One Way our Partners are Redefining “Productivity”

by Lara Diaconu, vice president, Health Services Fund, Global Partnerships

A couple weeks ago I moderated a panel on sustainable health services models at the 6th Village Banking Forum held this year in Guayaquil, Ecuador. Two of our partners, Pro Mujer in Nicaragua and ESPOIR, presented what they had learned about what it takes to implement high performing health services programs via the village bank platform. While much was shared, one main takeaway I had was the importance of investing in staff capacity, particularly investing in those on the “frontline” of integrated service delivery with clients.

One striking example was made by Gloria Ruiz, general manager of Pro Mujer in Nicaragua. She shared how one day of every week is spent training their credit officers – on health topics, on sales techniques, on participatory education techniques, on human development and financial education - skills, values, and knowledge that credit officers need to be able to stimulate conversations among clients, transmit key information about how to prevent and manage prevalent health conditions, and promote health services and behavior changes that can improve lives.

Investing in staff capacity may sound like a no-brainer. However, dedicating one day a week to staff development is a strategic (and costly) decision but one they believe is worth it to better serve their clients. Quick calculations indicate that the economic tradeoff for investing in building staff capacity results in a loss of thousands of dollars in potential income for the institution. This means an increase in costs per client which decreases productivity and efficiency, standard measures used to assess microfinance institutions.

That is to say that “productivity” of credit officers is generally interpreted to be a key indicator of institutional strength, as the more clients each credit officer can manage, the lower the costs per client to deliver a loan, and therefore, potentially the more profitable the institution. Lower costs per client is also key for those institutions with a mission to serve lower income segments, as it renders it more economically feasible to deliver lower average loan sizes. These key operational indicators signal to both senior management and the microfinance industry how streamlined an institution’s processes are, and how competitively they can price their financial services in the market. To all of this, Gloria simply stated, “We have redefined productivity.” In this instance, productivity is defined by strengthening their staff capacity to provide the essential knowledge, information and services to meet the needs of their clients effectively even if it means less income for the institution.

Pro Mujer’s approach enables them to deliver quality education and services that improve the health opportunities for women micro-entrepreneurs in Nicaragua. It’s a bold, strategic decision but it is very much aligned with their commitment to do what it takes to be more than just a financial services provider.

Blog Tags: community banking   Ecuador   Espoir   financial inclusion   Latin America   microfinance   Pro Mujer   VI Foro Latinoamericano de Banca Comunal   village bank   

Global Partnerships' Lara Diaconu sits in between two of our partners--Espoir and Pro Mujer in Nicaragua.
Lara Diaconu (center) moderates a panel on sustainable health service models featuring two of our partners, Espoir (represented by Executive Director Francisco Moreno on the left) and Pro Mujer in Nicaragua (represented by General Manager Gloria Ruiz on the right). Photo © Global Partnerships 2013.

GP Attends Village Bank Conference in Ecuador

by Lara Diaconu, vice president of the Health Services Fund at Global Partnerships (GP), and Ricardo Visbal, vice president of portfolio management at GP

Members of our team are in Guayaquil, Ecuador this week to attend the Sixth Latin American Forum on Village Banks (VI Foro Latinoamericano de Banca Comunal/the Forum) from August 7-9. The Forum is a regional conference that brings together actors in the financial inclusion space to discuss different methods of strengthening village banks*—one of the only means by which people living in poverty can access affordable financial services such as loans and savings accounts.

The Forum is hosted by the Rural Financial Network (Red Financiera Rural/RFR), an organization which consists of “43 Ecuadorian microfinance institutions (MFIs) that serve approximately 930,000 micro and small producers [throughout Ecuador].” Although the organization’s primary focus is community banking in Ecuador, RFR also aims to improve community banking throughout the rest of Latin America.  

In pursuit of this goal, hundreds will converge at the Forum to attend workshops, exchange ideas, and attend field visits.

Lara Diaconu, vice president of our Health Services Fund will moderate a panel called “Sustainable Models of Village Bank and Health Services.” The objective of the panel is to share perspectives on how village bank-based institutions can serve as sustainable platforms to deliver high impact and highly valued health services to clients in a sustainable way. Panelists will include representatives from our partners, including Gloria Ruiz, CEO of Pro Mujer in Nicaragua, and Francisco Moreno, CEO of ESPOIR (Ecuador). Amelia Kuklewicz from Freedom from Hunger’s Ecuador office will also participate on the panel. Panelists will speak to what benefits and challenges are implicit in the strategic decision to integrate health services into their respective institution’s mission and operations.

Ricardo Visbal, vice president of portfolio management in our Nicaragua office, will also attend the Forum to receive updates on trends in the Ecuadorian microfinance industry. Furthermore, he will meet with many of our partners that are attending the conference in order to collect updates on progress in the non-financial aspects of their work (i.e. health services, microentrepreneurship education, etc.). An additional objective is to meet with potential new partners to learn about their work, and to share with them the ways that the MFI channel can be leveraged to deliver essential non-financial services.

While in Ecuador, Ricardo will also conduct field visits to health clinics and village bank meetings administered by current partners Fundación Alternativa, Espoir and D-MIRO. During these visits, Ricardo aims to interview our partners’ management and speak with their clients in order to learn:

  • How  microentrepreneurship education can be delivered to individual credit clients that don´t attend village bank meetings;
  • If clients find the services they are receiving to be useful;
  • How Espoir, one of the partners in our Health Services Fund, is progressing in its health work; and
  • The differences between a pre-paid health services model versus a health insurance model.

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*Village banking is a method of financial services administration that ensures access to financial services for people living in poverty. This is made possible by keeping loan administration costs low, and by removing the need for collateral. A village bank consists of a self governing, self selected group of individuals from the same village or community that band together to receive a lump sum of credit from a microfinance institution. The village bank then divides and distributes the lump sum into smaller loans for individual village bank members. Each member acts as a guarantor for the other, thus creating a system of cross-guarantees.      

Question for our readers:   
What are some of the benefits of village banking for people living in poverty? We'd like to hear from you! Please leave a comment below.

Blog Tags: Ecuador   Espoir   Freedom from Hunger   Latin America   microfinance   Pro Mujer   VI Foro Latinoamericano de Banca Comunal   village banking   

A Fundación Alternativa credit officer shows a client how to formalize her business.
During a field visit this week with Fundación Alternativa, a microfinance institution and one of our partners in Ecuador, Ricardo Visbal, vice president of portfolio management, and Mark Coffey, chief investment and operations officer, watched as an Alternativa credit officer (left) provided a client with coaching to formalize her business, i.e. how to: obtain a business permit, pay taxes, and register employees. In doing so, Alternativa helps the client avoid any legal fines for improper business operation, which also mitigates the MFI’s own credit risk.