Sometimes it just aint enough…

by Michael Kasseris

Often times life is like a boxing match. You’re put into the ring with a challenge and you have some rounds to hash it out. Once you’re in this figurative ring you have a few options: you can get scared and jump out of the ring, you could dance around for a few rounds, or you can try to engage the challenge and see how you hold up. I know this metaphor sounds incredibly cliché, however it reminds me of a phrase our Fellows director told us way back in San Fran. To prepare us for our experiences in the “microfinance mundo,” ( I borrowed this from Susan Arthur, I really like it!) he told us that we should be ready for a few “gut punches.” When I heard this I wasn’t really surprised, I knew that things out in the field wouldn’t be easy. I knew that we all would have our fair share of adversity. I mentally prepared myself to expect the unexpected and for things to not always happen according to plan.

Soon after settling in at the head office in Hanoi, I was eager to meet more clients and visit them at their place of business. All worries and various setbacks that happened to me so far would soon wash away as I met my first clients. I didn’t mind that the trip there took over 3 hours in a cramped bus with the thermometer hovering above ninety degrees. I couldn’t wipe off the grin I had on my face as we pulled up to the first client’s house. The client came to the gate and we explained why we had come to visit her. With a friendly smile she invited me in, introduced me to her family and offered me a delicious cup of tea. Everything was going well during the interview and then it happened, my first gut punch. POW! Right to the gut, I was down and the referee was already giving me the ten count. The question I asked her was about how the loan has changed her life and if there has been any positive change since she has expanded her business. She replied emphatically, “No!” She even told me that her loan was too small to make any real changes in her life and that she needed double the loan if she was to have any impact on her children’s lives. After a couple minutes of Vietnamese back and forth my interpreter explained to me that although she was very happy with the loan and that it did help her pay for things, she still didn’t have enough to see serious changes happen in her life. The client then explained to us that although she could vary her family’s diet every week, she still didn’t make enough to buy meat or fish, or save enough to send her children to a university. I felt confused and frustrated. I knew that as a Kiva Fellow I wouldn’t be hearing dramatic stories every time I met a client, but I didn’t believe that I would have a client tell me that their loan hasn’t helped much.

After finishing the interview I contemplated what had gone wrong and why this woman hadn’t seen much change in her life. As we rode on the motorbike to the next client I felt a bit defeated. Even some of the street dogs we passed seemed to stop and give me a look of disappointment.

Fortunately enough for me my MPM ( Kiva’s partner manager in Asia and my fellows manager) was coming to the office this week and I explore the issue with some of the management in the office before I came to any conclusions. What I realized was that things weren’t as black and white as I thought they were. Although SEDA was a great organization and was expanding it still faced many challenges that so many other MFI’s face all over the world. They still have to manage their portfolio and develop solid lending practices for each one of their clients. There were many challenges that SEDA was still dealing with which kept them from lending larger loans like some of their competitors. Vietnam also has very different regulations from many other countries which keep a microfinance institution from lending as freely as they would like to. Essentially SEDA understood the problem of small loan sizes for their clients and is working to improve on it, however it is better for them to loan what they can and maintain their risk mitigation strategies than to create a situation which may compromise their lending ability all together. Also many of the clients that had complained about loan size had just recently started borrowing and they had to build their credit with small loans before they were considered for larger ones. When I spoke to some of my friends in other organizations I was reassured that many MFI’s were dealing with this challenge and that it was a matter of time before they could grow to their full potential.

It is important to understand that progress is being made! Whether it is because clients who are borrowing are now learning about practical business principles and how to manage a loan, or that the MFI is working out bugs in its operation model, progress continues. Even though many of the clients have been working hard to pay back some of their loans they are still very new to the credit system and they are learning about good borrowing behavior. Although some clients may not have realized it, many displayed a new understanding of the credit market. One could see the difference in behavior from a client on their third cycle to a client who just received their first loan. The older clients understood the difference between rates and repayment schedules. Experienced clients could explain why they like certain methods of repayment over others and some even kept track of their cash flows on ledgers, which they were always happy to display. I was excited to see that in some communities where SEDA had built a presence, principles of sound business and finance had taken root and taught business owners how to leverage their debt to improve their lives.

After I had considered the perspectives from the clients all the way through to SEDA’s management I felt more at ease with the progress of microfinance in Vietnam. I understood that although some clients didn’t feel a tangible improvement in their life, there were many positive improvements to the general financial system which previously didn’t even exist in these communities. I understood that there were still many clients who considered the changes in their lives to be very significant. A client I met last week told me her son might be attending a medical school if he passes the entrance exam this fall. She told me that another successful loan cycle would be enough to help pay for the tuition he needed if he gets in. At the end of the interview she gave me a wink and told me that she was confident everything would fall into place. I guess I learned to carry that confidence about the progress I’m witnessing in the poorest areas of Vietnam and engage the fight worth fighting, even if it means hitting the mat a few times on the way.

Michael Kasseris will be working with SEDA in Vietnam this summer for 12 weeks. If you would like to learn more about SEDA or lend to one of their borrowers click here.

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