Reflecting on microloan season

By Sakina Shibuya

Sakina oversees the warehouse as
farmers come to pick up their fertilizer.

Last Friday marked the official ending of this year’s first round of microloans, which lasted for about two weeks. During this time, we distribute the agricultural input microloans to farmers in our program. In this post, I would like to share what, in my humble opinion as an intern, I find fascinating about UMF’s microfinance operation.

But, before I get into details, I would like to quickly explain what microfinance as a concept means in general, for some who may not be familiar with the term.

Microfinance generally refers to various financial services provided to a client population which is traditionally not served by conventional financial institutions. It includes anything from savings accounts to micro-insurance. Some may recall the 2006 Nobel Peace Prize winner, Mohammed Yunus. He is the founder of Grameen Bank in Bangladesh, which is internationally famous its ultra small loans for small businesses, mostly owned by females. How ‘micro’ are Grameen Bank’s loans? It may be as small as a couple hundred US dollars.

Within the realm of microfinance, UMF provides microloans that are quite different from those of Grameen Bank. And I, as a graduate student who studies microfinance, am absolutely intrigued by UMF’s loans (I hope you are too, after this blog post.) So, let me be a bit arrogant and teacher-like for just a little, and explain why that is the case.

One may wonder how UMF implements loans and delivers cash to each farmer in a town where roads are unpaved, and water and electricity stop frequently. (La Unión doesn't have a bank branch – the closest branch is about an hour and half away by car.) It is quite risky for a bank to store loan funds in cash at its office. Additionally, having no bank in town indicates that farmers themselves are not going to be able to withdraw cash easily from their accounts (if they have any). Hence, conventional loan implementation through fund transfer between bank accounts doesn't make sense in the context of La Unión.

Given these obstacles, UMF implements loans by distributing fertilizers, rather than by allocating cash to farmers. Lending through the distribution of fertilizer has several implications. Firstly, it means that UMF can replace risk of keeping cash with one of storing fertilizer in a secure warehouse. Obviously, the latter has much lower risk.

Secondly, by distributing a specific commodity (fertilizer), UMF can restrict the use of loans. While cash can be used for purposes other than agricultural, fertilizer can only be applied to soil. Though it may be sold to attain cash, fertilizer is far less flexible than cash. Using fertilizer helps UMF reduce the necessity of fund tracing after loan implementation.

Brilliant, isnt’ it?

I very much enjoyed being part of UMF’s microloan operation. My responsibility during microloan time was to be in charge of the fertilizer storage and inventory control. It was my job to assure the right type and quantity of fertilizer that remained in physical inventory at the end of each business day.

Although my Spanish ability is limited, I thoroughly enjoyed interacting with our coffee producers. One day, two producers from the same village came to pick up their fertilizer, but their truck broke down as soon as they parked it in front of the storage. A moment later, I was pushing the truck with them in order to kick-start it so it could go get fixed. After seeing the car leave, I went back to the office. Then, the daughters of one of the producers brought me a bottle of orange juice and crackers. It was their thank-you present for pushing their truck.

My Spanish is horrible, and I honestly doubted that my wimpy push was much help for them. But they shared with me a small part of their daily experience, and let me be part of their group just for a moment. The orange juice, crackers, and the smile they gave me were indescribable. Maybe I’m being too sentimental. But this has been my favorite moment in La Unión so far.  

Adonil's corn mill, one year later

Interviews by Gilberto Barrientos and Pedro Hernández

Adonil and Gilberto

Jose Adonil Tejada came to La Unión on Friday to pick up his microloan of fertilizer for his coffee farm. Last year, Adonil received a loan from UMF to purchase a corn mill to grind corn into flour for his family and the community of La Ceibita, where he lives. In the year since he was able to buy this mill, he has paid off the loan and has secured a small but steady income for his family from the mill.

Besides receiving money from other families using the mill, Adonil’s family saves money by being able to use their own mill instead of paying to use another. Currently, they have an average of four people from the community coming to use the mill each day. The price Adonil charges others to use the mill depends on how much corn they bring, but he said the average is about 3 lempiras per person. This means the family earns about 12 lempiras per day from the mill.

Twelve lempiras is about $0.60, which doesn’t seem like much. However, many families in the La Unión region live on less than $2 per day. To receive an extra income of 360 lempiras (about $18) per month is no small thing, especially if a member of the family needs medical care, new clothes or school supplies. In addition to this income, Adonil’s family saves about 90 lempiras per month by having their own corn mill, making their total income/savings 450 lempiras (about $22.50) per month.

Adonil has not had to spend anything on the mill for repairs because he and his family perform simple maintenance to care for it. They make sure water does not fall into the motor, and they clean the mill immediately after grinding corn. They also clean the band of the motor and use resin on it to keep it on track.

Adonil said that he and his family are very happy with the mill, and that it has been a good investment for them. He likes that it is easy to operate for him, his wife or his daughter. At UMF, we hope to continue offering access to microloans for processing equipment, through which farmers may support their families, as well as provide a service for their communities. 

My food experiences in La Unión

By Sakina Shibuya

¡Hola!

My name is Sakina Shibuya. I’m an MA student in international development at American University in Washington, D.C. My academic interests are microfinance, financial inclusion, development, rural and urban poverty, economic growth, culture, values, historiography, the cold war, and the list continues. I’ll be working with Unión MicroFinanza as a summer intern until the end of July, and I would love to enter as many blog posts as possible to give you a good sense of what La Unión in the summertime looks like!

Food of La Unión

Food is a vital aspect of culture, and is also a great way of introduction to a new culture.

Of course, I have only been here for about a week and half. I’m certainly not claiming that I know all about the Honduran cuisine, rather I would like to share my culinary experience in La Unión.

My brief research prior to travel indicated that food in Honduras is very much the same as Mexican food. Well, that was a hasty generalization in my opinion. Mexican and Honduran cuisines are certainly similar. Frijoles negros (black beans), corn and flour tortillas, carne asada and chimichanga. The names of foods probably sound quite familiar to many residents in the States due to the prominence of the Cal-Mex and Tex-Mex culinary culture. But don't be fooled by the familiarity of the names, because they could be very different from what one imagines.

Let’s take chimichanga. Chimichanga is a deep-fried burrito in the States, but it is more of a simple cheese quesadilla garnished with fresh tomato, green bell pepper, and queso (hard cheese). It’s quite different indeed. There is so far only one comedor (small eatery) in town which makes this dish: Señora Anahi’s.

Chimichanga

Señora Anahi also makes, in my opinion, the best baleadas too. Baleada is pasty frijoles, avocado, and queso folded in a tortilla. Very simple, yet there is something very comforting about its flavor. Baleada is also a very common Honduran dish.

A baleada

The dishes above are very tasty, and affordable; however, after a week of living in La Unión, one soon realizes that there are not a lot of food variations in the town’s eateries. I have yet to be fed up with food here, as it has only been a little more than two weeks since I arrived. However, I can certainly see how I may not want to eat any more baleadas after two months (or, as one of my colleagues has done, for forty consecutive days).

I have thought a bit about why the food variety is quite limited in La Unión. From my observation, I believe one of the reasons is the remoteness or difficult accessibility of the town itself. Paved road ends about an hour and half way from here, which makes it much more difficult for trucks to come in. I believe this is especially difficult for produce transportation which requires better time management.

 

Aha, hence infrastructure can affect local diet.

I love my ‘aha’ moment. It only comes from empirical and practical learning like this, rather than my usual book studying (not to say books are not exciting, because they are). It’s more intuitive and experience-focused. It is ultimately more lingering in my memory.

I’m looking forward to having many more ‘aha’ moments in coming weeks, and would love to share with all on this blog.

Mountain roads, food, and the clinic: First week in Honduras

By Kerry Huang

La Unión, Lempira, Honduras

Hi, I’m Kerry Huang, one of the interns here at Unión MicroFinanza in La Unión, Honduras. I just finished my freshman year at the Wharton School of Business at the University of Pennsylvania. I haven’t decided my concentrations yet, but I have many different interests within business, including marketing, entrepreneurship, finance, and statistics. This summer, I will be doing a variety of activities with UMF and will be able to work with local coffee farmers on financing, analyzing leaf rust, and more. As a result, I will be writing blog posts throughout the next few weeks to share my experiences in Honduras and with UMF!

So much has happened in the 10 days that I have been in Honduras. Everything is so, so different from my comfortable life back home in New York and my college life in Philly. Right as I grabbed my luggage and walked out into the airport of San Pedro Sula, I took a good look around. Even though San Pedro is the “industrial” city of the country and has one of the busiest airports, this airport was miniscule. I felt like a stranger amongst so many Hondurans (also referred to as catrachos). Jeremy and Heather were there to welcome Sakina (the other intern) and me with hugs and to introduce us to Albin, whose house we are staying at.

The central park in La Unión.

Albin also drove us back to La Unión, which took about 3 hours. My experience in the car that day was very exciting, for lack of a better term. I felt like I was in a video game playing Mario Kart as we tried to dodge all sorts of carts, humans, animals, trash, wildlife, and dead trees. I never knew cars could swerve that fast in a second or that drivers would feel so comfortable driving in the wrong lane. I was not terrified, since I felt safe in Albin’s hands, but it was a vicious ride. As we finished the longer leg of our trip, we decided to take a “shortcut” through some rocky mountain roads to arrive in La Unión the back way. The roads curved back and forth, up and down, and had so many rocks. It was also very muddy because it had just started raining (it was the first rainy day in a while). I was amazed at Albin’s ease and the way he handled the car. His sharp turns felt so smooth, and I secretly loved going up and down the steep mountainsides. Right when we arrived in La Unión, I was unaware that we were already there. I looked down and saw a neat, organized town with a variety of houses. We also heard fireworks, which sound exactly like gunshots. People set them off randomly, which gets quite scary and surprising at times. Men also carry machetes, which I think I have gotten used to. They use these as a tool for pretty much anything, from tree-trimming to fence-making to digging holes in the ground. 

We stopped by Heather’s house and could hear Albin’s kids screaming “papi, papi!” The three children are very adorable but too hyper for me to handle. They all have a sweet tooth and get much too excited when there’s chocolate in the house. We even have two ice cream freezers now, since the parents decided to start selling ice cream as another side job! They are definitely going to make a lot of money off of us gringos!

Local fare includes pollo con tajadas
(fried chicken and plantains)

I wanted to focus the rest of this blog on my experience at the local clinic and talk about the medical care they have here in La Unión. Sadly, I started to feel nauseous on the first weekend. Sunday morning was not a great start, but I still went to the church’s fundraiser lunch: carne asada, or grilled meat. I felt even worse after that. I got to use some internet (finally), but my stomach was not doing well. I went to the mini super (one of the bigger pulperias in La Unión, about the size of a typical gas station store in the U.S.) and bought some milk, which was quite stupid since I knew I was feeling sick. When we got back to the house, I took a long nap and headed out for dinner with Sakina and Beth. We ate some food at a local comedor and had a relaxing night. However, the next few days only got worse for me.

On Monday morning, I was too sick to go to the office. Although I went to bed feeling better, I woke up at midnight feeling sick again and really needed to go see a doctor. Here in La Unión, there are clinics for checkups. Heather brought me to the public clinic, which was a great experience. I wasn’t sure what to expect of the doctors here in Honduras, but I was very pleased. We arrived around 7:30 a.m. and got to talk to the doctor in the consultorio (consulting room) fairly quickly. She explained to us how there would be no consultations in the office for the next two days because she was going to the nearby aldeas (villages up in the mountains) to treat pregnant women (who don’t get many opportunities to check up on their health). During the checkup, I explained my symptoms and how I felt over the past few days. She felt my stomach and asked if I felt any pain (no), and then listened to it with a stethoscope (apparently there was a lot of noise). My lips were really dried out, and she kept on commenting how I was dehydrated. She also listened to my heart and checked my throat, both of which were good. The doctor quickly concluded what medicine I needed and then suggested I get an IV since I had lost a lot of water and would probably throw up if I tried to drink anything.

Chickens are free to wander around La Unión.

I was a little nervous, but everything happened fairly quickly. I went to a different room and lay down until the nurse wiped my hand clean to put in the needle. Instead of injecting it into my arm, she put it in the back of my right hand. Then, to test if I was allergic to the antibiotic, another person poked the inside of my right arm (which hurt, SO MUCH). It kind of formed a bump automatically, but there was no redness or any itchiness, so they then put the rest of the antibiotic into the IV. I stayed there for over 2 hours and tried to nap. Heather checked in a few times from the office and was very helpful and caring through it all! I would not have felt as comfortable without her, although the doctors were so accommodating and wanting to help. The facility was quite clean and had no strange stenches. I was quite surprised at how good the service was. The total cost for the medicine, the consultation, and the IV was only 10 Lempiras…which is equal to 50 cents. I was really amazed. The public clinic is made so that most people can afford to get health services without having to pay most of their income. We had to go get a few other medicines from the pharmacy, but that was also quite cheap. All totaled I got 4 different pill types and a mixed powder to put in my drink, which tasted so nasty. I thought I was going to throw up again, but I finally finished the last packet. I definitely feel a lot better now, almost like a new person.

It has almost been 2 weeks since my arrival, and I am excited for the 8 weeks to come! We are distributing microloans for farmers this week, so it will be quite busy. Despite getting sick, I have thoroughly enjoyed my experience in La Unión so far and can’t wait to learn more. The people are very kind and have a simple but fulfilling lifestyle. It’s impossible to explain everything that has happened, since you really need to live here to understand, but Sakina and I will be writing blog posts throughout the next few weeks to talk about our experiences!

Me in front of the UMF office.