Recent Questions

To answer a couple of the questions, the goat was roasted (basically cooked over an open flame). The beer is really good, but not quite as good as Creemore. It is comparible to Heiniken.

As for the loan program, the banks claim repayments of about 98%, which is probably fairly realistic. The beauty of the concept is that the borrowers for groups and get a group loan on which they are all co-borrowers/co-guarantors. If one or two members fail to pay their share then the others are required to. The loans are based on the ability of the businesses to pay if the business already exists, so they don't really have a problem there. They do also lend occassionally to start-ups but then the loans are small enough that the other group members would be able to repay the loan if other members fail at their businesses. Also, since they cannot get additional bigger loans unless they successfully pay back the first loan and build up a reputation (just like a credit rating), it is in their interest to make sure they pay back in full.

ICODEI has a much lower success rate due to two major reasons: 1) they lend more to groups that are start-ups and that often do not have the business accumen to be successful to the same degree (which is why so much of what I do is education); and 2) volunteers are here from 1-3 months typically so there is little consistency in the administration of loans. At certain times, there are no (or not enough) volunteers to follow up on loans so they can linger in delinquency for months before the issue is addressed. This is why we were visiting the banks this week, so that we can leave the lending to those with the proper resources and practices in place to manage their loans.

Interestingly though, as a whole, micro-finance is both a solution and a problem. We see in Kenya that it gives capital to those who otherwise would not have it and allows them to make businesses from which they can raise themselves out of extreme poverty. On the other hand, it also creates a million micro-businesses while there are no large scale operations. So the country as a whole is grossly inefficient because there are no benefits of economies of scale, which is particularly important where large investments are concerned. In a place where people are starving due to poor crop harvests during the current drought, being able to produce more with less is vital. They will still require massive investments and aid to reach the tipping point where they can become self-sustaining.