What Really Goes On

Due to last week’s adventure and my usual cynical ranting, I selfishly failed to mention a significant political milestone that occurred here in Bolivia. On Tuesday, congress finally approved the call for a referendum on the new constitution that Evo Morales has been trying to push forward since his election. With congress’ seal of approval the constitution can now be pushed forward and voted upon on a national level (by everyone) on January 25, 2009. This document has been the cause of upheaval here since Morales came into power, but after some rewrites the opposition lawmakers finally came to an agreement. The reason this is such a political landmark for Bolivia is that it gives the government the legal framework it needs to make the changes they’ve promised and that, generally speaking, the country needs. Another reason it was such a momentous occasion is that congress’ deciding day was met by a march of more than 3000 campesinos who had walked a full week from Caracollo (200km away from La Paz) to the government headquarters just to show their support for the new constitution. Morales himself even met up with the march for the last day of the trek. Overall it was a peaceful demonstration of solidarity, but as the decision making process grew longer and longer (18hrs) people got rowdy and there were reports of dynamite explosions in Plaza Murillo where the legislative office sits. Morales actually had to come outside a couple times and plead with people to remain calm, but it was well-worth the wait because later that day Morales was able to make a tearful celebratory speech in front of thousands of faithful followers.

The revamped constitution was printed in the newspaper the following day, so I have a copy and could tell you some of the nitty-gritty details, but the most significant changes are those pertaining to indigenous rights and freedoms. Some examples include the right: to posses their own land, to have access to an intercultural and multilingual education system, to have access to a universal and free healthcare system that respects their cosmovision and traditional practices, to exercise their own political, judicial and economic systems according to their cosmovision, to participate in the benefits of the exploitation of natural resources in their territories, to the management of autonomous indigenous territory, to the use and exclusive enjoyment of renewable natural resources existing in their territory and to participation in the institutions of the state. Reading the constitution makes me wonder how Canada gets away with being known as such a ‘developed’ nation given the way that the rights of Canadian First Nations communities are continually ignored.
The edit that seemed to put the icing on the cake for congress though, related to the clause outlining how many consecutive terms a president can be elected for. On the first draft it was up to three terms, but now it’s been brought back down to a maximum of 2 terms (5 years each)- a number that lets the opposition sleep at night.

Despite Bolivia’s breakthrough last week, on Friday the lovely Condoleezza announced that the United States has officially decided to remove Bolivia from the ATPDEA trade agreement because apparently the Morales government hasn't made a concerted effort to behave in whatever way it is that the United States wants it to behave. Meanwhile the United Nations, the Organization of American States and the European Union are all giving Bolivia major props for it's recent political accomplishment... It reminds me of that Sesame Street song/game ‘One of these things just doesn’t belong, one of these things is not like the other, lets-find-out…’ Remember? Then you had to choose which image on screen didn’t belong? For example: if you were left with three puppies and one rifle, you would pick the rifle as the oddball of the group and then Elmo would come on screen and confirm your genius status. Except I don’t think the producers of Sesame Street would ever sign off on the use of a rifle (they don’t even let Bert and Ernie live together anymore)… I just wanted to go overboard with some anti-American symbolism.

Usually bureaucratic, constitutional, legal mumbo jumbo stuff tends to bore me, but I’m intrigued by Bolivia’s recent triumph because I see it as an important foundation for change. The constitution, unlike most lengthy complicated legal documents, is straightforward and includes a bit of information on how some of the proposed changes will actually take place. This could make a huge difference. It’s one thing to state your objectives, but outlining how you’re actually going to get there is the harder part. This is an issue that I am confronted with a lot in the world of international development where people like talking about their good intentions, but have a harder time executing them. The United Nations Millennium Development Goals (MDGs- to be reached by 2015) are an example of this disconnect that I frequently wrestle with. As human beings I think we can all agree that the MDGs are all wonderfully, reasonable suggestions:

The thing I struggle with is that these are pretty enormous goals that don’t come attached to a very coherent or cooperative action plan. #8 is my favorite though because while every NGO on the planet is working towards these goals in their own way, I still don’t feel like we are really joining forces to ensure that this stuff happens. We need better teamwork. There is so much good stuff going on out there, but with better networking and knowledge sharing I think things could happen a lot faster.
When I find myself doubting the power and significance of the goals however, I have to remind myself that at least they exist as an indication of where we want to be, and at least we’ve finally agreed to make these issues a priority on an international level. As we all know, people, society and governments tend to be somewhat resistant to change, so even if all the MDG’s do is put the rusty gears in motion I guess I should recognize this is a very crucial first step.

Another somewhat bothersome example of the disconnect that I see in the field of international development, and more specifically the field of microfinance, relates to the word empowerment, which has become popularized in development literature by academics, NGO’s and policy makers. It is the idea of providing the necessary tools and knowledge one needs in order to liberate or….empower… themselves. The idea of helping people help themselves- a hand up not a hand out. This concept has taken development circles by storm, which is a definitely a good thing because it’s better than the concept that used to take development circles by storm- imperialism, but I worry that it’s just a new catch phrase like sustainability was a few years ago. I’m obviously all for the idea of teaching a man to fish, not just giving him one, but there needs to be more talk on how this is actually going happen. Talking about empowerment is fine and dandy, but actually make it happen is slightly more challenging because it basically it requires a total restructuring of societal and political norms.

Microfinance is said to empower women because it recognizes women as a priority group and institutions target women with their services. The only problem is that just ‘targeting’ women isn’t enough. Providing a new group of people with access to financial services that they were previously excluded from, doesn’t mean that now they’re now automatically empowered. In the case of women, sometimes accessing a microloan just adds to their responsibilities because now they're managing a small business and the loan to support it and their usual household duties. There is a whole pile of other factors that need to go along with the provision of financial services in order to make for a viable tool of empowerment. It’s a difficult concept to work towards too because there are no hardcore evaluation methods out there yet to indicate whether or not empowerment has been achieved- economic figures don’t work as empowerment stats as well. While financial independence may be a very important piece of the puzzle, if social and cultural norms don’t change, and especially if national and international policies don’t evolve along with the microfinance movement, then 'empowerment' efforts will only get so far.
I will conclude again by saying that I am happy that the conceptual framework on empowerment exists. It's great that these types of ideas and perspectives are circling around and maybe soon all the theoretical intentions will become a reality.
I’m by no means condemning the mission of microfinance. I think it’s a good way to start working towards a ‘bottom up’ approach to development; it just needs some tweaking here and there and some cooperation from all levels of society, not just the grassroots sectors.

That’s my beef for today. It was a lot and I don’t want be so jaded, but what would the point of me entering this field be if I had no opinions or criticisms to share?

I don’t have any personal photos this week because I went on a hike yesterday and threw my backpack (containing my camera) into a river. It was a pretty extreme hike and I was attempting to toss my backpack to the other side of some rocks because I thought my chances of making the jump would be higher without my pack. Unfortunately I forgot that I have no upper body strength and so I was unable to hurl my backpack to safety. I am letting my camera ‘dry out’ in hopes that this will magically solve the problem, but it’s not looking good. These photos are blatantly stolen from the net.

Keep the Car Running

I love my supervisor Dustin, but like many Bolivians he doesn’t like to give direct or detailed answers. Usually I’m OK with the ambiguity, but on Tuesday it ended up being somewhat problematic. We were going to go visit a community outside of Sucre that FONCRESOL works with because Dustin needed to talk to them about the fact that their 3-year loan has now become a 10-year loan. I asked how far away it was, how long we would be gone and if I should bring my wallet or phone etc., but since I didn’t get any sort of helpful indication from him I assumed it wasn’t that far and decided to bring nothing at all.

An hour and a half later, after crossing a river in FONCRESOL’s tiny red Suzuki (there was no bridge involved) we arrived at Teja Huasi. I walked into the school room where the meeting was held to find about 30 people sitting on the floor- men on one side of the room smoking cigarettes and chewing coca leaves, and women on the other side selling food stuffs to one another and dealing with their children as they ran about. The meeting was entirely in Quechua (the native language of the region) and so I didn’t understand a thing, but I got the point- FONCRESOL wants to help, but they can't let this loan go any longer. The cycle has been drawn out for so long that some people in the group have even died and now other members are having to absorb their debts in addition to their own unmanageable debt. Reasons for being unable to pay back loans range from bad weather and ruined crops to lack of jobs and family emergencies. FONCRESOL is sympathetic to this, but they can no longer operate at such a loss. Furthermore, because this is a group loan the fact that some people haven't canceled their debts keeps everyone in La Central de Información de Riesgo Crediticio (CIRC), which means that they are sort of blacklisted by financial institutions. The CIRC is an instrument used to check up on people when they apply for credit. It keeps track of people's previous loans and whether or not they hold any outstanding debts. It is equivalent to the credit bureaus at home that keep track of our credit approval ratings. Anyway, Dustin doesn’t like being the bad guy, but this is part of the job. FONCRESOL has to put the pressure on, but there is no other way of doing it other than going out and lecturing people.

After the meeting we drove for another hour or so into the valley to visit some other clients who were also behind with their loans. Dustin was again forced to collect money from people who are barley making ends meet. Just as we were climbing out of the valley and headed back to Sucre in our little FONCRESOL automobile it decided to breakdown- on a narrow windy, uphill road on the edge of cliff. We were stranded there on the side of the highway in a desert like environment for over an hour before anyone came by. This is why it would have been handy to have known how far away we were going in advance because then I would have at least brought some water with me, or maybe even some money. Soon it was four o’clock and we had not eaten all day. Delirium was starting to hit. Finally, a pick up truck filled with men traveling from Santa Cruz pulled up and agreed to drive us back to Sucre. I had the pleasure of sitting on the lap of a large, sweaty man who insisted on putting his arm around me the whole time, which meant that his wet armpit was pressed up against my back for the entire journey. It was lovely. Moral of the story- we got back to Sucre safe and sound, but by that time it was close to 6pm and I just went straight home and cooked up everything in my fridge. The result was some revolting concoction that I hovered down in 10 minutes and that left me feeling toxic in addition to completely drained- and not ‘toxic’ in a sexy Britney Spears sense of the word...

Aside from that unfortunate ending, the day was really interesting and I’m glad to have had the experience. Not only to see the beautiful landscapes that lie just outside the city, but also because it was good for me to see a somewhat unsuccessful example of microfinance. The system has not been able to take off with certain groups and this realization has helped me get closer to figuring out what exactly I want to tackle while I’m here.

What keeps shining through as a common theme/obstacle with every group I’ve visited whether rural or urban, and even with the individual loan clients I’ve met, is the issue of financial literacy, or the lack thereof. Due to Bolivia’s competitive microfinance industry, credit is so readily available that individuals have begun to immediately take out loans in financial hard times without considering other options. This has created a ‘bicycle effect’- the settling of one debt by contracting another. Over the years, microfinance organizations have just assumed that poor people know how to handle debt and clients themselves have just accepted being in debt as a fact of life. Speaking with FONCRESOL clients it is rare to find someone who doesn’t have at least one other loan with another microfinance organization. This is partially because the loans offered aren’t always big enough to cover one’s perceived costs, but also because loans are so readily available that many people use them without fully understanding how they work. There is a limited awareness of the risk of over indebtedness and juggling multiple microfinance loans requires a certain level of financial education, especially for clients who are illiterate.
The situation isn’t actually much different from what goes on in the developed world with credit misuse. It’s like people who have 3 credit cards and are using one to pay off the other. In developed economies financial education is actually starting to get some play as it becomes evident that the majority of the population, regardless of class, doesn’t know the basics of money management. From making a budget to the difference between compound and simple interest- just because someone has money doesn't mean they know how to manage it. As the banking system gets more and more complicated and more financial products and services become available, one's ability to make sense of it all is diminished. Knowing how the financial world works, how to manage your money effectively, and how to make the most of the services and products offered are the first steps towards empowerment in today's volatile economic climate. Financial illiteracy is a worldwide epidemic, but it's effects are more drastic in developing economies where people can't afford to have sloppy accounting and overspend here and there. The importance of financial literacy hasn't been made clear in these societies however, because people tend to view personal financial planning and saving as something that only rich people with extra money can do.
What I’d like to do with FONCRESOL is try and increase the amount of financial education that the institution provides their clients. Increased financial capability will increase the transparency of the institution by allowing clients to understand and exercise their rights, it will also allow clients to maximize the impact of their loans, and it will help the institution retain and attract clients while keeping loan defaults to a minimum. Clients could have more discretionary cash if they were able to manage their household and business cash flows better. For the most part financial behavior among microfinance clients is reactive and people lack the skills and confidence to properly plan their cash flow. Unfortunately changing this behavior will not be easy and it will require a greater understanding of people's attitudes and habits towards money It will also mean figuring out a way to encourage people to plan ahead instead of living day-to-day, hand-to-mouth. Learning how to save is only part of the equation though, learning how to use available financial instruments and determining which are most appropriate for different situations is the other half.

Katherine Hane does CBBA

CBBA is the abbreviation used to refer to the city of Cochabamba.
Katherine Hane is the name that appeared on the nametag I was given upon arrival at FONCRESOL’s national conference.
My name is bizarre here no matter how you cut it, but this was the first time I had seen it interpreted in such a manner. I usually introduce myself as Kate, but if that doesn’t go well I switch to Katia or something along those lines that can roll off the Spanish tongue with more ease than my actual gringa title. The Katherine part on the nametag didn’t come as much of a surprise seeing as how that is in fact my real name. ‘Hane’, on the other hand, was more perplexing, but during one of the earlier sessions on financial accounting I managed to zone out for long enough to figure out that Hane was the result of a couple factors: 1) My employers have a copy of my passport so they have access to my full, official name in all it’s waspy glory. 2) Most Bolivians have two last names and because they were all using their first last names on the nametags I guess they thought they would use my middle name as my first last name. 3) In Spanish J is pronounced as H is in English and so I think someone from my office read my name over the phone to whoever was in charge of making the nametags and they interpreted Jane as Hane.

The conference was held at a hotel about half an hour outside of CBBA and there were about 40 people in attendance from all of FONCRESOL’s regional offices (La Paz, Potosi, Tarija, Sucre, CBBA). FONCRESOL’s last national meeting was 5 years ago, so this was a pretty big deal for everyone. I was just happy to be there and to be a fly on the wall. The meeting was a great way to learn more about the organization and to get to know the people I work with. I learned that FONCRESOL, although it is one of Bolivia’s smaller microfinance institutions, is an extremely dedicated and innovative organization made up of hardworking, committed people. It’s rare to find an NGO where everyone really wants to be there and where everyone is truly passionate about the cause and mission. Logic would suggest that people working for NGO’s would generally be of this nature, but based on my encounters so far in the NGO world I have learned that this is not always the case and that often people working in this sector end up losing faith rather quickly, especially in the developing world. FONCRESOL however, is well stocked with people who truly believe in the work they are doing and who are determined to promote the development of their communities through the solidarity-banking model.
Below is a photo of me and my male coworkers from the Sucre office who didn’t make it into the last blog. Until I saw this photo I didn’t think that I stuck out that much here...

Another thing I learned on this trip about FONCRESOL employees is that not only do they work, but they play hard too. The first night I couldn’t even make it to dinner after the meeting because I didn’t sleep the night before on the bus. The next morning I found out that almost everyone was up until 5 am living it up. The second night I was dead again and wanted to go to bed, but there was an evening of festivities planned. We had teams from group exercises earlier in the day and these were used again for the evening games, which included a karaoke and dance competition. As the only female on my team I was forced to be a representative in the dance competition... Obviously as a result of my participation my team lost, but I still think I deserve some sort of bonus for attempting to compete with a bunch of limber Latin ladies to reggaeton in front of my new coworkers. Thankfully, I have no photographic evidence of the incident, but below you can find a picture of my poor teammates.

In addition to the dancing, a lot of the conference material was out of my league. There was a bunch of technical stuff about the structural changes that FONCRESOL is going make in the coming years and stuff about the financial risk analysis work they have to do. The only session I was really able to engage in was the presentation on Fair Trade.
FONCRESOL is looking to promote Fair Trade among the producers they work with and they’ve hired a consultant and another Canadian intern on board to pilot the project. Going into the presentation what I knew of Fair Trade from my UBC economics courses was that it's a great, simple trade model that everyone should just start using. This presentation broke that utopian perception... It outlined the lengthy certification process that FONCRESOL would have to help their producers with, which involves going through internationally recognized Fair Trade organizations in order to obtain the official ‘Fair Trade’ seal. I understand that some sort of regulation and standardization is necessary, but I was really frustrated to learn how centralized the Fair Trade Labeling organizations are and how their Western/Eurocentric frameworks make it hard for producers of the Global South to insert themselves into these growing markets. It costs €250 to fill out the preliminary application, then €2000-3400 to get inspected and certified, and then €1500-2700 to get recertified annually. For large commercial farmers these costs would be nothing, but the point of Fair Trade is to work with small, subsistence farmers throughout the Global South and to provide them with access to markets where their goods can be sold at a fair prices. It makes no sense to be charging these already struggling producers with such high fees just so that they can sell their goods. Similar fees apply to the people who are purchasing and reselling official Fair trade goods, but considering that importers are usually from developed nations, comparatively those prices are pretty inconsequential. I actually think the regulations should be stricter on the importer side. As the market for Fairly Traded and Organic goods is becoming trendier, more and more companies are trying to jump on the bandwagon in order to improve their socially responsible corporate image and a lot of companies just fake it. This behaviour has become so widespread that there’s actually a term to describe the technique: greenwashing- a company’s efforts to rebrand themselves with an environmentally friendly/socially aware image regardless of whether or not they have actually changed their corporate practices (ie: Starbucks).
I don't want to rain of the Fair Trade parade, I just want to share some of the intricacies I learned about the system that really grind my gears. I guess as it is still a relatively new concept some significant structural and policy changes will need to take place if it's ever going to take off as an effective development tool, which I hope it does. In the meantime I still believe that supporting existing Fair Trade initiatives is the best way to promote better practice.

Taking Care of Business

Yesterday afternoon I experienced a Bolivian sporting phenomenon. After helping with some English classes at a language school a couple of evenings after work this week, I was invited to partake in their Saturday afternoon tradition- a rousing game of wally. At first I thought they were just mispronouncing 'volley', as in volleyball, but no... it looks like volleyball, it sounds like volleyball, but it most certainly is not volleyball. ‘Wally’ is played on a squash court with a volleyball net, using the walls (I guess that’s where the name comes from) and all body parts. It’s madness. The ball was frantically bouncing off the walls and people’s heads and feet at my face. Eventually I managed to warm up to the whole thing, but I’m still not sold on it. I really just wanted to play volleyball and have some familiarity in my life, but I guess that’s a silly thing to ask for when you agree to play a game you’ve never heard of with a group of Bolivians you’ve just met. I guess it was a positive experience overall, but I still want to know if anyone else on the planet has ever heard of or played this game.
Regardless, the language school was a random and interesting little connection that I made this week. Perhaps I will even find some friends for myself there. I’m still working on that- you know, making friends and stuff…

Aside from being super lame on the ‘wallyball’ court, highlights of this week include the fact that it was my first week of work at FONCRESOL. In honor of that fact I am going to take some time to explain what FONCRESOL does and what I will be doing here for the next few months.

FONCRESOL works with poor, marginalized communities to empower individuals within their local economies through the provision of microfinance services. FONRESOL practices a community-banking model where individuals come together to form an economic solidarity group in order to be granted individual loans. The solidarity group serves as a guarantee mechanism for its members as they have no official financial credit or collateral. Most groups are composed almost entirely of women, not because FONCRESOL has a discriminatory policy, but because they target women due to their proven higher payback rate and the crucial role that women play at home and in the community. Once a group has been approved by FONCRESOL (ie: they all have identification cards and no one is in debt to another institution) they apply for a loan as a group and it is divided among the members. Then the members choose a day each month that they will meet and pay back at least the interest (approx. 2.5%) on their loan. The loans are paid back over 6 month cycles, and after a group has successfully paid back their loan at the end of a cycle they can apply for a larger loan. Most loans begin at around $800 bolivanos ($120CAD) and FONCRESOL does not dictate what the money has to be used for.
Each communal bank has an internal account that is added to by its members who pay fines for things like arriving late to meetings or missing meetings. Some groups also organize community events and contribute any generated funds to the internal account. At the end of the cycle the members can divide the internal account amongst them or carry it on to the next cycle. The internal account can also be used for emergency situations and the group can vote on whether or not they want to lend money to a member in need. This week I had the opportunity to visit a group that had just successfully finished their first loan cycle and was getting ready to apply for their second. There were also new members at the meeting who had heard about the group's success during the first cycle and wanted to join. I spoke to two girls my age there who were taking courses at university and who had small businesses on the side selling perfumes, lotions and beauty supplies.

Although the provision of micro-credit is the basis of FONCRESOL’s work, they are also dedicated to providing social development services to their clients because the organization believes that social development is just as important as economic growth. Due to Bolivia's huge informal economy it has become a competitive place for microfinance institutions and so many are now trying to go above and beyond while others are just happy to aimlessly hand out loans. You can hand out money forever, but if overarching social structures and behaviors don’t change, the added cash won’t have any long-term effects. This is where I come in. I studied economics (my 22 yr old permanently furrowed brow is proof), but I am by no means an economist. What I’m going to do with FONCRESOL is help them build upon their capacity building programs. To date they have held workshops for their clients in areas like human rights, women’s rights and political participation, but they are looking to come up with a methodology that will make the delivery of these workshops more feasible and effective. During my time with FONCRESOL I will be evaluating the current structure of their banking programs to see where I can weasel in some more of this good stuff without burdening the already overworked staff too much. Above you will find photos of some of my co-workers- Berta and Amparo. There are two gentlemen that we work with as well, but I didn’t get a chance to snap their photo on Friday. They’ll show up later. Actually, probably next week because this week I’m going to Cochabamba (on my first business trip EVER!) where FONCRESOL is having their annual national conference. I’m a high-powered business executive.

This afternoon I visited a town about 1 ½ hr outside of Sucre called Tarabuco. They have a well-known Sunday market with lots of artesian crafts and weavings. It was a cold damp day, but it was nice to get out of the city and see some of the surrounding countryside. To top it off, just as my fellow Canadian co-worker Karen and I were about to leave the market a parade materialized and I managed to catch some footage of it. Enjoy the crazy monkey/lion man.
The pictures in this post are from Tarabuco, but similar small market vendors can be found in Sucre and they are an example of the type of clients FONCRESOL works with. Please note the woman selling coca leaves in bulk.