Tag: La Ceiba

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Relationship Collateral

Seven months ago I was appointed Program Director of Honduras Operations for La Ceiba. I am living in El Progreso as the first full-time employee in La Ceiba’s history. Yet, for a long time after accepting the job, I had no idea what Program Director was supposed to do. I wasn’t sure what my role was within the organization and I worried that my presence would cause an imbalance. The experiences I had as a student could not have been the same if there were a full-time Program Director in Honduras.

While I wrestled with this tension, I did the only thing I was sure I was supposed to be doing: I visited our clients one by one. We made small talk until the question occurred to me, “what do you think of La Ceiba?”

The answers to this question led me to believe that our service and product could improve immensely. The more questions I asked, the more involved and active clients seemed to get. I asked further questions.

  • What would clients like La Ceiba to improve upon?
  • What do they think of our requirements, our interest rates, and our policies?

Something unexpected happened during this time. Since the 20th of August:

  • La Ceiba’s Portfolio at Risk fell from 33%, to 8%.
  • Our gross loan portfolio went from 50,000 lempiras ($2,500) to 69,277 lempiras ($3,464).
  • We added 24 clients to our program including our first male client.
  • The disbursed principle over the last three months is 104,300 lempiras ($5,215) compared to 144,000 lempiras ($7,200) disbursed over the entire 2012 fiscal year.

I wonder whether we stumbled upon a powerful idea: did we replace collateral with a relationship? We’ve mitigated our risk despite rejecting collateral requirements, high interest rates, and the plethora of aggressive practices that are justified by our industry. Instead, we built trust through repeated interactions, constant and open communications, clear and explicit terms, and by adopting the attitude that the client can fulfill their obligations without an outsider telling them how. Clients understand our product as a mutual agreement: we won’t pressure you to pay, we’ll charge a fair price, and we won’t engage in aggressive practices. In exchange, the client makes herself responsible for her loan in the way she knows how. The only way we can make this work is if the client trusts us not to take advantage of her and we trust that she will do whatever is in her power to pay her loan.

In the last few weeks, La Ceiba students have met with Ana and I to discuss and develop policy. Together we made adjustments and reached breakthroughs. The meetings served to continue the process of questioning our policies and ourselves, but added a new perspective to the debate. It’s a further opportunity to develop the best product possible where it injects local knowledge and the clients voice into the process. And yet, it is a trade off.

Looking forward we encounter several questions.

  • Are we working towards financial sustainability?
  • Should we pursue legal recognition in Honduras?
  • Can relationships replace collateral?
  • What balance can we strike between a student-centered and a client-centered definition?

As we work towards perfecting our operations and roles, our mission and our focus, I am certain that we will do so together as a tribe, and, as we’ve always done, we wont fail to question our every step of the way.

Santiago Sueiro, co-Chair of La Ceiba MFI (www.santiagosueiro.com)
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More of my blog posts at: laceibamfi.org

(Originally posted to laceibamfi.org on November 24th, 2013)

 

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Tania Maricela Bobadilla Carcamo

Tania Maricela Bobadilla Carcamo, 28, is from La Ceiba city. Eight years ago Tania settled down in Las Brisas where she still lives today. Tania followed her sister Maria Carcamo to Las Brisas, whom married a man from the town. For two years Tania lived with Maria and her husband. During that time, Tania worked at the nearby pool hall. Maria’s husband was the owner and he needed someone to help manage money and sell drinks. Tania learned how to budget, save money for the business and manage operations, all while serving drinks until late at night.

During her time at the pool hall, Tania met Nelson Discua. Nelson proved a gentlemen, he walked Tania from the pool hall to her house every night after work. They married and Tania moved in with Nelson and his family. Tania remembers those as uncomfortable times, “I didn’t get along with Nelsons mom very well.” Tania wanted to move out. Luckily, Maria’s neighbor happened to move out. Tania and Nelson moved into the new home, it was an improvement but Tania was not satisfied. The land belonged to Marias brother in law. They didn’t have to pay rent but they couldn’t stay there forever.

La Ceiba met Tania in 2010. At the time, Maria was already working with La Ceiba. Maria explained to Tania how La Ceiba loans worked but Tania remained skeptical, “I thought it was propaganda of some kind.” But, Maria and another good friend, Suyapa Santamaria, convinced Tania that La Ceiba loans were real. Tania reluctantly accepted her first loan of L 575 ($28.75).

With money from the loan, Tania invested in silver with the intention of selling to residents in her area. Her operation was mobile, she went house to house and over time she developed a strong client base. Additionally, she set up a credit system of her own. Tania allowed clients to pay for her silver in parts. That is, they paid for some of the silver at the point of sale, and paid the rest in monthly installments for two months. This system worked well for Tania because, as she recognized, it gave clients a flexible method of payment where they might not be able to pay large sums all at once. Tania recognized other benefits. She never had worrisome amounts of cash at the house and if sales were slow the next month, she could rely on payments due from the previous month to cover costs.

In less than a year Tania received and paid five loans and worked her way up to a loan of L 2,500 ($125). As her loans grew, so did her income.

Tania’s plans changed a few months ago when a family member left the country. The family member left behind two businesses that were unmanned and in bad shape. Tania, along with her mom and two sisters, jumped at the opportunity. The family could benefit from a group endeavor where everyone involved received a steady income. So, Tania left the silver business and prepared herself for the new challenge. The two businesses were a chicken restaurant, and a food stand at the local school.

Tania’s mom is the boss, everyone works equal hours, and everyone splits the profits evenly. After three months on the job, sales have increased. Additionally, Tania increased her savings and covered all her home expenses.

Tania estimates that the food stand makes between L 2,000-2,500 ($100-125) a day while the chicken restaurant makes L 8,000 ($400) a weekend. However, their success is not without its challenges. Two weeks ago the food stand was robbed. One morning, Tania’s mom opened the stand only to find the door broken open and their products were gone. They had nothing to sell that day. Tania happened to be eligible for a L 5,000 loan with La Ceiba. The loan was large enough to replenish most of the inventory and Tania paid back the loan ahead of time the next week.

With her new income, Tania and Nelson, who works in a factory, are able to take a step towards Tania’s dream. Together, the couple saved enough money for a down payment on a plot of land. The sight is nearby in the neighboring town of Primero de Enero. They are paying what is left in installments and are on schedule to finish the payments by February of 2014.

 

Santiago Sueiro, co-Chair of La Ceiba MFI (www.santiagosueiro.com)
Get Social with Santi:

More of my blog posts at: laceibamfi.org

(Originally posted to laceibamfi.org on September 20th, 2013)

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Marlenia Urbina

Monte de los Olivos is a difficult place to get to. It’s a small town composed of 24 houses and a community center. The town is located about three miles from the closest paved road. To get there you have to park in Villa Soleada and walk on a dirt road lined by a palm tree farm. After a 10-minute walk through the shady grove, you can find the town of Monte de los Olivos.

Until she moved to Monte, Marlenia Urbina, 42, never lived in what she considers a safe or stable community. Her life is marked by instability and friction with her parents. Two years ago, Marlenia settled down on the small plot of land that is now Monte de los Olivos.

The move to Monte came about after a long struggle. Before living in Monte, Marlenia lived in a community by a riverbank. The land was not hers and the government seized the property where she lived. Marlenia, her husband and her four daughters, were forced to move but had nowhere to go. So, Marlenia and a group of over 30 families went straight to the Mayor’s office. They organized sit-ins and protested in the streets until finally, the Mayor granted the group a few acres of land behind the existing town of Villa Soleada.

In January of 2012 La Ceiba held an interest meeting with all the families in Monte. Marlenia describes her initial reaction to La Ceiba’s loans as that of “disbelief.” “The interests are so low! I couldn’t believe that there was no collateral. We thought it was part of a plan to take our land.” Marlenia tentatively accepted her first loan of L500 ($25).

Marlenia owns and operates her own pulperia, or convenience store, out of her home. The pulperia provides Marlenia with consistent income. It is one of only two pulperias in town. Marlenia depends on her pulperia to pay for the water bill, her daughters school expenses, unexpected expenses like sickness costs, any debts she may have, and whatever is left over Marlenia invests in her home and her pulperia.

Marlenia says that her loans with La Ceiba were initially unsuccessful. She used her loan to help a family member but the family member never paid her back. Marlenia was afraid La Ceiba would not work with her anymore. Eventually, through income from her pulperia and support from her husband, she was able to pay her loan. Marlenia worked her way towards a larger loan of L750 ($37.50). This time Marlenia decided to invest exclusively in her pulperia. Marlenia bought several products to sell including 18 “ristros.” Each ristro has 12 bags of chips. Marlenia sells each bag of chips for L5 (25¢). As a result, Marlenia says that her sales have steadily increased.

In addition to her pulperia, Marlenia is the head of a group of entrepreneurial women in Monte. Together, they develop business ideas and execute them. Their activities include the production of artisanal crafts and hair products. They also work together to find new markets outside of Monte, specifically in the city of El Progreso.

Marlenia says she learned a lot from La Ceiba’s financial literacy class. One of the concepts the class covered was that of savings. Marlenia learned how to organize her finances and save towards a specific project or item. Marlenia is currently saving her money to invest in one of her group’s business ideas.

Santiago Sueiro, co-Chair of La Ceiba MFI (www.santiagosueiro.com)
Get Social with Santi:

More of my blog posts at: laceibamfi.org

(Originally posted to laceibamfi.org on September 17th, 2013)