Here are a few of the amazing borrowers and staff members from Fundacion Paraguaya:
Wednesday, May 26, 2010
Sunday, April 11, 2010
Microfranchising: despensas are the New 7-11
By Kimia Raafat, KF10 Paraguay
College students must pick a major. They distress over the decision: economics or accounting? Political science or general studies? Should I double-major? Add a concentration? And throughout the process, there are many that pick one out of obligation (with no path in mind), they hope for the best, and of course, hope this decision will lead to future professional success.
Microfinance borrowers must pick a career—they risk taking out a loan to invest in their business. They distress over the decision: Despensa(general store) or clothing sales? Should I double-up my business by selling empanadas? And throughout the process, there are many that pick an activity out of obligation (often with no path in mind), they hope for the best, and of course, hope this decision will lead to future professional success.
At my college, I was given two years to try my hand at economics, calculus, psychology, biology and more, before settling in on one area of focus and continuing with advanced courses and trainings. Most microfinance borrowers lack the luxury of “trying out” businesses and/or receiving any training before choosing their “major” business activity. Borrowers often follow previous pathfinders, mimicking the only businesses they know--convenience stores, clothing shops and restaurants. What if all college students chose the same 3 majors?? In my humble opinion, the market for certain business concepts and majors are often saturated. Every other person cannot sell rice, oil and pasta in a Despensa or market clothing from the city.
Saturnina at her despensa
One borrower I met, Saturnina used to have a despensa(convenience store) based out of her home in Ita, Paraguay. A few months ago, her family moved and her home business quickly dissolved. Saturnina has no plans to resurrect her despensa, she would rather move towards a more lucrative activity such as distributing coca cola products. I admire Saturnina’s initiative; while all borrowers are grateful for the access to credit, many lack Saturnina’s awareness of the market, which inhibits their ability to efficiently use their loan.
Fundación Paraguay, Kiva’s local field partner, has decided to take charge of this issue by creating a “micro-franchises” division
HOW IT WORKS: Fundación Paraguaya orders pre-packaged products and delivers them to one of their 20 branches. From there, borrowers may use their loan to buy these products and sell them as their own “franchise”. For example, in February Fundación Paraguaya created school kits with backpacks, notepads, pens, pencils and erasers. Fundación Paraguaya distributed these school kits to their branches, allowing Paraguayan borrowers to manage their own backpack franchise. Fundación Paraguaya promotes micro-franchises that improve poverty indicators: first-aid kits, eye-glasses, school supplies, etc.
Franchises with successful business models
Avon's direct sales model is similar to a "micro-franchise"
This sort of direct-sales, “micro-franchise” model has worked for Avon (beauty products) and Yanbal (fragrances). Borrowers are eager to be entrepreneurs and to use their micro-credits wisely; they simple need exposure to more products. To me, the potential for giving a list of “micro-franchise” ideas to borrowers is like giving lost college freshmen a catalog of majors to choose from. The “micro-franchise” division of Fundación Paraguaya may expose borrowers to business opportunities beyond the standard convenience stores and clothing shops. This model would slowly diversify the marketplace throughout the country. Eventually, Fundación Paraguaya should aim to connect more pre-packaged products to these borrowers.
Overall microfinance is about an opportunity—and making the most of an opportunity. Whether a loan is micro or otherwise- a successful outcome depends on how the borrowers invest. After meeting borrowers in Ecuador and Paraguay, I know we have the same uncertainties when choosing a career path, and we all risk time and money for the hope of professional success. My courses in college exposed me to a world of possibilities, so why shouldn’t MFIs provide borrowers with a catalog of “major” franchise possibilities?
Click here, if you would like to know more about Fundación Paraguaya or feel free to send questions, comments, or requests for future blog topics to kimia.raafat@fellows.kiva.org.
College students must pick a major. They distress over the decision: economics or accounting? Political science or general studies? Should I double-major? Add a concentration? And throughout the process, there are many that pick one out of obligation (with no path in mind), they hope for the best, and of course, hope this decision will lead to future professional success.
Microfinance borrowers must pick a career—they risk taking out a loan to invest in their business. They distress over the decision: Despensa(general store) or clothing sales? Should I double-up my business by selling empanadas? And throughout the process, there are many that pick an activity out of obligation (often with no path in mind), they hope for the best, and of course, hope this decision will lead to future professional success.
At my college, I was given two years to try my hand at economics, calculus, psychology, biology and more, before settling in on one area of focus and continuing with advanced courses and trainings. Most microfinance borrowers lack the luxury of “trying out” businesses and/or receiving any training before choosing their “major” business activity. Borrowers often follow previous pathfinders, mimicking the only businesses they know--convenience stores, clothing shops and restaurants. What if all college students chose the same 3 majors?? In my humble opinion, the market for certain business concepts and majors are often saturated. Every other person cannot sell rice, oil and pasta in a Despensa or market clothing from the city.
Saturnina at her despensa
One borrower I met, Saturnina used to have a despensa(convenience store) based out of her home in Ita, Paraguay. A few months ago, her family moved and her home business quickly dissolved. Saturnina has no plans to resurrect her despensa, she would rather move towards a more lucrative activity such as distributing coca cola products. I admire Saturnina’s initiative; while all borrowers are grateful for the access to credit, many lack Saturnina’s awareness of the market, which inhibits their ability to efficiently use their loan.
Fundación Paraguay, Kiva’s local field partner, has decided to take charge of this issue by creating a “micro-franchises” division
HOW IT WORKS: Fundación Paraguaya orders pre-packaged products and delivers them to one of their 20 branches. From there, borrowers may use their loan to buy these products and sell them as their own “franchise”. For example, in February Fundación Paraguaya created school kits with backpacks, notepads, pens, pencils and erasers. Fundación Paraguaya distributed these school kits to their branches, allowing Paraguayan borrowers to manage their own backpack franchise. Fundación Paraguaya promotes micro-franchises that improve poverty indicators: first-aid kits, eye-glasses, school supplies, etc.
Franchises with successful business models
Avon's direct sales model is similar to a "micro-franchise"
This sort of direct-sales, “micro-franchise” model has worked for Avon (beauty products) and Yanbal (fragrances). Borrowers are eager to be entrepreneurs and to use their micro-credits wisely; they simple need exposure to more products. To me, the potential for giving a list of “micro-franchise” ideas to borrowers is like giving lost college freshmen a catalog of majors to choose from. The “micro-franchise” division of Fundación Paraguaya may expose borrowers to business opportunities beyond the standard convenience stores and clothing shops. This model would slowly diversify the marketplace throughout the country. Eventually, Fundación Paraguaya should aim to connect more pre-packaged products to these borrowers.
Overall microfinance is about an opportunity—and making the most of an opportunity. Whether a loan is micro or otherwise- a successful outcome depends on how the borrowers invest. After meeting borrowers in Ecuador and Paraguay, I know we have the same uncertainties when choosing a career path, and we all risk time and money for the hope of professional success. My courses in college exposed me to a world of possibilities, so why shouldn’t MFIs provide borrowers with a catalog of “major” franchise possibilities?
Click here, if you would like to know more about Fundación Paraguaya or feel free to send questions, comments, or requests for future blog topics to kimia.raafat@fellows.kiva.org.
Wednesday, March 17, 2010
I Can't Believe It's Not Butter!
Although lard has always been a popular alternative to butter, and a readily accessible by-product of pork, I have somehow managed to remain a lard simpleton—until now! Upon approaching the home of one Fundación Paraguaya borrower, Gloria Elizabeth Cabrera de Echeverria, I expected to find a typical despensa (general store) or home tailoring store, instead I was kindly greeted by the lingering scent of rendered pig-fat!
Gloria produces and sells bottles of lard to local bakeries. The bakeries use the animal oil to cut down their operational costs, a bottle of oil sells for less than a package of butter of equal size. Gloria also argues that the animal oil leaves the bakeries a certain intangible quality (read: smell) that butter lacks. Although some may be offended by the Nutritional Facts associated with animal fat, I appreciate Gloria’s ingenuity, one man’s pig scraps is Gloria’s money maker!
So how does one produce their own animal oil? Gloria takes the fresh cuts (one-inch cubes) of animal fat (usually pigs, but sometimes cows) and melts or “renders” them over an outdoor grill. It is recommended that one only attempt grease production outdoors, in a well ventilated area. The cubes of meat are cooked with water over medium heat, as the solid “melts” into oil. One pound of fat will yield about 2¼ cups of grease. So you can only imagine how many pounds of fat Gloria burned to produce this barrel (see video below)!
On production days, Gloria often spends from noon to midnight burning fat. Taking advantage of the fresh fat, can often be trying on her schedule. Raw animal fat can quickly become rancid, so she will stay awake as long as she needs to, in order to burn all the fresh cuts.
As she described her laborious schedule, Gloria looked at me, eyes swimming with motherly conviction, and she said “I do this so my kids stay in school (which they have!). Please keep working, so that you never end up like me.”
Gloria produces and sells bottles of lard to local bakeries. The bakeries use the animal oil to cut down their operational costs, a bottle of oil sells for less than a package of butter of equal size. Gloria also argues that the animal oil leaves the bakeries a certain intangible quality (read: smell) that butter lacks. Although some may be offended by the Nutritional Facts associated with animal fat, I appreciate Gloria’s ingenuity, one man’s pig scraps is Gloria’s money maker!
So how does one produce their own animal oil? Gloria takes the fresh cuts (one-inch cubes) of animal fat (usually pigs, but sometimes cows) and melts or “renders” them over an outdoor grill. It is recommended that one only attempt grease production outdoors, in a well ventilated area. The cubes of meat are cooked with water over medium heat, as the solid “melts” into oil. One pound of fat will yield about 2¼ cups of grease. So you can only imagine how many pounds of fat Gloria burned to produce this barrel (see video below)!
On production days, Gloria often spends from noon to midnight burning fat. Taking advantage of the fresh fat, can often be trying on her schedule. Raw animal fat can quickly become rancid, so she will stay awake as long as she needs to, in order to burn all the fresh cuts.
As she described her laborious schedule, Gloria looked at me, eyes swimming with motherly conviction, and she said “I do this so my kids stay in school (which they have!). Please keep working, so that you never end up like me.”
Monday, March 15, 2010
Open Your Eyes
In Guarani (a Native American macrolanguage, spoken in Paraguay and parts of Bolivia, Argentina, and Brazil), the name Tesape'ara means "to open [your] eyes". Upon meeting the Tesape'ara group, the sense of awareness, as implied by their name, quickly becomes evident.
This spirited group of women originally chose "to open eyes" because their microloans introduced them to a world of possibilities: financial independence, business strategy and a support system. Equally moving, their empowered network gained the respect of their husbands and thus forced their husbands to open their eyes as well. The women in the group have noted their husbands love and value them more now (than before they became borrowers) because "he HAS TO, he sees that I have options" says one member of the group. The Tesape'ara Group has loved setting positive examples for their children as well, the children see that "si podemos" (yes, we can!) be housewives and business women.
While they say their group dynamic has been "spectacular" , two group members decided to take a break from borrowing in cycle number 5. The Tesape'ara Group gathers every Saturday to review their finances and to support one another. This loan was their 4th cycle, and they managed to put 1,175,000 Guaraní into savings!
The women wanted to show off their promotional skills, so in this video you can see them having fun marketing their products! First you will see the group president, Clara selling underwear. Next comes Marcelina Gladys Beatriz selling sweet bread. Also in the video is "la abuela" (Ignacia) who says that working in the group has helped her overcome certain inconveniences of aging as she continues to sell food from her home and finally you will see Claudia.
This spirited group of women originally chose "to open eyes" because their microloans introduced them to a world of possibilities: financial independence, business strategy and a support system. Equally moving, their empowered network gained the respect of their husbands and thus forced their husbands to open their eyes as well. The women in the group have noted their husbands love and value them more now (than before they became borrowers) because "he HAS TO, he sees that I have options" says one member of the group. The Tesape'ara Group has loved setting positive examples for their children as well, the children see that "si podemos" (yes, we can!) be housewives and business women.
While they say their group dynamic has been "spectacular" , two group members decided to take a break from borrowing in cycle number 5. The Tesape'ara Group gathers every Saturday to review their finances and to support one another. This loan was their 4th cycle, and they managed to put 1,175,000 Guaraní into savings!
The women wanted to show off their promotional skills, so in this video you can see them having fun marketing their products! First you will see the group president, Clara selling underwear. Next comes Marcelina Gladys Beatriz selling sweet bread. Also in the video is "la abuela" (Ignacia) who says that working in the group has helped her overcome certain inconveniences of aging as she continues to sell food from her home and finally you will see Claudia.
Wednesday, March 10, 2010
Does microfinance work?
Does microfinance work?
I can explain my answer best with the stories of Blanca and Monica, two borrowers I have met in the field in Guayaquil, Ecuador.
Blanca runs a “mobile hair salon” and she took out a $350, 6 month loan to purchase sheet metal to fix her roof. While I support the fact that Blanca wanted to secure her roof and I am sure this loan has helped her lead a more stable life, the loan was not income generating. Leaving Blanca to pay her regular monthly expenses, plus the loan capital and interest.
I believe a microLOAN is not always the best microfinance service available as a means of poverty alleviation. In situations like Blanca’s, I believe that microsavings would be more beneficial. To me, the loan should somehow boost a borrowers business or fulfill an urgent need (health, safety, etc.). Otherwise, I wonder if borrowers would be better off saving their money for 6 months and gaining a little bit of interest. In Ecuador, many clients have trouble trusting financial institutions with their money so they would rather take a loan than open a savings account. Thankfully Fundacion D-MIRO is trusted by its clients and they are in the process of becoming a bank so that they may provide savings services.
On the other hand, I have seen microfinance “work” for many clients who have capitalized on the opportunity to enhance their businesses. For example, Monica took out a 9 month, $500 loan to buy a copy machine. Monica has a keen business sense as she realized there were no other copy machines available in her area, thus making her shop very popular with her neighbors! Monica saw immediate return from her loan use and has since expanded her business and the number of products sold in her store!
Overall microfinance is about an opportunity—and making the most of an opportunity. Whether a loan is micro or otherwise- a successful outcome depends on how the borrowers capitalize and invest.
I can explain my answer best with the stories of Blanca and Monica, two borrowers I have met in the field in Guayaquil, Ecuador.
Blanca runs a “mobile hair salon” and she took out a $350, 6 month loan to purchase sheet metal to fix her roof. While I support the fact that Blanca wanted to secure her roof and I am sure this loan has helped her lead a more stable life, the loan was not income generating. Leaving Blanca to pay her regular monthly expenses, plus the loan capital and interest.
I believe a microLOAN is not always the best microfinance service available as a means of poverty alleviation. In situations like Blanca’s, I believe that microsavings would be more beneficial. To me, the loan should somehow boost a borrowers business or fulfill an urgent need (health, safety, etc.). Otherwise, I wonder if borrowers would be better off saving their money for 6 months and gaining a little bit of interest. In Ecuador, many clients have trouble trusting financial institutions with their money so they would rather take a loan than open a savings account. Thankfully Fundacion D-MIRO is trusted by its clients and they are in the process of becoming a bank so that they may provide savings services.
On the other hand, I have seen microfinance “work” for many clients who have capitalized on the opportunity to enhance their businesses. For example, Monica took out a 9 month, $500 loan to buy a copy machine. Monica has a keen business sense as she realized there were no other copy machines available in her area, thus making her shop very popular with her neighbors! Monica saw immediate return from her loan use and has since expanded her business and the number of products sold in her store!
Overall microfinance is about an opportunity—and making the most of an opportunity. Whether a loan is micro or otherwise- a successful outcome depends on how the borrowers capitalize and invest.
Thursday, February 25, 2010
Got Milk??
Today I visited Fundacion Paraguaya's Farming School (Escuela Agricola) and I had the opportunity to milk a goat!! More to come on the foundation's program and facilities, but for now, go grab yourselves a couple of cookies to go with this....
Monday, February 22, 2010
Vegetarians Beware!!
We had an asado on Saturday in our backyard, so I took a picture of what a typical dinner in Paraguay looks like (Sorry PETA):
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