Helping Microfinance Clients to Save: Are Incentives a Solution?

This post originally appeared on NextBillion‘s Financial Innovation blog on January 26th, 2017. It formed part of NextBillion’s January focus on microfinance.

Authored by Jeff Paddock and Santiago Sueiro.

At La Ceiba, we believe microfinance can be about more than loans. We work in a rural community 30 minutes outside of the city of El Progreso in northern Honduras. El Progreso has a small urban center where many Honduran banks established their branches. Our clients are just close enough to the city to open and access accounts but far enough away where they don’t visit the city or their bank on a regular basis. Additionally, clients cannot afford the ancillary fees that are associated with savings accounts. Our client population has low literacy levels, which make it difficult for them to understand financial vocabulary and concepts. The combination of distance, cost and knowledge gaps discourages clients from opening and maintaining a savings account. We decided we needed to offer a financial service focused on those three challenges.

Microfinance can be a tool for developing meaningful and intimate connections with low-income families. Know your clients, and let them know you. This concept, and the conditions that clients face, was the basis for our incentivized savings program.

Over the years, our staff developed intimate relationships with clients and their families through frequent interactions. We encourage this type of interaction through our relationship collateral philosophy. Recently, we heard a growing number of clients express interest in financial products beyond the loans that we already provide. Clients told us that they want to save but they are finding it difficult to do so.

There is a growing amount of research and work done to increase savings for low-income clients. A 2014 publication by Dean Karlan, Aishwarya Lakshmi Ratan and Jonathan Zinman lays out the constraints to savings observed across several regions in the world and highlights field experiments and nascent savings models that seek to address those constraints. But while this research was useful, it didn’t serve as the impetus for our program. At this point in the process, clients expressed that a small match from our organization would incentivize them to make frequent deposits. Their feedback inspired us to adopt an incentivized saving concept.

One of the largest incentivized savings programs in the world is the Assets for Independence (AFI) program in the U.S. AFI uses Individual Development Accounts (IDAs) to encourage individuals to save. The model allows for individuals to save significant sums of money and facilitates asset accumulation. AFI makes it easy for organizations to operate IDA accounts by providing federal grants to fund the individual’s matched deposit. AFI allows organizations to match a deposit 1:1 and up to an 8:1 ratio for a maximum of $2,000.

Incentivized savings is extremely resource intensive, which is why AFI provides grants to make it easier for organizations to adopt the model. However, we are a small NGO with limited resources and an equivalent to the AFI program does not exist in Honduras. We had to build something that would require a small financial commitment but preserve the motivating effect of a matched deposit.

Our first step was to partner with formal banks. Banco Ficensa, Banco Azteca, BanRural and Banco de Occidente already have the infrastructure and products that clients want and need. Second, we identified the entry costs we could afford to cover. Third, we used conversations with clients and relied on the knowledge of our Honduran staff to establish a match amount that was small enough for us to afford but large enough to still encourage clients to make a deposit. Finally, we knew that we had to provide classes that would allow clients to understand the technical aspects of savings and their account. We settled upon these four inputs:

  1. We provide $5 for the minimum balance required to open bank accounts.
  2. For every deposit the client makes, we deposit $1.05 into their account.
  3. We provide monthly classes to train participants on how to use deposit booklets and plan for the future.
  4. We provide a small stipend to address the opportunity cost of being away from home and work while attending classes.

These small incentives and supports motivated clients to make deposits on a regular basis. Fifteen clients made 51 deposits over three months. Of these, eight opened a savings account for the first time. Accounts spanned four different banks and clients deposited a total of $408 with a median deposit of $4.25. We matched this with $112. As a result, clients held a total of $520 toward their future; that’s $3.71 saved per $1 of subsidy money. Every $1 we contributed carried almost four times its weight in financial security.

This project is minuscule, but it’s a first step toward something larger. We are planning a second round of accounts for 15 new clients. But what we are really excited about is the clients’ commitment to the program. Clients express high satisfaction with the program and they continue to make deposits despite such a small incentive. We believe that this is due not just to the financial incentive offered, but from their role in designing the program. The idea for this program was born from the clients, and while we incorporated empirical evidence and studied existing models, we developed the program in conjunction with clients. As the program grows and we continue to foster meaningful relationships with clients, we will continue to explore this central question: What role can and should microfinance play in empowering the poor?

Jeff Paddock is the program director of La Ceiba and Santiago Sueiro is on the Board of Advisors.

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Sunday, Soup, and Community

Domingo was always on that corner. He would greet me from his stool while chewing tobacco and with a toothless smile, “como estamos Santiago?” Every day I would sit on the stool next to him and he’d tell me his life’s story. Domingo told me everything, from his proudest moments to his lowest. He’s an alcoholic and goes to AA meetings every week. He was an engineer in Puerto Cortez where he worked alongside several American engineers who were veterans of World War II. It wasn’t long before I exchanged some of my own stories, even if they didn’t compare in meaning. I could only talk to him for a few minutes at a time, and before long I had to interrupt him and ask him to tell me the rest the next day.

Walking through the streets of ‘El Progreso’ can be a jarring experience. The most popular reggeaton, bachata, and merengue songs ring through the streets. Taxi cab drivers tell their dirtiest jokes as they stand idle by their cars. Vendors yell about their newest bargain from store fronts. The crowded streets, the festive melodies, and the colorful characters project a feeling of excitement rather than a place of business.

Walking about the city center, I was always bound to run into a few people I knew. It was common to run into a client and her children, “Hola Santiago, como esta? Vaya pues, que Dios le bendiga!” We’d stop, greet, chat, and wish each other goodbye. Always a few minutes at a time.

There are a few “spots” I frequented. Chepe’s Restaurant, which was more of an open air cafeteria, served my favorite chicken soup. Even on a hot sunny day, chicken soup always hit the spot. Steamed carrots, broccoli, potatoes, cabbage, and juicy chicken all served together with a delicious broth… my mouth waters even now every time I think of it. I had it so often that Chepe knew my order by heart. “Vistes el Atletico?” he’d ask me. Chepe loves Atletico Madrid. While I slurped my soup he would tell me about their latest win.

On the opposite corner from Domingo is a small shoe repair shop. Gerson is its owner. It has one large window without a glass pane. On any day of the week you can find Gerson behind the counter, with his glasses on, a sewing needle and special tools at hand, hard at work on a shoe. The first time I went to his shop we shook hands and I was taken aback. His hands are huge. They are as big as a basketball player’s, his fingers are thick as cigars and rough like sand paper. “Y su familia como esta?” Gerson is a man of few words, but he always asked about my family.

It’s been a year and a half since I left Honduras. Except for a brief visit, I haven’t kept in touch with clients and neighbors. I don’t know if they think about me. I don’t know if my presence left an impression. The longer removed from Honduras, the less I remember about Domingo, my neighbors, and my clients.

Honduras is one of the most violent countries on earth and one of the poorest countries in the western hemisphere. It’s a Spanish speaking country, it’s soccer crazed, and it’s in the Caribbean, and thus very hot. If this is all you knew of Honduras, you could be forgiven for misunderstanding so much of what makes the country and its people unique.

Despite the fear and caution that the news can inspire, my experience endeared me to El Progreso. I found meaning in the serendipity of running into someone you know on the street and the satisfaction of dropping what you’re doing to catch up with a familiar face. There is a strong sense of community in that town.

Community is a collective attitude. What every one of those relationships, from Domingo to clients, had in common was mutual affection. By affection, I don’t mean of everlasting friendship, I mean of a level of curiosity and friendliness that comes with knowing someone well enough to be vulnerable with them. I mean the type of relationship that isn’t defined by status, competition, or transactions. I mean the connection you feel with someone with whom you share a space with and interact with on a daily basis over and over again. Essentially, community is defined by geography, but it’s also defined by some level of love.

When I left Honduras, I lost that community. Living in DC, I feel a different attitude in the collective conscience. There is more distrust, more isolation, more individual expectation and less collective culture. I worry that I’m losing perspective. I’m more distracted by technology and in constant need of stimulation from anything that will suppress my angst.

While in Honduras I felt a strong connection to the place and people. But, I’m mindful of the fact that I could never fully be a part of that community; my identity and privilege will always provide a certain degree of separation. Nonetheless, I still took part in this collective attitude of acceptance, free from judgment, driven by love, and defined by a common thread: the unspoken understanding of community.

Santiago Sueiro, Former Program Director of La Ceiba MFI
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Our Sacred Tree

Image by Jessica Foster via Facebook

The Mayans believed it to be sacred. That it connected the underworld, the terrestrial, and the skies. It was the stitching that held together the spiritual with the earthly. The descendants of the Maya leave the La Ceiba tree standing when harvesting forests and cultivating the land.

The La Ceiba tree in Villa Soleada is impressive. It is about 70 feet tall, surpassing all nearby trees. It has a thick, smooth, branchless trunk, and a wide sprawling canopy. The roots themselves are impressive. They act as a buttress at the base of the tree, in a distinctive cuneate shape, the full height of a person. The tree stands alone at the edge of the community, overlooking the naked fringes.

There is a wooden conference table in a small room of the economics house. During La Ceiba class, students gather around with Dr. H at the head. Class after class they gather at that table. They talk about Villa Soleada, microfinance, and Ivan Illich. Dr. H asks the impertinent question, encourages scrutiny, and students respond in kind. They accept the challenge, explore their motivations, and take ownership of their work. This is where La Ceiba started. In that small room, around that wooden table, on the fringe of campus, a small group of students decided to start a microfinance organization.

In the midst of organizational change, I went to Honduras for a few months. There was no escaping the reality this time. With the distance removed, the time constraint lifted, I was exposed to the reality of Honduran life. Over time, the exposure revealed to us what we already suspected: beyond our product, something special was crystallizing. It drew strength from the trust and respect that we worked so hard to earn. So much so that a baker and his wife were willing to take a chance on us, to place their faith in our judgement, that we would do the best we could to offer them a useful product. That moment in our growth was defined over the phone. During that call, feeling high tension, and 2,000 miles apart, a small group of devoted students decided to let La Ceiba grow.

The seats on Spirit airlines don’t recline and seem intentionally narrow. I squirmed in my seat as the man next to me snored loudly. I had just said goodbye, I thought perhaps I should be more emotional. But at 1 am with a sore butt and an achy back, I just felt empty inside. As we landed I was shepherded off of the plane, walked to the next gate, and waited in a crowded room with a low ceiling and dim lighting. A creeping anxiety had taken over. The realization that it was over began to sink in. As time when by, the days went unfulfilled. The search for meaning dwindled. How can we just walk away from something to which we devote so much? Why can’t this thing, this idea, this beautifully flawed tree, grow into a beacon? Why can’t we give it the light and the water that it needs to continue its work? Or the space to grow tall and wide? What is the next step, the next defining moment in this story of a slow steady struggle toward meaning?

We try wholeheartedly to make a difference, in the process we undergo a transformation that changes us forever. But we leave our work behind, unfinished and full of potential, and we enter a world that asks us to compromise. We are taught to suppress that which we let blossom, we are conditioned not to question, encouraged to forget what gave us so much power, and if we resist we are dismissed as naïve. Too naïve.

The work must go on. The class needs to evolve. Despite living at the margins, the La Ceiba tree makes itself noticed, it grows and flourishes, it does the quiet work of holding our world together. 


Santiago Sueiro, co-Chair of La Ceiba MFI
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From Stuttering to Listening

I joined La Ceiba as a junior in college. Every assumption I held about charity and development until then was action oriented. Help by building a house. Help by volunteering. Help by doing something, anything.

It wasn’t until I was challenged by my own projects, and by lessons from developments past, that I began to question my efforts.

My first project in La Ceiba was to develop the Constant Client Contact (CCC) program. The goal was to gather information that could be applied to loan design and impact evaluation. I was convinced that the project would work. Success meant successful help for the client and vindicated good intentions.

After developing the logistical framework and the goal of the program, it was time to roll it out. The program used phone conversations as the method to gather information. We developed well researched survey questions, a set of questions for clients whose loans were in good standing, another set for clients in arrears, and a third set for clients who left the loan program. I was confident in my research and the questions I developed.

My first call was to a client named Suyapa. I was so nervous that I felt like vomiting. My stomach was in a knot, I couldn’t think straight, and my hands were shaking.

I dialed Suyapa’s number and listened while the phone rang. “Hello?” She answered. “Helllyyyo ah, yes. It’s me Santiago. Is err, Suyapa? Sorry, I am calling from…” Oh my goodness. I was stuttering, none of my sentences made any sense, this was a disaster! We have a discussion guide that is supposed to help me through the conversation. I developed it! But even so, that first call ended poorly and so did many after that.

It was around this time that we read a controversial speech that criticized good intentions. It asserts that the act of helping is more about the person giving the help instead of the person receiving it, that a desire to be pure and virtuous is driving our actions and not the needs and wants of the less fortunate.

I thought about my project differently after reading this. Maybe the project was about us and not the client. Perhaps the project was meant to impress my professor. Perhaps the project was meant to make me feel a sense of achievement and strengthen my self-worth. Perhaps my good intentions weren’t enough to help the client.

It was true. I felt good about myself because of those efforts. I wanted to impress Dr. H, I was afraid of what my older and wiser colleague would think of me if I didn’t work hard, I caught myself bragging about my project to my friends, and yet I had no evidence that the CCC improved client well being.

There was a second goal to the project. In addition to gathering information, the program is meant to open channels of communication between clients and ourselves. It sounds more formal than it is. Really it was meant to be a conversation. We realized that we can’t just ask clients our questions and get what we want out of the conversation. We need to listen more and we need to give clients the opportunity to talk about what they want to talk about.

There is one question in the survey that reads, “if you were mayor and had the power to do anything you want, what is the one thing you would change to improve your community?” The question doesn’t serve any immediate practical purpose. It doesn’t tell us anything about our loan program. But the answers are meaningful. Clients expressed a desire to implement a drainage system to curtail flooding, others said they needed a greater police presence, some said they simply wanted job opportunities. The question allows the client to express their goals and aspirations, for themselves and their community. And it allows us to learn about what the client thinks should be and can be made better.

By the time I moved on from the CCC project, I thought about the program not so much as a tool to advance client well being, but as a way to better understand our clients. This path to understanding starts with humility and empathy. And by listening to each other while working together, we can begin to make a difference.


Santiago Sueiro, co-Chair of La Ceiba MFI (
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Arguing to Understand

Soccer always played an important role in my life. I grew up with soccer. I played in High School and a year in college. It taught me valuable lessons, it challenged me, and it introduced me to my best friends. I was excited then, to live in Honduras where soccer is also an important part of life.

Soccer is everything in Honduras. Every town and neighborhood has a soccer field. It’s an outlet from struggles of daily life and lends meaning to life simultaneously. It’s a measure of manhood and a rite of passage. A typical Sunday in Honduras has three things: Church, Soccer, and tajadas. I was lucky enough to be invited to the men’s team for the Villa Soleada town, where most of La Ceiba clients live.

The Villa team consists of an odd mix of players. One or two ex pats from the local NGO’s play consistently. Five or six players from Villa form the core of the team. The rest come and go: family members visiting from out of town, a friend of a friend who happened to have the day off, or a friend from a nearby community who we dragooned away from his own team.

Juan Carlos runs the Villa team. He is stocky with dark hair, dark skin, and a gut. Juan Ca likes to exchange jeers and jokes with friends in his familiar shrill voice. On game day, it’s not unusual to arrive at Juan Ca’s house to find him pacing in his yard, nervously calling players who are late, barking orders at his daughter to put together the team’s kit, and frantically scan the length of the field to find someone to referee.

One of my first games with the team was against a nearby town called La Sarrosa. It was a big event. The team asked to borrow a bus from SHH and they charged 100 LPS per person to travel with the team.

I was told that La Sarrosa was a strong team to be respected. “We have to play with everything we have,” was the motto of the week. The hype surrounding the game was real. Our game would be the main event: a 7pm start under the lights. When we arrived, it looked as though all of Sarrosa was there, and with many of our own fans making the trip, the edges of the field were packed with spectators.

I was new to the team, unfamiliar with their style of play and still learning everyone’s name. I was careful to listen to my teammates and had low expectations for myself. As we stretched and warmed up, Juan Carlos gave a talk: he would not play that night and instead be in charge of substitutions, “Santi will be our captain, because of his knowledge and experience.”

I was confused. Why was I made captain if I was new to the team? How did they know that I had knowledge or experience worthy of a captainship? I didn’t have much time to think about it or even speak up. As Juan Carlos finished his talk, the whistle blew and the game started.

We lost that game 2-1 in a hard fought battle. But the question still lingered.

In a sport that I knew was nearly a matter of life and death to Hondurans, for a game on which a lot was riding, against a stout opponent, for some reason Juan Ca, with silent approval from the rest of the team, selected me to be captain. How was that possible?

Two years later I was in another high stakes game: “Good fucking job Santi. Nice pass to the other team!” Juan Ca’s sarcastic yell could be heard above all others.

Juan Carlos and I sparred frequently in the month previous. We worked together to organize a soccer tournament with 10 teams, each from a different town. We had miscommunications that led him to blame me for “mistakes” in the schedule.

The tension between us culminated on that day. Juan Carlos didn’t start me this time and much less make me captain. Before the game he told me I was in bad form.

A few plays later I received the ball again. I was on the right side, I beat one defender, cut inside and put a cross in that our forward headed wide of the goal. A good play, I thought. “WHY DON’T YOU YELL ABOUT THAT JUAN CA?!” I shocked even myself at how loud I had yelled. The field went silent. I heard someone on the sideline say, “whoa, what was that?”

We lost that game. Afterwards, Juan Carlos scolded the team saying that we didn’t play with enough heart and toughness. I couldn’t contain myself any longer. I got into an argument with him in front of everyone and told him to shut up.

Strangely, when I look back at that memory, I feel proud. I like to believe that I broke through a barrier. Juan Ca and the team treated me better than I deserved at La Sarrosa. But in the two years between these two games something changed. Juan Ca yelling at me was more meaningful than being named captain. It is a sign of an underlying trust, that he can be honest without fear of jeopardizing our friendship and my support.

Juan Ca and I talked later. He explained to me why he was so critical. Juan Ca wants to win because soccer is more than a respite to him. Winning means gaining the other teams respect, winning is gaining status for a day, and winning swells your pride in your team and your town. I respect that.

I don’t mind being benched or getting yelled at. I mind him giving me respect I haven’t earned. I mind him curbing his ambition to please me or anyone else. Now I know he isn’t trying to be mean, now I know I will have to earn his respect and play with everything I have to honor his ambition and his team.

Santiago Sueiro, co-Chair of La Ceiba MFI (
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Working Towards Rejection

She was pissed. Chilo recounted all the curse words used and how dramatically she reacted to the news. She wouldn’t receive a 4,000 LPS loan like she wanted. Instead we approved her for a 3,000 LPS loan.

Sandy is in her late 20’s. She is skinny with light skin and large facial features. She usually has a stern look about her. She has a husband and an infant son. She works as a cashier at a pharmacy and her husband works full-time. They bought their land and built their home themselves. Sandy’s situation is significantly different from that of a majority of clients.

Sandy is the client who asks the most questions, who scrutinizes our loan program, and me, the most. When I told Sandy about our loan ladder and the three repetitions, she scoffed. “Are you serious!? That seems like a lot to me.”

When a new client wants a loan, we sit down with them to review our Customer Information Packet. In this initial meeting, the goal is to review our loan program, the risks of a loan, and the goals of the client. Most new clients are relatively new to loans. I normally have to make an effort to make the client feel comfortable and at ease. I will disclose my intentions and the purpose of my visit right from the start. I tell clients that I am not there to interrogate or judge them but instead to provide them with information and have a discussion.

None of that was necessary with Sandy. She interrupted me to ask a question after every point on the Information Packet. She asked why we offered such small loans, why we charged such low interest rates, how our interest rate is calculated, where we get our capital, how we could afford our service… she had questions about everything.

Sandy wanted a 4,000 LPS loan as quickly as possible. I was concerned when I asked Sandy what goal she had for a large loan; she didn’t have anything in mind. When Sandy became eligible for a larger loan, we offered her a 3,000 LPS loan instead of the maximum 4,000 LPS loan. When Chilo told Sandy of our decision, she was livid. She rejected the 3,000 LPS loan and stopped communicating with us.

I was impressed at Sandy’s ability to tell us what is on her mind, to call us out when our service or product isn’t good enough, to scrutinize and question without fear, and to be able to walk away from the table. Sandy is an intense, edgy, outspoken woman. She was approaching me from firm ground and a place of confidence. Other clients are easily intimidated, passive, and have trouble speaking up.

Perhaps it was Sandy’s financial situation. She had more education, opportunity, and overall wealth than many other clients. Or perhaps it was innate in her character. I wondered too why this was a virtue, it wasn’t just that Sandy had wealth, it was that she felt free of my expectations, she had power in choosing to work with me or not.

There is an unspoken goal for us: we want to become obsolete. Aid and development exist to serve people in poverty. Our goal should be to accept a day when those are no longer necessary. While this may not happen soon, keeping that goal on the horizon affects the way we approach our work. It reminds us that microfinance isn’t about us; it’s about the client. We should work towards the day when clients find a loan unnecessary not just because they already have the wealth and opportunity they need, but because they have the confidence to be able to tell us that they don’t need us.

In December, a few months after our fall out, I finally reached out to Sandy. I went to the pharmacy where she works. I felt nervous and was worried that she would yell at me or curse at me like she did with Chilo.

We spoke briefly and I apologized for how things ended between us. Calmly, she accepted my apology. I offered her the 4,000 LPS. She declined but said she would think about it.

“I’ll give you a call when I’m ready. Just so you know, I deleted your number but I’ll get it from a neighbor.”

Santiago Sueiro, co-Chair of La Ceiba MFI (
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“Damn this printer!”

I had to make 80 copies of the invitation and the printer jammed after 40.

Chilo looked over at me, smirked, and shook his head.

“I told you it would jam.” He said.

A mild desperation started to build inside.

“Lets get the document on the USB and head over to the print shop.”

Pablo the printer guy attended to us when we got to the shop. We usually made small talk or told jokes, but I wasn’t in any mood for jokes.

“Hey Pablo. Forty copies please.”

I was feeling the pressure. We were planning a breakfast for clients. It was the last event of the year before the student trip. We wanted to organize something nice where we could communicate our appreciation for clients.

The next day I got to Villa at 8:00am. That hour from 8 to 9 was agonizing.

The breakfast was a mistake. No one will enjoy this and I just spent $75. What was I thinking? Is this really what a Program Director should be doing?

At 9:15am the first person showed up. Carmen walked in and sat down. We served her coffee and made small talk. It was 9:25 and still only 5 people had shown up.

A few minutes later something happened. The La Ceiba ladies showed up. They were all impressed by the set up, they all gave us hugs and thanked us for inviting them. Guillermina gave me a Christmas present: a pen, a notepad, and gum. She said it wasn’t much but she wanted to give me something.

Inside clients were striking up conversations with one another. Ladies from Villa were talking to ladies from Monte de los Olivos, Carmen who was previously silent was laughing at Selma’s jokes, and more ladies were showing up.

We had planned for 30 people to show up. In the end 38 ladies showed up.

Before we served breakfast, I gathered everyone’s attention and asked Chilo to say a few words.

“I just wanted to say that I like working with you and I appreciate the kindness and respect you have shown me.” Everyone clapped.

Some of the women who came had loans that were in arrears and previously felt too ashamed to talk to me. However, one woman pulled me aside during the breakfast. She was a year behind on her payments. She explained to me that shortly after she received her last loan her husband left in dramatic fashion and now she was alone to care for her three children. There was nothing I could do except listen.

I wondered why so many women came to the breakfast, and why that one woman in particular felt the need to be so open with me. I didn’t think they wanted breakfast that badly, they know that we cant force anyone to come, and the one woman had no reason to explain her situation (she could have just kept quiet and there would have been no consequence).

It’s in the relationship, with Chilo, with students, and with myself, where clients find meaning. The common thread among all of our relationships is mutual respect. Despite difficult moments, moments where I give bad news and moments where clients articulate their displeasure with me, through successes and failures and my own moments of despair, we always treat each other with respect and empathy. We try to understand each other and forgive each other for our failures.

At the end of breakfast I asked everyone if we could take a group photo together. We gathered in front of the bilingual school and called the guard over to take the picture. As we posed together awkwardly there was a long pause. “Did he take it yet?” “What is he doing?”

Finally the guard blurted, “how does this damn thing work?” Everyone burst out laughing.


Santiago Sueiro, co-Chair of La Ceiba MFI (

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A Quick Cameo

Microfinance isn’t what I thought it was. My understanding was based off of a simple narrative: give a poor person a loan, they use that loan to start their own business, and they lift themselves out of poverty. Embedded is the assumption that loans are positive, and that they should be extended to as many marginalized people as possible.

Over the last two years I’ve changed my expectations, not because I wanted to but because I had to. In the course of my job, I found that several of my assumptions, my expectations for Microfinance, and my ability to change things, were off.

Loans are inadequate in fighting poverty and can lead to negative outcomes. Progress against poverty requires all type of tools and strategies, not just a loan, because poverty is not a simple condition, it affects many segments of ones life from health care, to education, to civil rights… loans are only one of many tools that can be employed.

Loans can cause harm. If a client doesn’t understand the product, if institutional incentives are distorted, if a loan is not applied carefully, it can lead to negative consequences. Missing payments and accumulating debt causes anxiety and loss of self-worth. Clients feel personally indebted to the loan officer and worry about their judgment. Where client protections aren’t enforced, an institution can employ harsh repayment policies that can further impoverish clients.

Loans aren’t for everyone. Many aren’t interested in a loan and don’t need one. Some don’t see the benefit of taking on more debt. Others don’t trust financial institutions. Sometimes a client wants a loan where an alternative would have worked better.

I am not as powerful as I thought. Changing things isn’t naïve if you know what it takes to do so. I was naïve because I didn’t know enough. I thought I could change things if I just worked hard and believed in myself. The reality is much more complicated. The culture and history of Honduras deeply affects attitudes towards credit and foreign intervention.

Hondurans embrace of Americans is cynical. The community never questioned my presence and it was assumed that I had the means to “help.” Association with an American is a sign of prestige. My idea for relationship collateral suffered because I misinterpreted my role and relationship with clients.

I discovered significant forces working against me: lack of economic opportunity, lack of quality and affordable health care, lack of quality education, unsafe streets, an unresponsive government. These are systemic problems whose challenges are not easily met. Many clients fall behind on repayments because of those forces: a fatal illness, high medical expenses, a robbery, large debts to other providers, lack of access to insurance, or poor administrative skills.

My knowledge about the context and culture of clients is incomplete. Categorizing the conditions of poverty, and conducting surveys, cannot sufficiently capture what it means to be a Honduran living in Villa Soleada. That is why it is important to approach MF with skepticism and development work with humility. No matter how much we research MF or immerse ourselves in local culture, we wont know what the best solution is for clients.

Poverty is not emotional. It doesn’t go away if we pity it, it doesn’t disappear when we show it love, it doesn’t care if you give it affection especially from a foreigner. Progress against poverty requires real tangible results. My good intentions are useless if I can’t apply it to something meaningful and impactful. The poor don’t need a friend or a caretaker, they need self-determination, they want the means to decide for themselves, they want to pursue their goals, they want to take care of their own family, and they deserve the means to do so.

Our actions, no matter how small and narrow, lead to unintended consequences. We live in a web of social connection. When we give to some but not all, those on the fringes of the web notice. The people who didn’t receive that dollar or donation, they ask themselves why. They wonder what they have to do to get the same and they change their behavior. And, government institutions feel less accountable because the foreigner is claiming responsibility over their constituents.

It’s difficult to establish honest relationships when the local perception and expectations for your presence don’t match your goals and parameters. Especially when our service consists of giving, we invite a relationship based on what we have and what we can give instead of who we are and what we can learn from each other.

Despite those limitations, I believe that my presence and the tool I chose to offer can lead to change. To do so I’ve had to challenge my expectations and the expectations of those I work with. Change is possible but not in the fashion we imagine. A loan can work if it is designed and applied carefully, but it’s not for everyone, and when it works, don’t expect it to be the silver bullet we were told it could be. It’s on the margins where we find our role. Not as the protagonist, but as the friendly adviser with a short cameo.


Santiago Sueiro, co-Chair of La Ceiba MFI (

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Coffee and Donuts

Image by Kim Geiser via Etsy Shop

“Somos cabeza, no somos cola”

We are the head not the tail. They sang a hymn for me on the day after my birthday. Reina on the guitar, Norma at her side, Carmen at mine, Marlenia at the opposite end of the table, and nine other women joined in.

It was Saturday morning at our weekly coffee and donuts gathering. This Saturday however, was June 14th, the day after my birthday. Clients found out about my birthday last month when Josefa, another La Ceiba client, spread the word. Josefa had celebrated it with me last year. In an intimate gathering, we shared an afternoon at her home. Josefa cooked a delicious chicken and we broke a piñata afterwards. On this day, the women of Villa Soleada planned to sing songs and share gifts.

“Por eso gozo y nadie me quita el gozo”

That’s why I’m happy and no one can take that away. Carmen had the loudest voice of all.

A year ago Carmen moved away from Villa Soleada. Carmen is a big lady, with dark hair, black eyes, and a round face. She is gentle and affectionate and always gives tender hugs. Carmen has a loud singing voice but a soft yet confident and firm tone that makes speaking to her an intimidating experience.

Carmen is best known for her work as an artisan. She is a leader in Villa. She often has the best quality products and sells the most clutches during volunteer season. As such, she commands respect among the other women. When one does business with Carmen, it is easy to see why.

Carmen is savvy. In meetings, Carmen usually employs a specific pattern. She will greet me, give me a big hug, she will tell her children to do the same, she will ask how my family is doing, and finally how Dr. H is doing. Only then will she get down to business in a direct manner while maintaining an affectionate tone. In a past life I am certain that Carmen was a politician. She knows how to use the art of flattery and misdirection in her favor.

Carmen moved back to Villa recently. She asked if she could receive a loan. Carmen received a loan in January of 2012, that debt is outstanding. I explained that she could not receive another until she paid her debt. This was not an acceptable answer to Carmen. She gently questioned the policy, and asked me to double-check my records. After several minutes of back and forth, Carmen finally gave in and accepted the policy. She left me uncertain however, and belabored the point so effectively that I felt unsure of it myself. I felt the need to confirm it with my colleagues.

“Despues de quitar prestado, vamos a prestar”

After getting a loan, we will lend. Reina learned how to play the guitar by reading “how to” manuals and watching famous guitarists play on TV.

Reina is one of La Ceiba’s most active clients. Reinas husband, Rigoberto, uses part of Reina’s loan to fund his medicine sales. This serves to support their family of six. Rigo lives in El Progreso, apart from Reina, and visits Reina on the weekends. In a recent visit, I found that she was sick with a cold and migraine. Reina was upset with Rigo that he hadn’t come home yet or sent any money. Reina stays at home to care for their four children. She works hard to keep the house together. Sometimes Reina feels that Rigo needs to be home more and that he isn’t fulfilling his responsibility as a father.

“Rigo sends his birthday wishes,” Reina told me before she started singing and shortly thereafter Rigo himself called.

On this day, Reina was not sick, her young ones were playing close by, her oldest was at home playing on their new (used) computer, and Reina herself was leading the group in song.

“Nacimos para conquistar”

We were born to conquer. Norma was sitting off on the corner but her presence was certainly felt. Her body swayed back and forth in her chair as she clapped to the beat of the song and sang in her raspy and off-tone voice.

Norma is a small lady. She has grey and brown hair. Her face is marked by deep lines around her mouth and across her forehead. Norma’s most prominent trait is her jovial spirit. She is affectionate, has a great sense of humor, and silly mannerisms.

A few minutes earlier Norma arrived bearing a gift. She bought me a pair of socks and wrote a short but heartfelt note. We sat as I thanked her for the kind gesture. She asked me all the usual questions until we touched upon a new topic. Another woman asked Norma how many children she has. Norma responded that she didn’t have any. She had two sons who died a while back, and a third she lost in a miscarriage. As she remembered those she lost, her eyes began to water; she stopped speaking for a moment, and wiped away tears. Her jovial spirit was gone. There was a long tense pause at the table. She looked melancholic. “It’s a hard thing to lose a child. And now I am alone.”

I’ve known Norma for over two years and this was the first time I had heard her speak about her children. Suddenly, I looked at Norma differently. This woman, almost 60 years old, with no family except for her husband, had so many reasons to shrink from the world, to succumb to despair and grief, and to become cynical. It was admirable that she had kept this to herself throughout our entire relationship. Now, I understood her jovial spirit differently. It wasn’t merely a quirk or a fun character trait, it was a manifestation of something else: of her hopefulness and resiliency.

“Si se puede, claro que se puede”

Yes we can, of course we can. Marlenia Urbina wasn’t singing, instead she clapped along to the rhythm of the song.

Marlenia lives in Monte de los Olivos. Marlenia has had success with La Ceiba. She won first place in the Business Plan Competition, she participated in three financial literacy classes, she started her own business and built it into the most successful one in her community, she is supporting her four kids, she helped in leading the movement to win the land she lives on now by organizing sit–ins and protests at the mayors office, and she just recently won a jump with La Ceiba (a 4,000 lempira loan), her 10th loan.

Two months ago Marlenia took in her eldest daughter who had been living with Marlenia’s ex-husband. Marlenia was hurt and disappointed when her daughter left home. She ran away with a neighbor apparently motivated by love. Marlenia tried to advise her daughter to stay in school, get her high school degree, get a job and stay with her where it is safe and stable.

She told her daughter that nothing comes easy in this world, if she wished to start a family and find success in her life she had to work hard and make sacrifices, that everything Marlenia had done, all the success and stability she had found, came as a result of perseverance, hard work, and grit. Marlenia told her daughter to take the initiative, not to wait for good things to happen, but instead believe in herself and invest in her future by studying hard.

Marlenia’s advice was reminiscent of something Seth Godin or Steven Pressfield would say. I was also reminded of my own lessons, hard won through the challenges and struggles of my job. Marlenia had learned many of the same lessons on her own, through her own challenges, and was making those work for her and her family. This quiet, often expressionless, lady was fierce and tough under the surface. And yet, she wasn’t satisfied; she felt that she was failing as a mother; she wanted to do better.

The kind gestures and expressions of affection moved me. But that was not what resonated with me most. What I was reminded of that day was that these women, who many would classify as poor and ignorant, are, in so many ways, the opposite. They are rich in character, they are wise, they are complex, they can be mean, they can be loving, they are struggling, and yet they are confronting their battles on their own, making progress little by little.

Its easy to make assumptions about those we don’t understand, its even easier to get lost in the technicalities of interest rates, repayment rates, and bottom lines. What we cant forget is that these women are full individuals, capable of achieving great things, and yet at risk of getting hurt. We have a responsibility to learn from them, to continue to widen the path towards understanding, and to remember that they are not our subjects, but our equals.


Santiago Sueiro, co-Chair of La Ceiba MFI (

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