Global Perspectives | Summer 2008
 

Beyond Microcredit

GP microfinance partner Pro Mujer Bolivia offers computer training classes to their microloan clients' children at the El Alto bank branch

Here in the United States, it isn’t hard to imagine going to a bank to take out a small business loan. But imagine going to your local bank branch with your children in tow, so that while you take out that loan, the younger ones can go to the bank’s daycare center and the older children can attend a computer training class—then afterwards, taking your family down the hall to the bank’s health clinic for your annual check-ups.

For the clients of Pro Mujer Bolivia, one of Global Partnerships’ microfinance partners in Latin America, this is standard procedure. Committed to improving the lives of very poor women and their families, Pro Mujer combines small loans and other financial products with an array of social services designed to help women address the many challenges of poverty. Pro Mujer’s commitment to alleviating poverty combined with their sound financial management and impressive growth makes them an ideal partner for Global Partnerships (GP).

With the on-the-ground expertise of staff based in Latin America, GP identifies microfinance institutions (MFIs) that can grow and succeed in increasingly competitive markets while remaining committed to having a strong social impact. By providing these MFI partners with much-needed, socially motivated capital leveraged by philanthropic contributions to support their continued growth, GP ensures that more families living in poverty have access to microfinance and the economic opportunities it provides.

Pro Mujer Bolivia and CRECER, GP’s other MFI partner in Bolivia, exemplify a business model that GP calls “integrated service providers” (ISPs)—one of three MFI business models that GP believes have the greatest potential for impacting poverty.

CRECER and Pro Mujer share several characteristics that are typical of the ISP model:

• The mission and organizational cultures of both organizations are strongly focused on serving very poor, marginalized populations, especially women and their families.
• Both MFIs are committed to providing effective, integrated financial and non-financial services that respond to the needs of their clients and help them raise their families’ standard of living.
• Both use a village banking model—where groups of 12 to 30 borrowers, most often women, guarantee one another’s loans. The groups meet regularly to collect loan payments, distribute new loans, and to participate in trainings provided by the MFI on topics such as healthcare and education.
• Both CRECER and Pro Mujer are pursuing strong, sound growth strategies, significantly expanding their reach to many more people living in poverty.

To support the economic stability of their borrowers, the two MFIs require clients to save a portion of their loans in order to develop a culture of savings—and build their financial security. Both also recently introduced a microinsurance product, which for a very small monthly payment (the equivalent of about 3 cents), in case of a borrower’s death, pays off her debt and provides a small sum for her family.

Despite their many similarities, the two organizations are distinct from one another in several ways. Pro Mujer Bolivia’s clients, who live mostly in urban and peri-urban areas, travel to bank branches for their group meetings (called “communal associations” by Pro Mujer) where they have access to all the services that Pro Mujer provides, including preventive healthcare, computer training, financial literacy and other classes for adults and children.

On GP’s recent PartnerTrip to Bolivia, our travelers visited Pro Mujer’s largest regional center in El Alto, outside of La Paz. They participated in the twice-monthly meeting of a communal association called “Esmeralda,” whose members run businesses that range from selling cell phones to making macramé crafts. As an example of the ways that Pro Mujer strives to adapt its services to meet the varied needs of its clients, the women in this group were mentoring three 16-year-old members as part of a pilot microcredit program for youth. In addition to providing loans for the youths’ own income-generating activities, the program provides them with access to the host of integrated services that Pro Mujer provides at the center, including healthcare, career planning, computer training, education loans and English classes.

Members of GP microfinance partner CRECER's village bank in La Maica, participating in a discussion on financial planning as part of their regular monthly meetings

In contrast to Pro Mujer, CRECER’s loan officers travel via motorbike to their clients, many of whom live in remote rural areas. In addition to facilitating the loan process, the loan officers provide on-site trainings to village bank participants on maternal and family health, business development and financial management, and civil rights. CRECER also has formed alliances with other organizations to provide services for their clients. For example, they have established contracts with local health providers that give CRECER clients a 20 percent discount on services.

This past April, GP’s Bolivia PartnerTrip travelers visited one of CRECER’s village bank groups in a community called La Maica, just a few miles outside of Cochabamba. All the members of this bank, like most of the residents of La Maica, make their living from dairy farming. The meeting began with a training that focused on the basics of family budgeting. The loan officer invited all the women to prioritize various expenses in the life of a fictional bank member named Antonia.

“Sitting along a bench, wearing the broad-rimmed, white straw hats which are characteristic of Quechua women like these, the members were quite animated and confident discussing which expenses really mattered for Antonia—like being on time with her monthly loan payments,” described GP staff member and PartnerTrip organizer Chris Megargee. “On the other hand, they all agreed that the wedding expenses for Antonia’s son should be given the lowest priority level. We all laughed as one woman shouted out, ‘If his fiancée really loves him, she will wait for him to save up for the wedding!’”

For Global Partnerships, identifying MFI partners like CRECER and Pro Mujer—ISPs that demonstrate strong financial performance, sound fiscal management, and an unwavering commitment to increasing their social impact—is critical to fulfilling our mission of expanding opportunity to people living in poverty. Through our investments and on-the-ground support to ensure that these organizations can continue to grow and thrive, GP is helping ensure that all people living in poverty have the chance to improve their lives and build a better future for their families.

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From the President

Dear Friends,

Last month, I traveled to Peru with our Director of Latin America Programs, Alberto Solano. We had the opportunity to meet with the leadership teams of six microfinance institutions (MFIs), from urban Lima to the agricultural north, from the Amazonian jungle to the 12,000-foot highlands. I was especially struck by the innovation being pursued by these MFIs: new outreach efforts to weekly marketplace fairs where some of the poorest indigenous people are served for the first time; life insurance policies made available for 37 cents a month to protect families from destitution; research into the impact of combining microcredit with maternal and child health services. I returned to Seattle inspired and excited by the possibility of bringing much needed GP support to new MFI partners, and I was reminded of the importance of “being there.”

In 2003, Global Partnerships opened a small office in Central America. Today our Managua office is the hub of GP’s due diligence and monitoring activity. In concert with our staff in Seattle, a team of seven professionals create and build relationships with our MFI partners. A typical due diligence visit lasts several days and includes interviews with the institution’s board, leadership staff and borrowers. Our team digs deep into business plans and audited financial statements. We learn a lot by doing that, but just as often, valuable insights are found in the unscripted moments. In a conversation over lunch, we may learn of an MFI’s efforts to deepen impact by offering innovative health services. On drives to remote village banks, we listen to how MFI managers balance the actions necessary to achieve social performance with those needed to ensure economic sustainability. By being there, our team meets the staff and can see firsthand whether an MFI has been successful in creating a culture of respectful service to people living in poverty.

Despite remarkable advances in communications technology, nothing takes the place of meeting colleagues face-to-face, of spending time with borrowers and understanding their reality. Our commitment to staying connected to the people we serve led us to establish our field operations in Latin America. It is this same commitment that inspires us to lead PartnerTrips. I invite you to discover the value of “being there” by traveling with GP.

With best regards,

Rick Beckett, President and CEO

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Global Partnerships at Work in Bolivia

Country Statistics Population: 9.2 million Pop. living below poverty line: 63% Pop. living on less than $2 a day: 42% No. of MFI partners: 2 No. of borrowers reached: 193,030* GP investment: $2.35 million * As of March 31, 2008

Global Partnerships began working in Bolivia in 2007. It is the only landlocked country in the Andean region of Latin America, with a climate that varies with altitude from humid and tropical in the lowlands, to semiarid and cold in the altiplano (high plateau).

The country covers an area of nearly 425,000 square miles, about the size of Texas and California combined, although much of Bolivia is not developed and still remains as intact forest. La Paz is the highest of the world’s capital cities at 11,800 feet above sea level. Neighboring El Alto sits at 13,800 feet above sea level, and is one of the fastest-growing cities in the hemisphere. However, Bolivia is still considered one of the poorest and least developed countries in Latin America.

Bolivia has a rich diversity of people and cultures with a population of 9.2 million. Approximately 55 percent of the population is indigenous. The largest indigenous groups are the Quechua, Aymara and Chiquitano, yet there are an estimated three dozen indigenous groups living in Bolivia. Only about half the population speaks Spanish as their first language, the other official languages being Quechua and Aymara.

GP is proud to partner with two outstanding microfinance organizations (MFIs) in Bolivia : CRECER and Pro Mujer Bolivia. These MFIs have a combined reach of 193,030 people, with offices spread throughout the country to reach both rural and urban populations (see map above).

GP currently is present in six countries, with plans to expand efforts into Mexico and Ecuador by 2009. As we develop new partnerships to reach more people living in poverty, we will continue to share these new experiences with you along the way.

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Global Partnerships Goes Carbon Neutral

Global Partnerships’ commitment to people living in poverty includes doing our part to reduce carbon emissions and combat climate change.

We recognize that the earth’s ecosystems are interdependent – how we live in the Pacific Northwest affects all of us, but especially people living in poverty. Not surprisingly, it is the poor of the world who are the first to bear the adverse effects of climate change.

We are already seeing expansion in tropical areas susceptible to infectious diseases, like malaria, dengue and yellow fever.(1) Intense weather events often have a devastating effect in the lives of people who are living without a safety net. Desertification of land and salinization of irrigation water leads to reduced yields for subsistence farmers.(2) The United Nations estimates that by 2050, 50 percent of Latin America’s agricultural lands will be adversely impacted by climate change.(3)

This is especially disturbing when one considers the statistics on greenhouse gas emissions caused by human activity. Latin America, with 8 percent of the world’s population, emits 5 percent of the world’s carbon dioxide. In comparison, the United States, with 4.6 percent of the world’s population, emits 21 percent of the world’s carbon dioxide.(4)

We are taking action to become a carbon neutral organization by sourcing our electricity from renewable sources and offsetting our carbon emissions from heating, driving and flying. This includes our participation in Seattle City Light’s Green Up! program and our partnership with Climate Trust. Seattle City Light invests in the expansion of renewable energy sources in the Northwest to generate electricity without burning fossil fuels. Climate Trust, a Portland-based nonprofit organization, allows individuals and organizations to offset their carbon footprint by investing in a portfolio of projects that reduce carbon emissions or sequester carbon through reforestation and preservation.

Learn more about Climate Trust and City of Seattle’s offset programs at www.climatetrust.org and www.seattle.gov/light/green/greenpower/greenup.asp

Notes

(1) Climate Change Futures: Health, Ecological and Economic Dimensions. Center for Health and the Global Environment, Harvard Medical School, 2005.

(2) Grattan, Stephen A. ‘Irrigation Water Salinity and Crop Production.’ Division of Agriculture and Natural Resources, University of California, Davis, 2002.

(3) ‘The Consequences for the Future.’ UNEP, 2007.

(4) Human Development Report 2007/2008. UNDP, 2007.

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