Saturday, September 24, 2011

Estrellas del Norte

Thursday mornings are still spent moving about with the senior citizens.

Yesterday I accompanied them to San Isidro del Guarco (outside Cartago) for a gathering of over 200 senior citizens from the area. A few photos from the day:

Don Begnino
Excited to be here! (He's the only muchacho in the group!)

Las Estrellas del Norte

Doña Anna





Sunday, September 18, 2011

Keeping the Mission in Mind

FINCA’s Mission: Promote integral development in communities, through the formation and strengthening of Community Credit Enterprises.
Nathalia, the treasurer, selling the first stocks

Two weeks ago we elected the board, credit committee and fiscal and purchased the first stocks. We sold 48 stocks, at 5000 colones each. Our social capital is 240,000 colones or around $480.

Yesterday was step 8  ½; granting the first loan. Please note, that once again we have a ½ step.

One side of me pushes to finish each step in time, to reach the end “goal” faster. But then I step back- realizing I am losing sight of the mission; which is to promote integral development in communities. This means not just the economic growth that will come from the access to loans, but also the education and financial literacy. Spending the time to make sure all elements of the process stay clear is crucial in working towards FINCA’s mission.
CCE- Cristo Rey


So we spent all of Saturday afternoon going over the process for soliciting a loan, the analysis of a loan, and how to calculate the repayment schedule.

The CCE charges a monthly interest rate of 2% (although the annual rate of 24% interest can sound high, it is important to take into account all the benefits of having the bank local, not paying for transportation, paperwork etc. and also earning dividends on their stocks. Many microfinance institutions charge a much higher annual interest rate).

Nathalia, our treasurer, is taking out the first loan for her artisan business. She wants to buy a new machine that cuts wood, and will make her work easier and faster. The machine costs around 100,000 colones or $200. Because this is the first loan, she has agreed to a short term loan of 8-months, in order to keep the money circulating.

Month
Initial balance
Interest
Principal
Ending Balance
Total Payment Due*
1
100,000
2,000
12,500
87,500
13,625
2
87,500
1,750
12,500
75,000
13,625
3
75,000
1,500
12,500
62,500
13,625
4
62,500
1,250
12,500
50,000
13,625
5
50,000
1,000
12,500
37,500
13,625
6
37,500
750
12,500
25,000
13,625
7
25,000
500
12,500
12,500
13,625
8
12,500
250
12,500
0
13,625
* To calculate the total payment due, we averaged the interest payments + the principal payment:                                                                          

It was essential that I took the time to really make sure they understood the whole loan process, as one of the most important aspects of microfinance is transparency. They need to understand what they are paying with each loan repayment and be able to complete the loan analysis, repayment schedule and forms with confidence.

Thus, we will finish step 8 next week, with payment of commission (3% to pay for administrative costs of the loan) and filling out receipts.

I’ll end with my golden moment: Cali, the president, asked if he could take home the loan repayment schedule we had written on large construction paper, "to study".

CCE-Cristo Rey voting on new members
It is so inspiring, so motivating that the members all have so much interest, and desire in the Community Credit Enterprise’s success. 

Thursday, September 1, 2011

Motivation


Right now I am forming a Community Credit Enterprise in Cristo Rey, but also I work with a well-established CCE in San Cristobal Norte (my community).

San Cristobal Norte’s CCE (named SACRIN) is successful. Founded in 1996 with a social capital of 100,000 colones (around $200), they now have a social capital of 26,000,000 colones (around $52,000) and a credit portfolio of 115,000,000 colones (around $230,000). The capital is formed by means of members of the bank buying stocks in the CCE.  This is impressive, especially considering that the majority of the 83 members have not finished primary school and work principally in agriculture.

As I go through the formation process with the group in Cristo Rey, I ask myself, what is the recipe of motivation? Why has SACRIN succeeded while many other CCE’s are still struggling year after year?

Autonomy. Purpose. Mastery.

“Autonomy-  The urge to direct our own lives
Purpose- The yearning to do what we do in the service of something larger than ourselves
Mastery-  The desire to get better at something that matters” (-Daniel Pink, TEDtalk)

In Daniel Pink’s 2009 TEDtalk, he outlines the science behind motivation, arguing that for complex “thinking” tasks rewards are not the answer, but rather the intrinsic motivation to do something interesting is .

SACRIN is motivated, and not by money. The board of directors takes time away from their families, their work, their leisure time for the betterment of the CCE. They have been handed full control of the workings of the CCE, FINCA-Costa Rica was there 15 years ago to help in the formation, and they have a once a month meeting with 5 other CCE’s in the community, but the CCE is all theirs. They have complete responsibility of its success or failure.
2 members of the Cristo Rey group, taking responsibility and putting up the 22 steps 

SACRIN takes a great focus on the improvement on the community (members and non-members of the CCE). They offer various business courses, space for meetings, a library and a savings program for all youth in the community. The CCE is a part of something greater; it is not just access to loans, but a vehicle for change in the community.

And lastly, mastery- they have progressed greatly since the day of 20 members, and a suitcase for an office. Don Ananias, the president, directs the meetings with great skill, after years of experience and the continued desire to get better. He brings Costa Rican’s “Commercial Code” along with the CCE’s own regulations to every meeting, and can often be seen referencing them to help guide his decisions.

Right now, with Cristo Rey, I am focusing on autonomy. Giving them control of the formation of the CCE, allowing them to direct the meetings and take full responsibility.