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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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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Step Into Chaos

La Ceiba forces you outside of your comfort zone and makes you choose: you can go back and be safe, where research papers and professors define the struggle, or you can face some hard truths about yourself and the world.

This reality is full of chaos.

Chaos can be jarring and raucous at first, but out of chaos arises beauty, a natural occurrence of serendipity and depth in human interaction.

Something curious happens when you step into the chaos. You don’t have the benefit of your system, that system that taught us why our world is the way it is. That world doesn’t exist in the chaos. How do we behave in this space? How do we make sense of things we don’t understand?

It starts with humility.

To be humble is to be honest about what you are and to consider how we affect those around us. When we step into the chaos we don’t understand what is around us, at first, but we can understand what we are.

I am a male from Washington, DC. My mother is a Peruvian immigrant; my father is of Spanish decedents. I am a college graduate. I went to a private school for middle and high school. My family doesn’t have wealth or status, but they gave me everything I needed to be healthy and happy. It’s because I was given those opportunities that I have a degree of privilege that clients don’t.

To understand requires honest, sometimes uncomfortable, discussion about our circumstances.

  • It’s uncomfortable to ask why a grown woman, mother of three, never finished 2nd grade.
  • It’s uncomfortable to talk about my home feeling that the client wished she were there instead of Honduras.
  • It’s uncomfortable to feel the anger and frustration of clients emanating from their stifled goals.
  • It’s uncomfortable to communicate my mistake in assuming the client was something that she isn’t.

When I think about chaos I envision a dark room. I envision a person standing in the middle of this room and objects of all shapes and sizes whizzing by at random speeds and from every direction. I like to think that if you stood there long enough and stared into the space in front of you, eventually out of that randomness, patterns emerge. Eventually you see the same object more than once. Eventually those movements, those objects, and that room become familiar. Eventually you start to appreciate that chaos. Eventually you find beauty.

When I started my work in Honduras, I was a boss, a director, and a savior.

By the time I left, I became an equal.

I know this because I stopped receiving preferential treatment. When I did something to upset someone, I heard about it. That is the act of an equal.

Clients weren’t clients anymore, they were neighbors, mothers, fathers, daughters, sons, feisty, shy, religious, indifferent, angry, generous, petty, honorable… they are complicated and whole individuals.

If my work were just about Microfinance, I would not be the person I am today and I would not have found meaning in my work. La Ceiba is more than microfinance. It’s about something else:


Creation by disruption with question

Struggle for meaning against fear, the tribe as my ally

Listen with empathy to understand


Let’s move away from the idea that we are here to help and that microfinance will eradicate poverty. Let’s define a new role. One where our purpose is to learn, listen, and take our cues from the people we serve.

We are here to get yelled at when needed, to receive hugs when needed, to be present through thick and thin, to understand each other, to love each other, to walk through the world together and stumble upon beauty in the midst of chaos.

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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Little by Little

She recently finished construction on her cement patio, extended the roof of her porch to reach the sidewalk, installed a six person picnic table, and built cement steps for customers to step up to the window. Inside, Josefa shows off her economic engine. “Esta vacío ahorita,” its empty right now. Josefa’s pulperia, or convenient store, is run out of her home. She sells everything from candy, to rice and beans, from bags of water, to 3 liter bottles of Pepsi. Her pulperia is what allows her to make improvements to her home and business.

Josefa (40) has a pleasant demeanor. She is soft spoken, generous and motherly. She is small in stature, about 5 ft. She has a young face with delicate eyebrows, rosy beige cheeks, a warm smile, and soft eyes. Welcoming in nature, she offers food and drink to all her guests. With such a tranquil and gracious manner, it is hard to guess that she is a single mother with 10 children, that her only husband died 15 days before their wedding, that she’s never attended school, and that she was one of 10 children.

Josefa grew up in San Jose de Negrito, near El Progreso. San Jose de Negrito is a remote mountain town accentuated by thick vegetation and rolling hills. The nearest pulperia was a two-hour walk from her home and the nearest school was a three-hour walk. Josefa is the second oldest of her brothers and sisters. Her siblings looked up to her and depended on her to take care of them. Josefa’s mother worked as a maid during the day and expected Josefa to take care of the family while she was gone. Thus, Josefa spent most of her youth cleaning, cooking, washing clothes, fetching water, and caring for sick siblings.

Josefa was 18 when she met Dionosio Escobar. Dionosio was a farmer who lived near Josefa’s home. Josefa remembers him fondly, “le amaba mucho,” I loved him very much she said. They were together for six years and had four children. Dionosio worked on a farm for a wealthy landowner. He made enough money for the family to live comfortably while Josefa spent time at home with her children. She remembers those as happy times and planned to officially marry Dionosio. Tragedy struck however, when, just fifteen days before the wedding, Dionosio was shot and killed.

“Jueves, 19 de octubre, 1997.” Josefa murmured, in a low sad voice, the date Dionosio was killed. Her eyes watered and tears ran down her check as she sat silently in thought.

With no wealth of her own, no job, no status, and coping with the loss of her fiancée, Josefa took to cultivating the land. She had enough land to grow beans, corn, tomatoes, peppers and coffee. Soon, Josefa was growing enough food for her family to live from and there was enough left over to sell in the market. What’s more, word got out throughout the community that Josefa was growing her own food. Eventually Josefa found herself juggling job offers from three different commercial farmers. She worked for a respectable wage of 140 lempira ($7) a day. It was an unsustainable venture however, as agriculture punished Josefa physically. After three years of farming, she decided to move.

Josefa found an opportunity in the community of Siete de Abril. Josefa could buy and own the land, an ambition of hers for many years. It came at a cost however: the conditions were dismal. Her house was built from cardboard, rusty tin, scavenged wood, and cloth. To start a construction project on a worthy home in Honduras, one needs a total investment of about $10,000. With her salary of $2.50 a day working at a restaurant, five children to take care of, and another on the way, Josefa’s dream seemed far off and unobtainable.

Josefa moved to Villa Soleada in 2008 through a project of Students Helping Honduras. Her home is small yet comfortable. The front room is divided in two, by the pulperia, on the left side of the room, and the living space, on the right and backside of the room. A multi-colored hammock hangs across the front of the room near the door. A couch lines the right wall. A frail metal stand houses a small television and stereo set. The grey cement walls are decorated with pictures of her children with friends and family. The pulperia claims two large refrigerators and a 4 by 6 ft shelf stand. The shelves are neatly filled with rice bags, cookies, bread, eggs, and beans. About 50 chip bags line the left wall. Her pulperia is the only one on her side of town, and serves about 22 households.

Josefa doesn’t keep formal records of her financial activity but she knows that the pulperia produces enough money to cover most of her needs. The pulperia produces enough money to pay for food, electricity, water, school tuition fees for most of her children, and enough is left over for cell phones, transportation, and construction projects.

Josefa currently has a 5,000 lempira ($250) loan with La Ceiba. She’s had nine loans dating back to 2009. Josefa used half of her current loan to pay off other debts. The other half she invested in her pulperia. For example, Josefa’s mother was sick recently and she didn’t have enough money to pay for medical expenses. She asked a neighbor for help who agreed to lend Josefa 3,000 lempira ($150). Josefa used previous loans to pay off more toxic debts. For example, the furniture in her home was bought on credit. The store let’s customers buy furniture on credit and will charge interest on payments. Some stores charge as high as 30% monthly interest and exorbitant late fees. Additionally, Josefa or her home might get robbed on occasion… the life of a Honduran. Josefa was recently robbed in El Progreso and she found the La Ceiba loan useful in supplementing her lost cash.

Josefa acknowledged that she has come a long way. She listed improvements from a year ago: a cement porch, new home furniture, a refrigerator, shelves for her inventory, she is planning new investments in her home, her pulperia is growing, almost all of her children are in school, and everyone is healthy.

As Josefa finished telling her story, she settled her stare on the cement brick wall as if her story were hidden in the cracks. Suddenly her posture changed and she sat back in her chair. Her expression went from that of a pensive and serene one, to one of satisfaction. A slow smirk came across her face. She looked at her daughter attending to customers at the window, at her son Nelson, laughing and playing outside, and at the pulperia. Her gaze turned to the wall where the pictures hung of her, her children, and her daughter in a graduation toga, and finally, she looked at me. Completely silent and peaceful, her thoughts turned to the future. “Poquito a poco,” she said, little by little.


Santiago Sueiro, co-Chair of La Ceiba MFI (

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(Originally posted to on March 14th, 2014)

Norma the Magnificent

She was furious. I was flustered. I gathered my belongings, my papers, folders, pen, and phone, briskly shoved them into my backpack, bid a hasty and nervous farewell to my hosts and bolted for the door. Outside, she was already 30 yards away. “Norma!” No answer, no slowing down, no acknowledgment of my yell for her. Unsure of myself, I walked after her. She walked towards her house. The closer she got, the more I yelled. No answer.

I had a queasy feeling in my gut. I was uncomfortable. It was like knocking something over in the dark, you know you did it but you don’t know what it was. I retraced my steps, my words and my gestures, anything that could have caused an offense. But, to no avail, I was too busy trying to keep up.

She reached her house and fiercely shut the front door. As I stood outside I was embarrassed to discover Maria Yaneth’s daughter, Jocelyn, whose house I had just left, was at my side asking what happened. Of further embarrassment, the neighbors across from, and next door to Norma’s house were all standing outside or looking through their windows, watching the scene unfold.

“Norma? Would you like to talk?”

Nothing of the sort had ever happened to me before. I was beloved in Villa Soleada, or so I thought. Residents routinely invited me into their homes, fed me and spoke kindly to me. I couldn’t understand why Norma was upset.

A man answered the door: Norma’s husband. With complete indifference, he opened the door, looked at me, looked at Norma standing across the room with her arms crossed, and said “would you like to come in?”

I didn’t know what to say or do. Norma certainly didn’t want me to come in. I was frozen. The man didn’t wait for a response. He left the door open, turned and sauntered back to his room.

“Norma?” She turned her head away and stood idly.

Jocelyn stepped inside. “Let him talk to you Norma.”

I couldn’t bring myself to step inside. I was unsure of my footing and didn’t want to disrespect Norma any further. A long silence passed. Norma was still, statuesque, magnificent and dignified. I felt small and pitiful.

“He only buys from people who are young and skilled and who have help from their family. I’m old and have no help! Why do you always buy from them and buy so little from me?”

My thoughts raced as I scrambled to piece together a coherent answer. With each passing second, it became increasingly clear that any response I gave would only disappoint Norma further. I told Norma that the products we buy from artisans have to be of a certain quality otherwise they wont sell. Indeed, it meant her products did not sell and didn’t meet the standard. As I spoke I could see Norma’s demeanor change. The rage in her eyes and voice were replaced by melancholy and despair. Her arms weren’t crossed; instead they were drooped by her side. Her shoulders were slouched and her head was lowered. My words seemed to suck the life out of her. “I’m not sure what I am supposed to do Santiago.”

It was a debilitating moment. I was powerless. There was nothing I could do or say that could make Norma feel better. I had nothing to offer her.

“Its ok Santi. I’ll walk you out.”

Her demeanor changed again. She seemed to regain her confidence. She walked with her usual pep. As we walked out together she put her hand on my back is if to console me. Norma asked about La Ceiba, my plans for the future, and about my family. I answered feeling no less confused than before.

“I’m sorry for reacting the way I did Santi.” She apologized to me? I thought I was the guilty one!

Norma was excluded from the program in part due to circumstances that were out of her control. She was missing out on an opportunity. It speaks to a larger question: how do we implement policies in a fair and just manner without compromising (too much) our ability to fund operations?

My interaction with Norma was one of the first honest exchanges I had with any client or artisan. It was refreshing. If honesty is necessary to build trust, Norma’s reaction was an indication of her faith in me not to dismiss her and move on. Today, Norma and I incorporate this trust into our working relationship. Norma isn’t shy about telling me where our policies fall short.

I recognize that my organization is imperfect and can be unfair for those we work with. If we are to address our imperfections, we must do so together. The process of fixing injustices, especially the ones we perpetrate, starts with honest communication. By listening to those who are directly affected by our actions, and working together to adjust our practices, we are sure to stay on the path of understanding. It can be messy and time consuming, inefficient and uncomfortable, but it’s non-negotiable and essential. It might not be the best business practice, but it’s the cost of doing business if we are to adhere to our convictions.


Santiago Sueiro, co-Chair of La Ceiba MFI (

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(Originally posted to on January 20th, 2014)

The Culture of Credit

For weeks I was bothered by a question. It started after a conversation with an elder family member. She suggested that my involvement in La Ceiba meant I was idealistic and naïve, and that I have a shallow understanding of what I am doing. It occurred to me recently that these are the same assertions that Ivan Illich makes in his speech, “To Hell With Good Intentions.

I am not sure what Illich would think about La Ceiba if he were alive today. I can only presume that Illich, like my family, would point out that we aren’t experienced professionals, we depend on SHH for infrastructure, our business model is unsustainable, we are outsiders, and we don’t know Honduran culture or history. Its true, the longer we carry on with the project, the clearer it becomes that we are powerless.

If La Ceiba’s primary goal is to alleviate poverty, we should stop what we are doing right now. The evidence of our effectiveness in empowering women and increasing income is inconclusive. Further, La Ceiba staff and students benefit far more from their investment in the project than clients do. We have the privilege of leaving Honduras whenever we want, students earn academic credits for taking part; I get a prestigious title and resume builder. Meanwhile, clients get a $25 loan.

We fail over and over. More than once, I misinterpreted my role in the community, we made unfair assumptions about clients, we patronized and offended, we were yelled at, rejected and pushed around. Many of our policies and products caused unintended consequences of which some in the community are still dealing with today.

Illich is right in his conviction that North American “do gooders” can cause harm to those they seek to help. He is right to imply that our culture and shallow understanding contributes to a cycle of patronization, of subjugation, of victimhood and guilt. What’s also true, however, is that we can change our culture and improve understanding.

I wonder if the mere act of admitting our limitations, privileges and failures empowers us to respond in a way where we can pursue a more just and fair purpose. Perhaps now, after admitting defeat and failure, we can say that we know that good intentions are not enough.

Since its inception, La Ceiba students and members undertook a painfully difficult evolution. We criticized ourselves, our intentions, our motivations, and we came to realize that we are broken. We know now that we can’t presume to stand for change if we don’t first change ourselves. In employing self-doubt, in challenging our assumptions and convictions, we refine what it is we believe in. What I initially took as a college economics class was in fact a space underlined by themes of justice and equality.

Out of the fog of uncertainty and fear, we were able to reach important conclusions. We recognize that our very involvement in development could cause more harm than good. We are ready to accept doing nothing as a course of action. We act in accordance with the old rule that we should treat others the way we want to be treated.

Despite our limitations, and our view of ourselves, we cannot ignore injustice. I’ve seen how financial institutions use fear to motivate repayment, how they’ve threatened clients implicitly and explicitly, how they are verbally and physically aggressive, how they intimidate, and how they set unfair terms based on the premise that the client cant be trusted.

In this instance, we have the tools to create fairness in an unfair system. I am not talking about what Illich referred to as our “sacrifice” or “help.” This isn’t help. We want to change an industry; we want to prove a point. It’s the attitude that the client can take control of her life, that she knows best how to manage her finances, that she has aspirations and dreams that are just as worthy as ours, that defeat Illich. We aren’t providing charity; we are providing a partnership, an opportunity to seek justice together. This act, of working together and learning together, reinforces an element of equality.

Many people will read this and dismiss me as another young idealist with a false sense of reality: an Illich do gooder. You don’t have to believe me. I don’t expect you to. But, don’t confuse my idealism and hope for passivity.

When we decide to go house by house, to sit down with every client who has a question, to give clients the benefit of the doubt, to document every success and failure, to write about nuance and complexity, to offer an honest and fair interest rate, to share an honest repayment rate with the world, to change the way we think about the poor, we can inspire those around us and make a dent in our industry. In the end this isn’t just a function of changing business models, it’s a function of changing the culture of an industry.

Santiago Sueiro, co-Chair of La Ceiba MFI (
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More of my blog posts at:

(Originally posted to on December 16th, 2013)