Adventures in Micro-lending - Working for PROMYPES

Every morning starts the same... with kisses. Buenos dias, May (kiss). Hola, Sherli (kiss). ¿Qué tal, Howard (kiss)? ¿Comó estás, Maga (kiss)? and so on and so on. Eleven times to be exact. For this reason I have learned to be the first person at work. This way people have to come up and greet me. I don´t have to make the rounds. Selfish? Maybe, but I´m from the U.S. and not used to such, um, closeness. I can only imagine greeting people like this at my old job. Awkward! Still this is only one of the many changes I have come upon working for a micro-finance organization in Perú... one of the many welcome changes.

Huancayo

My new place of employment is small, maybe 800 sq ft. It is composed of a reception area and a conference room. There are no individual offices or cubes delineating hierarchy. In the morning everyone simply trickles into the conference room and seats themselves around an eight-person table. Around us, in the conference room, are white boards, poised and ready to display the cases of potential clients.

From left to right: Karina, Jessica, Victor and Magaly organization receipts for the days collections.

First up to bat today to present a potential client to comité (a.k.a. me and my co-workers) is Jonathan. He floods the white boards with green marker. His potential client is a 28 year old woman named Rosario who rents out her car six days a week for approximately US$10 per day. We, comité, review Rosario´s financial statements and learn that between her and her husband they are able to net an income of about US$100 per month. Rosario would like to borrow US$250 from PROMYPES to fix the suspension of her car and would be willing to repay the loan over 16 weeks incurring a 5% per month interest rate. Comité pokes and prods at Jonathan´s case until they find a weak spot - Rosario´s business has only been around for two months. Not long enough. Frustrated, Jonathan sits down. Next up is Jessica.

Jonathan defending his case.

Jessica presents a 32 year old bodega owner, Ida, who sells anything from vegetables to beer to wooden and glass shelving units. Ida is single with children and is able to net about US$100 per month. She is asking for a mere US$170 so that she can buy more rice to sell to her customers. Ida would be willing to repay the loan over 12 weeks, one payment per week, with a 5% per month interest rate. Comité is able to dig a little deeper with Jessica´s potential client. Does Ida own her own home? In sorts, she and her children sleep in the back of her bodega. What is the community´s perception of Ida? Good. She is a well respected, hard working woman in the eyes of her neighbors. Does she pay her bills on time? Yes, although she doesn´t have many gastos familiares without electricity running through her home/bodega. This throws comité for a loop. If she doesn´t have electricity, then she is only able to keep her store open until 6pm when the sun disappears below the horizon. Is that enough time for Ida to make a reasonable profit? Comité ultimately decides not to hold it against her. What bothers them more is that Ida´s brother-in-law is already in PROMYES´ database of clients and he is a mora, slang for someone who pays late. If Ida´s brother-in-law can´t pay on time what are the chances that Ida will do the same? Comité hymns and haws for a while before deciding to accept Jessica´s client. Jessica leaves to deliver the good news to Ida.

Jessica preparing to present her potential client.

It always surprises me who comité decides to accept and reject as analysis is based more on gut instinct and the clients integrity rather than the clients ability to repay the loan. In other words, what the potential client´s neighbor has to say about the client has much more influence in comité than the potential client´s liquidity or pro forma debt coverage. But that is one of the defining characteristics of micro-lending. It is a business based on social trust.

Comité fills most if not all of the morning work hours from 8am to 1pm. After a 2 hour siesta we return to work at 3pm and from 3 to 7 we takes to the streets for cobrando (the collection of loan payments) and promocionando (the promotion of PROMYPES). We walk the neighborhoods of Huancayo, stopping in many of the shops along the way, handing out business cards, chatting, visiting PROMYPES´ existing clients and simply getting to know our neighbors in Huancayo better.

Jonathon and Michael promocionando in the streets of Huancayo.

Jonathan learning more about his potential client - a man who owns a blood analysis laboratory.

Uñas - a nearby town where I have gone to promote PROMYPES.

Victor collecting a payment from a local butcher in Uñas.

Through these processes - comité, cobrando and promocionanco - PROMYPES has accumulated 150 active clients whose average préstamo [loan] is a mere US$170. And like most other micro-finance organizations, PROMYPES has an unreal repayment rate: 99%.

Although there are a few thing PROMYPES does that I don´t agree with (ex: they refuse to lend start-up capital, they won´t take in older business owners as clients, and they, without exception, charge an exorbitant 5% per month interest rate) working has given me purpose. I actually enjoy going to work every day. Not only do I get to work with numbers but I get to help people (and mostly women!!!) in the process. This is exactly what I want to do with my life... So whats the next step? Finding a way to stay in the micro-finance industry after my job ends in December. Then, eventually, I would love to go back to school and get my PhD in third world economics (if I can convince some poor school that I am smart enough) and end my working years teaching. Now I´ve just got to make it happen.