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This piece was originally published on the FINCA website. I just felt I had to share it here as well! 

 

I got the sad news yesterday, via Twitter, that one of the people I most admired in this world, Naima, had passed away.   The tweet was from Basha, who is married to one of Naima’s daughters (and who had accompanied Naima to the Sheraton Hotel in Kampala, Uganda, to meet with me several years ago, an encounter which led to my decision to employ Naima as our first Ambassador in that country.

Naima’s qualifications for the job were impeccable.   She was one of our most successful clients ever, having clawed her way out of severe poverty over the course of a decade during the 90s, powered by a series of FINCA loans. She had so impressed our staff that, when our other, slightly more famous Ambassador of Hope, Natalie Portman, visited Uganda in 2004, they put her forth as someone Natalie had to meet.

Natalie and I met with Naimi on a hot morning in Jinja, Uganda, a town situated at the source of the Nile, complete with a statue of Speke, the Brit explorer who claimed to have “discovered” the place where Ugandans had been living since time immemorial.   Naima took us to the back of her restaurant, which she ran with the help of her four daughters, and, while a journalist from Reuters looked on, told us her story:

Naima

“I was born in the Iganga District of Uganda in 1958. In my family, girls were not permitted to have an education, but my brother secretly taught me to read and right.   I was married at the age of 13, and born my first child, a daughter, at age 15.   I had five more daughters, which displeased my husband, who wanted sons, and so he divorced me.   We were living in Mombassa, Kenya, at the time, and I moved then back to Uganda, where I married for the second time. My second husband died when I was 33, leaving me to care for my eight children. We lived in a one-room dwelling, and I supported my family by cleaning people’s houses, who in return allowed me to take their table scraps and wash my family’s cloths with their used dish water. Many days, we had no food at all.

 

In 1996, a friend of mine told me about an organization named FINCA that made loans to poor women so they could start businesses and support themselves and their families.   She took me to a meeting of her village bank, where I was introduced to the other women.   But the women decided that I was too poor to join their village bank, and would not be able to repay the loan, meaning they would have to repay for me.   I got down on my knees and begged them to accept me. Four of the women took pity on me, and said they would pay for me if I failed to repay the loan.   In this way, I was accepted.

 

The first loan I received was 50,000 shillings (US$ 40).   I didn’t know what to do with so much money.   My four friends in the village bank invited me to go with them to a nearby village where they was a good crop of tomatoes that would could buy and bring back to Jinja for reselling in the market.   The plan worked fine, but by the time we returned to Jinja, the market was closed.

 

That night, I slept with the tomatoes. The next morning, I sold them all at a good profit.   After years of hard work, aided by increasingly larger loans, I eventually saved enough money to buy this restaurant. And now, the best news of all, I have bought a plot of land, in town, and am building my own home.”

Naima related all this, quietly, with a transcendent dignity born of a life of struggle and setbacks, none of which stopped her and, on the contrary, fueled her determination.   At the conclusion of Naima’s narrative, the Reuter’s journalist asked Natalie what she thought of all she had heard. Natalie, in tears, shook her head and said “I don’t have problems.”

Years later, in preparation for a visit to Uganda, I asked our CEO, Julius, to get in touch with Naima and if possible arrange a meeting.   “I am sorry to say that Naima is not well,” Julius responded.   He went on to tell me that Naima had suffered a series of setbacks, which had left her in dire circumstances. First, her mother had fallen ill.   To take care of her mother, Naima had left her business in the hands of one of her daughters, who was not up to the task of managing it, and had been forced to sell it to the landlord. Then Naima herself fell ill, with cancer.   She entrusted her care to a fraudulent doctor, who took all her money.

“I have to see her,” I told Julius.   “Can you arrange a meeting?”

I met with Naima at the Sheraton, Kampala Hotel, a venue that held many memories for me.   It was there, back in the mid 80s, that, unable to afford to actually stay there, I used their telephone and tea room as a communications and meeting center, subscribing to the “fake it until you make it” philosophy.   It worked, and today FINCA Uganda has over 55,000 clients and a loan book of $20 million.   Also, it was in the Sheraton San Salvador, on the other side of the world, that my boss, Michael Hammer, was gunned down by a Death Squad in 1980.

As I listened to Naima relate her story, with the same quiet dignity as when we had met with Natalie, I kept thinking: “This can’t be.   Our most successful client ever, not just in Uganda but the world, and it has all been erased.   What a tragedy.”

Being the CEO of a global company has its drawbacks, but there are times when the advantages far outweigh the liabilities.   I decided then and there to invoke “Executive Privilege”, and deviate far from our normal policy of treating every client the same, i.e., that our job was to provide financial services and not to take responsibility for whatever else was going on in their lives.   No, Naima was different.   Maybe we couldn’t solve every problem our clients faced, but as in that wonderful line from the movie “The Year of Living Dangerously”, when fate put someone in our path and we had the opportunity to help them, we had to do it.

After the meeting, I told Julius that we had to hire Naima, and that she needed to tell her story to our other 50,000 clients, most of whom were women in circumstances similar to hers when she joined FINCA, and to inspire them to do for their families what she had achieved with hers. At the time, I thought I was performing an act of charity, putting her on the payroll, and inventing a job for her.

How wrong I was.   A few months later, a picture arrived with Naima, dressed in a gown she had made herself, celebrating her new role as our first Brand Ambassador.   She went from village to village, telling all the women:   “When you have problems, FINCA will never abandon you.” It was a powerful message.   Our retention rate soared.   Despite the highly competitive market in Uganda, our client list grew.

There are things I’ve done in my life I am ashamed of, but of all the things I am proud of I don’t think any can equal my decision to throw a lifeline to Naima in her hour of need, an act she repaid many times, and will, as long as my own struggle lasts, challenge me to live up to the impossibly high standard she has set for us.

 

 

Reading through David Roodman’s book conjured up more memories of the Way it Was back in the 80’s and 90’s while we were running around the globe starting up microfinance programs on a shoestring.

My fellow pioneers will remember when it was an article of faith that “clients are indifferent to interest rates”. Impossible to believe now, when clients shop from one MFI to another for the best rate, but back then the important thing for the clients was to find a provider who could get them the funds they needed quickly and with minimal red tape. MFIs in those days were essentially competing with money lenders in the local markets who charged high rates (10% per DAY), but didn’t ask you to fill out forms or provide real guarantees. These guys walked through the markets with a “Mochilla” full of greenbacks slung over one shoulder and a .45 over the other. Banks today (or used to, anyway) talk about “instant approval” of loans, but the “chulqueras” of Ecuador and Peru counted out your $50 loan the second you asked for it, if you were a repeat customer.

At FINCA, we learned the “real” cost of money when, upon the suggestion of the members of one of our village banks on the border of Mexico, we created “the internal account”. This was a euphemism for the 20% (of the FINCA loan) forced savings we required of our clients, which back then was kept by the Treasurer of the Village Bank. After a few 4-month loan cycles, this money really began to pile up, and one of our enterprising Mexican VBs asked John Hatch if, rather than risk having it lying around the Treasurer’s house, they couldn’t lend it to the more successful microentreneurs in their VB who had need of it. The women who borrowed money from this internal account would pay interest on it, which would be the property of the VB, to be used however they decided. How much would they charge? John wanted to know. The answer: 10% a month, or more than 3 times the 3% charged by FINCA.

It worked brilliantly. The more dynamic groups actually made enough money on the “internal account” to pay all the interest on the FINCA loans, making it essentially “free” money to the VB members. The women who borrowed from it were happy because they had more working capital at a lower cost than from the loan sharks.

Sadly, over time, many of the Treasurers began to abuse the trust of the members and embezzle their savings. We at FINCA were unable to place adequate controls over the myriad internal accounts, and eventually had to abandon this part of the model. A word of caution to the “new” trend of community savings groups gaining popularity as an alternative to microfinance. This will become a problem, if it hasn’t already.

It was 65 F today so I went biking on the canal tow path. The water in the canal was pretty clear, unlike during the summer when it supports thick, green, oozing matts of blooming algae — making the whole thing look like a giant trough of creamed spinach at a Holiday Inn breakfast buffet. And the mallards and the Canada geese just seem to revel in that stuff. No more bird hunting for me!

Just west of Georgetown, I came upon a “Discovery Channel Moment”: a Red Shouldered hawk perched in a tree on the side of the path, devouring a vole. He must have been hungry because he didn’t fly off when I paused to share this life and death moment. The alert reader of my websayito will recall that I wrote an entry last February 14th on this very topic, although in that case it was a Red Tailed Hawk carrying off a hapless vole who had been nesting happily in my compost heap.

Voles, as you know, are rodents who failed to brand themselves as well as mice and so missed out on the Walt Disney bonanza and then — many years later — the pointing device bonanza. Some complain, even, that they are profiled by raptors, in much the way “Sheriff Joe” Arpaio hauls in anyone he overhears speaking Spanish down in Arizona.

Since Mister Hawk was too busy eating to talk, I ask the vole what kind of day he was having.

“Not good,” he replied.

“I can see that. In fact, I’m surprised you can talk at all. Isn’t that your large intestine I see going down his gullet?”

” ”

I attended the launch of David Roodman’s “Due Diligence: An impertinent inquiry into microfinance” which played to a packed house of practitioners and representatives of the larger International Development Community. I haven’t read more than the opening chapter of the book and so I shouldn’t comment yet, but I will, based on David’s remarks and a briefing paper he distributed (which can also be found on his blog

David is of the “microfinance has zero impact on poverty” school which holds that, based on a handful short term (18 month) “Randomized Control Trials”, the benefits of MF as a tool to fight poverty have never been demonstrated. He does not go as far as Milford Bateman (“Why Microfinance Doesn’t Work”) in arguing that microfinance actually exacerbates poverty, but rather argues that it does “provide useful services to millions of people in a businesslike way.”

I suppose it is an indication of the state of the industry that those of us who have dedicated most of our working lives to channeling financial services to the poor have to take some encouragement from that characterization.

I’ve learned to sit still while listening to people decry how we practitioners have “oversold” the impact of microfinance on poverty, that it can’t by itself pull people out of poverty, doesn’t empower women etc. My problem is I know that it can do these things, and that the key factor is not how poor a person is to begin with, but rather how determined he or she is to get out of poverty. Had we 25 years ago, as Roodman recommends in his synopsis, “eschewed any drive to extend credit to the poorest”, then many of FINCA’s most spectacular success stories would never have happened.

To be fair, David and I have different perspectives, I having lived through the “golden age” of microfinance when the first mover clients were the most entrepreneurial people in their villages and realized windfall profits when moving off credit from loan sharks at 10% per day to FINCA loans at 3% per month. By the time David arrived on the scene, microloans had become easy to obtain in many markets, drawing in more marginal microentrepreneurs whose businesses faced more competition and steadily declining returns. He naturally — but erroneously — concluded that we all “made up” the more dramatic success stories.

More to come, once I read the book.

Jan
5

Packed the newly weds off back to London last night, and Lorraine is up in Providence on a consulting gig, so the house has fallen silent except for the occasional yawning of the dogs. Feeling like King Lear, with one daughter in San Francisco and the other in London. Oh, how the heart aches, sharper than a serpent’s tooth! At least I’ve got the boy to keep me company.

Today I will attend a book launch for David Roodman‘s “Due Diligence: An impertinent Look at Microfinance” at the Center for Global Development. I will try to behave myself. David’s a good guy, but after just the first chapter I find myself disagreeing with him, especially when he says microfinance doesn’t empower women. I think we live in different worlds.

Check out the A&E bio of Natalie Portman, either tonight at 8pm or tomorrow (friday) at noon. Lots of footage from her work with FINCA.

Does my nose look too big? No?

My mistress’ Dad had to go back to work today — poor Rupert! — so he asked me to author a guest websayito today on his behalf. I’m not much of a writer, to tell the truth, but — as you Yanks say –here goes nothin’!

I came over a few days ago from London, where I stay in a charming flat a stone’s throw from Hyde Park in London’s fashionable West End. Well, to be honest, we’re kind of on the fringes of fashionable, right alongside the railway tracks.

Let’s see, what should I talk about? Rupert, as he was leaving, mentioned something about a caucus race in a place called Iowa. And a tea party, like the Mad Hatter gave, or was it a reference to that thing in Boston? If so, come on, guys, that was back in 1773! Take about harbouring a grudge! (ooo, nice pun, maybe I’m getting the nack as we say)

But you blokes do have some real nutters over here, I must say. Well, ‘course we do as well, but we kind of keep them in the back rooms of the pubs, rather than strutting them out center stage like as you do here. I mean, wow, that woman from Alaska? I saw here on the tele ranting on about how the “government” had shipped all your jobs overseas and how the private sector should “reindustrialize” America, but without government interference. Helloooooooo! Who do you think shipped all those jobs overseas? It was the private sector, dummy, not the government!

Oh,and that Tea Party woman down in Florida, what’s-her-name. Regarding the EPA, she said that the government should stop putting “Nature ahead of people”. Yes, she really said that! Hellooooooooo! Like people are not part of nature? Next thing she’ll say is dogs are not part of nature, so we should stop putting them ahead of squirrels and rabbits.

Well, I think I’ve said enough for one day, don’t you? I think I will now take a well-deserved nap, maybe on one of the heating vents, if I can get a place on one before Penny and Bruno. Cheers!

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