mind this. I get bored doing the same thing too many days in a row, and I like learning and being challenged in this way. The salaries of a research associate ranges from $40,000-$70,000/year.
My favorite part of my job, hands down, is getting to connect with people from around the world! Because our partner organizations are almost exclusively locally staffed, I’m meeting and working alongside colleagues that understand the local context in each country. Plus, when I get the chance to go and visit in-person, I have the opportunity to go and hear from our clients themselves. In the past year I’ve been able to visit our partnering organizations in Colombia, India, Ghana, and Uganda.
Traveling to a new country and interacting almost exclusively with people from that country–especially those who are middle- and low-income, is far from the typical tourist experience. For example, this past February I was in Cartagena, Colombia helping to set up a research project. Before I caught sight of the colorful colonial architecture or Caribbean beaches, I was on the opposite side of the bay in a former squatter’s settlement with no running water and homes constructed of salvaged plywood and corrugated tin. Taxi cabs refuse to drive through the community for fear of being robbed, so we travelled to and from the closest main road on the back of motorcycles. After meeting a few of the families in the community, they walked us up to the highest point so we could see their favorite view–across the bay to the condo-lined coast of Cartagena. Many of the residents in this community travel two hours by bus to their jobs in these buildings.
This past summer, I also got the chance to interview Aunty Maggie–a shop owner who lives in the suburbs of Accra. She started selling packets of soap at a table on the side of the road. Now, she owns her own fully-stocked shop constructed out of cement. Her business secret? Every time someone would come to her asking for an item she didn’t have, instead of telling them she didn’t carry it, Aunty Maggie would say she had just run out. Pure genius! I was amazed by the perfectly-curated stock in her convenience store. Every person who came in while we were visiting left with exactly what they wanted–even me! I left with some raw shea butter that’s keeping my skin hydrated during these dry Chicago winters.
While I sometimes have a day or two to see the sites, I often miss the tourist landmarks in the cities I visit. This is something I’m starting to miss less. Local markets and restaurants are often more interesting, as are the sites that my colleagues recommend to me rather than the “Top 10 List” destinations. How else would I end up eating freshly-cooked chapatti on the side of the road in India or listening to a live jazz band in Ghana?
It still gets lonely sometimes when I travel, and traveling up to a quarter of the time means I often feel like I’m in limbo–never able to fully commit to friendships or activities at home, because I might have to travel unexpectedly. But when I’m travelling, one of my favorite parts is unwinding after a long day of work with my colleagues–laughing and connecting over our shared experiences from the day or comparing and contrasting life in our respective countries. There’s so much we have yet to learn about this world, and I’m excited that I get to be a part of it.
Interested In Knowing More About Microfinance?
If you’re interested in learning more about my team and our research.
About microfinance/poverty alleviation research and approaches.
Poor Economics, Abhijit Banerjee and Esther Duflo. A great introductory book on the complexities of being poor in the developing world. Esther Duflo also has this great 16-minute Ted Talk.
More Than Good Intentions, Dean Karlan. This book offers some great examples of practical, research-based approaches to poverty alleviation.
The Challenge for Africa, Wangari Maathai. A Kenyan environmentalist’s perspective on the nuances of development for African countries.
Poverty, Inc. A really fascinating documentary on breaking out of the conventional poverty/aid industry. Available on Netflix, iTunes, and Amazon. https://www.povertyinc.org/
Living on One Dollar. Four college guys from the U.S. try to live on one dollar a day. Spoiler alert – it’s way harder than they though! It’s a bit cheesy, but they do a good job of introducing some of the basic (but often unexpected) challenges faced by people living in poverty in Guatemala, plus the ways microfinance can make life easier. Available on Netflix. http://livingonone.org/
Jobs in International Development International development overlaps with just about every other field (finance, health, education, engineering, etc.) and area of expertise. (Yes, non-profits still need accountants, HR, and marketing! And is there really that much of a difference between a salesperson and a fundraiser?) If you’re curious about jobs in international development, I recommend looking on Devex for job postings and job hunting resources catered specifically to the area of international development (https://www.devex.com/). Many jobs are based in the US or Europe and require varying amounts of travel, others are full-time positions overseas.
Note: All photos with Opportunity clients are used with their written and/or verbal consent.
About The Author
Abbie is a microloaner that loves to talk about her job. She also hosts travel quizzes every week. You can feel free to message her and find her on the social media buttons below: