I had my first real work with microfinance today—met a dozen boat-owners, part of a group that’s agreed to upgrade their boats (for safety and aesthetic reasons) with support from a grant funded by Banesto (a Spanish bank) and administered by ASSET. Present at the meeting, in addition to the boatmen and me, were Badu, the office manager at ASSET, Daouda, the project liaison, and Peter, a sixty-something Dutchman(?) who’s been living in The Gambia for twenty-eight years and helping the boatmen engineer structural upgrades for several.
The most striking thing about the meeting—and the whole process of setting up this project, which has been under negotiations for nearly a year—was how reluctant the boatmen were to take the money; how worried, even angry, they were about various restrictions and requirements. The main bones of contention were insurance, which ASSET insisted was necessary to upgrade their licenses and compete with larger boats but the boatmen felt would be too expensive, and the payback schedule. The boatmen were also concerned that ASSET might not do enough to negotiate with the “glam tour” operators to get more clients for the boatmen, so they could make enough money to pay back the loans. The meeting was mostly conducted in Wolof, the local language, so I’m making some assumptions based on body language, intonation, the bits of English sprinkled in, and the summary-translation given to me by Badu and Daouda.
It makes perfect sense that the boatmen would be apprehensive. Even without speaking their language, I could see how different their lives and perspectives are even from the ASSET representatives, let alone the bankers they’d be indirectly indebted to (no shoes, missing teeth, mismatched clothes, gnarled hands, discomfort with chairs). Taking on debt is anathema to these folks who’ve always lived hand to mouth, and for whom the last couple seasons have been particularly delicate. Yet I’d simply never thought about any of that. In the U.S., the focus is always on raising capital with which to fund microfinance, or perhaps finding local banking partners to work with. I always assumed the actual lendees would be chomping at the bit for the chance to acquire some capital. But what seem piddling sums to those of us in a position to loan ($25 is the minimum loan at www.kiva.org) mean all the world to people for whom the old Dickensian proverb applies acutely ("Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.").
Yet in a sense the boatmen are getting an even sweeter deal than they realize: Banesto is offering the money to ASSET interest-free; it’s actually a grant, but ASSET is re-packaging it as a loan (still interest-free but with a nominal administration fee) so that the boatmen have a real incentive to complete their renovations and pay the money back. In most situations microcredit is offered only with interest, either a low rate only to cover costs (as with www.kiva.org), or, in some cases, a very high rate, to attract investors and motivate debtors (as with the groundbreaking Yasmeen Bank). Success has been achieved with both models, which suggests that the genius of microfinance lies not in the administrative details, but in the basic availability of credit to those too small to get any from traditional sources.
Just as abruptly as the boatmen raised their objections, they dropped them. (This reminded me of a meeting between government meat regulators and a group of peasant farmers I’d attended in Chile: disempowered people often don’t really want to object to offers of help so much as they want to seize the opportunity to be heard.) They agreed to nominate five amongst themselves to take a share of the money and renovate their boats; allow ASSET to negotiate a new group insurance policy on their behalf; and agree with Peter on a model design for safer, more attractive boats. By Friday or Monday, hopefully, we’ll meet again and learn who the specific lendees will be, and how the remaining financial and legal challenges will be resolved.
This is all pretty exciting to me, even though it would be easy to get discouraged by the amount of red tape and bureaucracy and politicking that threaten progress even in such a humble situation as this. But it reinforces what I already knew: just as much as the first world is clueless and selfish, and could do vastly more to help the developing world with minimal sacrifice, it’s ultimately those in the developing world themselves who must work toward change; a hundred well-intentioned, non-expert foreigners like me are no substitute for a single educated, skilled, organized, energetic, enterprising local.