Microfinance in the Honduran Mountains

Mikela Trigilio is a 2nd year MA candidate at the Johns Hopkins University (JHU) School for Advanced International Studies (SAIS), where she is focusing on impact investment, small business development, and social entrepreneurship. She has studied in France and traveled overseas on many occasions, but reserves a special place in her heart for Latin America. Mikela has been an intern with Social Enterprise Associates since October 2010.

Like most students at SAIS, I get a periodic itch to travel overseas in developing countries. It's the lust for adventure - meeting interesting people, eating local food, and struggling to roll your R's in Spanish like a native speaker.

I've always believed that the best way to get to know a culture is to dive right into it, which is why I decided to join several of my classmates on a Microfinance Brigades trip to Honduras over Spring Break. Our team was lead by Sminu, a pre-med student from JHU, with a motley crew of 11 graduate and undergraduate students.

We arrived in Honduras' capital, Tegucigalpa, on a dusty Friday afternoon, ready to get our ‘micro-loan on.' We would be working for the next week in El Encinal, a rural coffee farming community located 3-5 hours northeast of the capital (depending on who was driving).

Our local coordinator was an enterprising young Honduran named Alex; our driver, Rafa, was a rugged guy with a past in military intelligence. Alex would head up our college student convoy in his truck while Rafa followed in our surprisingly hardy Honda minivan. We would grow to appreciate the easygoing attitude and amazing driving skills of these two men as we traversed rocky roads, steep mountains, and multiple rivers (without bridges), just to reach our 400-person community.

Upon arrival, we were driven to our compound, Nuevo Paraiso [New Paradise], located next to an orphanage of the same name. That weekend's activities consisted of playing soccer with the orphans and meeting our program director, who we affectionately referred to as "Professor Danny."

Danny provided us with an overview of El Encinal's Caja Rural [rural community bank]. The Caja was initially capitalized in 2006 by FUNDER [Foundation for the Development of Rural Enterprise]. FUNDER provided basic financial training to leaders within the community, who took ownership of the Caja. Microfinance Brigades began working in El Encinal in 2009 in order to provide technical assistance and seed capital for Caja operations.

After the presentation, we were paired with students from UC Santa Cruz+UC Davis and introduced to the leaders of the Caja. We asked them questions about outstanding loans from a poor harvest in '07, ways to market the benefits of Caja membership, and income-generating ideas for the community. Discussion was guided by Elias, the head of the loan collections committee, and Guillermo, an enthusiastic Caja member whose ear-to-ear grin and positive attitude were downright infectious.

Over the next several days, we conducted a series of home visits in teams of 5-6 students to interview local farmers about their personal finances and experience with the Caja. We learned all about harvesting coffee and plantains, while promoting the importance of savings and loans.

We were struck not only by the extreme poverty in the community, but also by the vast gap between the elite members of the community and those less fortunate. Wealthier community members tended to have fewer children, better homes, and more land. Poorer community members typically worked as day laborers on the land of others and dreamed of one day buying their own manzana, a local unit of measure equal to about 1.68 acres.

On our third and final day in El Encinal, we gave a presentation to the entire community on the benefits of joining the Caja (gracefully accompanied by a microfinance song sung in broken Spanish to the tune of "In the Jungle"). The presentation was well attended by the adults in the community; the women wore their best dresses and the men carried fancy machete scabbards sporting decorative stones and fringe. Afterwards, the Caja hosted a fiesta for the children of the community, complete with a piñata, coke, and cake.

What struck me the most about my time in El Encinal was how politics played out on a local level - it was like a tiny microcosm of public affairs. When I asked Danny about what made a caja successful, he had an interesting answer. In other cajas, the leadership consists of younger men who are not established or wealthy, but who are still doing well for themselves. He explained that these young men are motivated, interested in change, and willing to take risks, whereas the leadership of El Encinal is older, better established, and more risk-averse.

That evening, we presented to Danny with recommendations for how the Caja could improve its operations, along with a $100 donation from each student. We saw an opportunity to attract some "fresh blood" into the Caja. It is currently run by a relatively small group of community members (20), and the leadership positions are monopolized by one family. We suggested the Caja lower its entrance fee and attract more members. We also recommended the Caja provide basic budget training for all loan recipients, and create a standardized schedule for overdue loans.

In the end, I was grateful for the opportunity to meet the people of El Encinal. It reaffirmed my belief that we are really not so different after all - many of the coffee farmers reminded me of my grandfather, whose family emigrated to the United States from Italy in 1921 to make a better life for themselves. Ultimately it is the relationships we build that enable us to make dreams become a reality.

Microfinance Brigades provides poverty-stricken communities in the developing world with the educational, financial, and organizational resources necessary to sustainably drive their own economic development. Microfinance Brigades volunteers help the under resourced in remote villages build their own businesses, ensure against emergencies, and fund community projects. For more information on how you can join a brigade, please go here →


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