A few more excerpts from my last week’s journal entries:

Ciprian has a broad goofy grin, missing some of his back teeth.  Hilda says he used to spend all his nights on on the street drinking and hanging around, but now he’s more serious.  He is a student of political philosophy as a well as law.  His religious views are Christian, but with a unitarian flavor.  He believes that Sai Baba in India has raised men from the dead, and places much importance on the scriptures of other faiths.  To relax he watches action movies, the higher the body coudn the better.  He makes a mean smoothie.

Agustin my translator is also my resident social commentator, grammar teacher and conspiracy theorist.  He is a thorough-going pacifist who believes that George Bush planned 9/11 as an excuse to go to war.  His great concern is that everyone be “positive.”  He even took issue with the psalmist for being overly negative.  He has a very soft heart and has become quite concerned with some of the women we’ve talked to.  One of the in particular, a lady named Yindiana–impossibly skinny with missing teeth and wild eyes–he came to feel somewhat responsible for.  He told me he planned to loan her husband the money he needed to sell fruit.  Las week, after I thought he’d forgotten about it, he gave the money to Ciprian, who completed the transaction.  I hope it helps them and doesn’t interfere with the project.  Aguesin says he will cry when I leave and I believe him. 

Walden is the best book I read this summer.  I read it twice, underlining quotes and writing bad poetry in the margins.  The last sentence still runs through my head.  I think I want it carved on my grave: “There is more day to dawn, the sun is but a morning star.”

The best way to eat a mango is to peel it with your teeth.  You bite into the top and rip off a long chunk of the peel, then repeart until you have an open place large enough to sink your teeth into.  The best thing is to leave yoursefl an unpeeled portion to grasp it by until the last possible moment, but no matter what you will eventually get your hands and face all sticky with the orange juice.  Experienced and determined mango eaters spend considerable time sucking all the goodness out of the stringy part, then they throw it into the street for the flies to finish.

The singing in our little church (La Iglesia Episcopal San Pedro y San Pablo) is a cappella and robustly out of tune.  “Hoy Senor Te Damos Gracias,” “Pescador de Otros Mares” and the others all had keys when they were written, but the church members sing-chant them in a way that seems to force the key signature out of the way.  I do my best to follow along, sometimes finding the melody, other times just keeping up with the words, singin softly in a low register.

The service is very formal, which combined wit hthe early hour (7:00 am) gives me a feeling of rightness, as if everything were squared away and simple, no matter what might happen the rest of the day.  Reverenda Milquilla takes the first communion wafer, which is larger than the others and usually decoratted with a chi-rho symbol, and breaks it into quarters over the cup of wine.  Then she eats half of it and gives the other half to Alexander.  Before she swallows she takes the first sip of wine.  I watch her mouth fill with bread and wine, and every week I notice her throat move when she swallows.  Every time it surprises me just a little bit.  It looks gross, not ceremonial or holy when she drinks with her mouth full then swallows the whole mess hurriedly so she can continue the service.

Still more to come, but I’m going with my family to Colorado for a week.  This is a good review exercise, so expect more posts after I get back.

During my last week in La Barquita I began writing down details about people and things I didn’t want to forget:

It gets cloudy most afternoons, but it often does not rain.  On these days, when it is hot, muggy and overcast I experience a physical longing for rain.  It is hard to explain since it is neither pain nor pleasure, just desire.  Similar even to sexual desire. I think I will feel something like it in the instant just before I am drawn up to meet Christ in the air.

Dona Pimpa is a short stumpy lady who walks somewhat crookedly and as little as possible.  I’ve never seen her go beyond her block.  When she sits down she falls into her seat suddenly, then arranges herself so her stomach sticks out just enough to balance a coffee cup on.  She has three gold teeth.  Every Sunday during the church service just after communion Alaxander the deacon walks down the street with Dona Pimpa, her stumpy arms folded behind her, walking her lurch walk.  I do not know what they talk about.  She calls me her “hijo” (son) and is always pleased when I visit and surprised that I leave so soon.  I have nevery recieved so much love accompanied by so few words.

Hilda and I drink coffee in the afternoons.  this is the foundation of our relationship.  At first we could barely talk, but I knew enough to learn how to make coffee, so after the first time I became the family coffee maker.  Now we have limited conversations about food, my family, my work, and especially the needs of little Alani.  Hilda strikes me as mostly a simple nature.  She like dancing and music and going to the salon.  She also likes quiet and has few friends.  She loves her family.  She often refers to how things will be when I return here, as if it is a certain fact that I will come back soon.  “When you come back Alani will be bigger,” she says, or “whe you come back we will be living better.”  I’ve told her I don’t know when or if I will return, but she still says things like this.  She has been so welcoming and has done s many kind things for me, from cooking every day to repairing my pants button, that I have no idea how to thank her.

When I got here Alani was only two months old, so I’ve been here more than half her life.  I don’t quite remember what she looked like then because soon after I arrived she became sick and was in the hospital for almost two weeks.  My main recollection is that she always looked terrified.  Her face is more expressive now.  She somiles sometimes for no apparent reason and it is no less brilliant for being toothless. Sometimes she looks very thoughtful and I almost forget she is a baby.  When she throws a fit she looks like a crazed little monster.

Most people here have brown eyes, but some of them have eyes I would describe as grey.  It is a very light color, almost greenish.  It makes them look very intense.  Carlos Pimentel, Esperanza’s Director, has this eye color, more green than most.  One of the women in the groups below the bridge has a little girl with those eyes.  She is one of the most beautiful two year-olds I’ve every seen.  She’s also a total terror.  I think people with these grey eyes probably have hidden powers which they only reveal if threatened with death.  I’ve never seen this eye color anywhere else.

That’s enough for now.  More later.

Hello America!  I’m back, so feel free to call, write or send candy-grams.  Especially the candy-grams.  It is a bit strange being back here in the land of the free and extremely comfortable, but it’s good too.  I’ve been enjoying taking warm showers, drinking cold milk and nursing my sense of entitlement back to health. 

Here is the link to my Final Report.  Feel free to read the whole thing if you like, or just skim the cool diagrams I made. 

A summary of its contents might look something like this: I was supposed to find out why more women were not participating in Esperanza in La Barquita.  I found that the most important reason which Esperanza had any control over was the solidarity groups: the groups of five women who guarantee each other’s loans in lieu of collateral.  It is very difficult to form a group with women you trust enough and who you believe will succeed in business.  According to group contract theory, the safest most trustworthy borrowers will find each other first, leaving the more risky ones to fend for themselves.  Thus the second group will be more risky than the first, the third more so than the second and so on.  This means each group will also take more time to form than the one that formed before it.  Given this information I suggested that the group formation process is difficult in an urban area like La Barquita, where social ties are looser than in the country, and that Esperanza’s expectations should be changed accordingly. 

My actual report contains much more information, and in a more nuanced manner than that, but I think that was the most important part.

My presentation went very well in case you were wondering.  I think I raised some good questions and provoked constructive responses.  I was pleased.  Today I wrote my final bit of homework for Smita, so I am done.  When I have access to good internet again (i.e. once I am back in the USA) I will post my report and presentation in case you are curious.  I also have a lot of review and reflection to do, so some of that will make its way here.  For now though I´m just happy to be done.

Today I finished my final report.  Tomorrow I present my findings to the Reverend Milquilla, Pedro (Microfinance Director of Esperanza), Carlos Pimentel (Commander in Chief of Esperanza), Padre Milton (Episcopal higher-up) and a whole gaggle of church people and group members.  Wish me luck everybody.  If you think of it at 10:00 am eastern time, send up a prayer.  I need my wits about me and wisdom to know how to present my ideas effectively and constructively.

Keep cool everybody! (or as they say here, chebere mangu)

I mentioned in an earlier post that I have been thinking about profitability as a possibility for microfinance institutions. A commentator on this blog mentioned a recent article in the Economist about this issue. Unfortunately, you have to pay to read it on-line, so I didn’t, but here’s my semi-informed opinion on the matter:

Sustainability and Profitability: A Beginner’s Guide

If you want to understand the debate between non-profit and for-profit microfinance you need to understand why microfinance is even necessary in the first place, and why it has been almost entirely dominated by non-profit institutions. This is more complicated than it might seem.

You see, according to one of the hallowed laws of economics: the law of diminishing returns, we should never have needed microfinance. The idea is that the more capital you have, the less profit you get from each additional infusion of capital. Thus well-financed corporations get less profit from each additional dollar of capital (technically you should be thinking machines, not money when I say capital, but here it is just as useful to think of a loan as what the business would buy with the loan). On the other hand a poor entrepreneur with no capital whatsoever should make very high profits from each dollar.

Theoretically, this should mean that poor entrepreneurs can afford to pay high enough interest rates to draw money from rich banks. Capital should be flowing toward poor countries and poor businessmen like it was rolling downhill. The problem is, it doesn’t. Banks don’t want to loan to poor people, despite the fact that they should be able to gain more from every dollar of capital.

The reason is more complex than this, but basically, banks have no way of knowing who is a safe borrower and who is a risky borrower. Since they can’t know this, they offset costs and deter risky borrowers by demanding collateral. Poor people don’t have collateral (or at least not in amounts large enough to offset the cost of a defaulted loan). Microfinance, starting with Muhammed Yunus and Grameen bank in Bangladesh, combated this problem primarily by loaning to groups instead of individuals. This group contract opened up finance to poor entrepreneurs, and was effective enough that the idea has spread around the world.

And it all started with a non-profit institution. Grameen bank and its imitators have all started with the goal of fighting poverty, not making a profit. But wouldn’t services spread faster if you could make use of the most powerful incentive known to (neo-classical economist) man? Given that MFI’s generally achieve repayment rates in excess of 90 to 95% it would seem that this would be possible. But I’m not sure it’s that simple.

The fact that the microfinance innovation happened first in the world of non-profits should be one clue that profitability is difficult to achieve.  The fact is that non-profit MFIs do in fact strive toward profitability, but under a different name: sustainability.  Sustainability broadly defined means that the institution is able to cover its costs.  One important point is that if an institution reaches full financial sustainability (defined as the ability to cover both its operations costs and the cost of borrowing funds) it will theoretically offer the exact same interest rate as a profit-maximizing corporation operating under perfect competition.  This is because competition pushes profit to zero.

In other words, MFIs are actually pushing toward profitability in order to cover their costs and ensure that they can offer services to their clients without requiring massive subsidies which may dry up when microfinance loses its fad status.  Only the minority of MFIs have reached full sustainability.

The problem is that it is cheaper to cover larger loans.  You have higher costs per dollar when you loan to very small borrowers.  So the pressure as MFIs try to become sustainable is to service larger and larger loans.  Though they are still covering an under-served market, they tend to drift away from helping the poorest.

This is why I do not think that profitability is the ultimate answer.  I think the free market can and should efficiently serve the less-poor with financial services, but  there is less profit to be made from the most poor. I am certain that for-profit microfinance will expand in the future and I am relatively certain that this is a good thing, but it will not likely reach the very poor.  Because of this, I think non-profit organizations with a strong sense of mission will still be needed.

Also, the market needs constructive competition to ensure that the customers receive services at the lowest possible cost.  Compartamos in Mexico has received much press recently because it went for-profit.  Compartamos reportedly charges interest rates around 100% annually.  By way of comparison, Esperanza charges 30% annually.  I am certain that with stiff competition cheaper services could reach the consumer, but this would need to be constructive competition, i.e. an effective credit bureau needs to be established in order to assure that bad borrowers to not bury themselves in debt from competing institutions.  Unregulated competition nearly destroyed BancoSol in Bolivia because of this problem.

So that’s my opinion.  I know it’s really long, so I guess some more stars are in order for anyone who actually read the whole thing.  Geez I’m long-winded.  Anyway, if you know something about microfinance weigh in.  Stephen, I hope that answers your question.

This is the week I write my final report. It will consist of an explanation of all the reasons why women in La Barquita do not participate in Esperanza’s program, along with a theory for why there might be less participation here than one would expect, and a tentative estimation of the possibility for growth. When I’m done I’ll post it here somewhere, along with a summary for the lazy among you.

Pray that I get it finished on time, that I get plenty of rest, and that I can remain fully engaged in the community, even as I look forward to going home.

I’m working on an explanation on that whole microfinance profitability thing.  Stay tuned.

Today I finished administering my survey. I have a nice round 150 interviews under my belt. Now begins the analysis. I´ll be using statistics software to see if there might be correlations between any of the economic and social indicators and the women´s likelihood to start a business or take a loan. 150 is a pretty small number for this kind of work, but I´ll also be doing some more qualitative analysis. My presentation to the leaders in the church and of Esperanza is next Friday the 25th. I hope I can say something relatively useful, otherwise I´ll have to settle for amusing and I know they won´t get my stand-up act.

Someone (I don´t think I know them) commented on my post below about the likelihood that a for-profit MFI would be more efficient and effective at delivering financial services than a non-profit like Esperanza. This is an interesting question, hotly debated among development workers. I´ll have to wait until I have a better connection and some AC before I give my full opinion, but here´s a question to think about: wouldn´t the profit motive be the ideal way to ensure that everyone is able to recieve financial services? Without profits, will capital actually be mobilized in the amounts needed for real development to happen? On the other hand, wouldn´t a for-profit institution tend to serve only the less poor?

I have some sem- informed opinions, but we´ll talk later. I have other things to do at the moment.

Ok, sorry to post twice today, but this is cool.  Kiva is a web-site intended to raise money for microfinance by connecting actual borrowers to supporters in the US.  You can go and look at profiles of Esperanza associates (or borrowers from any of the other microfinance institutions who participate) and then loan them a part, or all of the amount they need.  The money is channeled through Esperanza, then they pay you back after the loan period.  It’s a great way for Esperanza to raise funds.  So, check out this page.  You’ll learn a bit more about the organization I’m working with, and if you want you can help them out.

Murphy’s Law of the Gua-Gua: Just when someone gets off and you think you’ve managed to claim yourself a little space to breathe…a fat lady gets on.

Anyhoo, this is my last week of interviews, as my last post may have mentioned.  It is sinking in that I won’t be here for that much longer.  That’s good in some ways, because I’m running low on funds and I’m looking forward to seeing my family and starting the school year.  But man, my Spanish was just getting almost workable!  I mean sure, I still sound like a stuttering idiot when I try to talk about subjects my vocabulary doesn’t cover (one of which is politics, and that’s all people talk about around here) and my syntax is often unforgivable, but still!  I can ask for directions and talk about microfinance and school and food.

This is the part of the experience (judging by last summer) when I really start to love the area.  I am about to leave Santo Domingo, so I am willing to forgive its faults.  Also, I’ll have to say goodbye to Ciprian, Hilda and Alani.  This is the first time I’ve ever been in constant contact with a baby for any length of time, except for when my sister was born, but I was only two then.  Little Alani has grown.  Her face is more expressive now.  At first she mostly just looked amazed and kind of terrified all the time, with her big wide eyes and drooling mouth.  Now she sometimes gets this thoughtful look like she’s trying to figure out all she’s seen in 4 months of life (I’ve been here for more than half of her life!), and then she smiles her crooked toothless grin.  She was trying to crawl the other day, but she can’t do it yet.  She squirmed ineffectually toward her teddy bear, then her head dropped and she fell asleep.  It was hilarious.

So anyway, I’ll miss this place, but let’s not get sentimental yet.  I’ve still got some time.

I’d like to say a word about my Independence Day post (if you’re not interested, stop reading.  I don’t mind). Looking back on it I realized the only non-rhetorical, actually-controversial question I asked was the last one about the war.  Here’s why I included that one: My translator Agustin is a committed if not philosophically rigorous pacifist.  I am convinced that a just war is possible in theory, though aware that theory gets muddled in real life. I believe war should be avoided at any cost short of allowing an injustice that would be greater than a war.  Having Agustin around, and being in a country that overwhelmingly believes the war in Iraq to be unjust has made me ask myself what makes a war just or unjust.  I have grave doubts about the justice of the war in Iraq, but I am still unsure about my opinion.

I write this with the full recognition that this medium is not a good one for discussing controversial issues (the popularity of political blogs notwithstanding).  So forgive me, and if you have a different opinion I hope we can talk about it face to face sometime.

My good friend and future roommate Chris Thornton responded to my post with Mr. Bush’s statement that we cannot distinguish between terrorists and countries that harbor terrorists.  This seems to me a sufficient, though over-simplified justification for the invasion of Afghanistan.  I see less application for this justification in Iraq.  It seems that the war in Iraq was the result of poor intelligence combined with a dangerous bluffing game played by Saddam Hussein, who seemed unwilling to reveal the actual weakness of his position, and his apparent lack of weapons of mass destruction.  Any post-hoc humanitarian justifications don’t seem to fit the rhetoric of before the war.

So, here are some questions that I’ve been trying to sort out about this war:

Can a war begun with false information be just?  Can it actually be considered unjust if bad information was followed with good intentions?

What is the justification for a “war of liberation?”  Is it a comparison between the suffering caused by war, and the current suffering of an oppressed people?  What if the suffering caused by the war is worse?  Can you ever improve a people’s situation by invading their country?  How many people have to want you to invade in order for the war to be justified?

If we are justified in invading any country with an evil dictator, why haven’t we invaded the countries in Africa that have suffered under unjust regimes?  Where do you draw the line between being a “liberator” and being a neo-colonialist?

Can you base a just war on a possible good that might come about in the future (i.e. a peaceful, stable, democratic Iraq)?

So as you can see, I’m really confused.  If you have any suggestions for reading on the topic of just war theory, bring ‘em on.  Have a great week everybody!