$$bLiNG bLiNg$$ money ain't a thang?

Last week I launched the market research phase of my project- which really just means that I began surveying FONCRESOL clients. I like to use the term ‘market research’ though because I secretly fantasize about being a big-time corporate executive and because I believe it is the right approach to use for the type of analysis I am trying to do. FONCRESOL, and all NGO’s for that matter, need to think of themselves as businesses because they are indeed organizations offering a service to consumers and therefore they should be very concerned with understanding what their clients want. Many NGO’s however, tend to be very product driven- they focus more on the service they deliver and less on understanding their clients’ needs and wants. I am not saying that NGO’s arbitrarily invent social services to offer, but I do think that sometimes after a while the initial mandate gets lost and organizations start to forget why they are doing what they are doing. Meanwhile, although it pains me to admit it, the corporate world has really nailed getting into consumers' heads and understanding their clients. In fact they’ve achieved this to such a freaky extent that iTunes can now read my mind and recommend music that I actually like and subsequently end up buying…

Last week I began using FONCRESOL’s caja communales (communal banks) as focus groups to probe clients about some of their feelings, attitudes and habits concerning money. Most groups were very quiet at the beginning of our discussions, but by the end everyone was participating and sometimes getting really fired up about the questions. Some examples of the types of questions I ask are: How do you feel when you have money? How do you feel when you don’t have money? Has anyone ever taught you how to manage your money? What do you think is the most important thing that everyone should know about money? Do you save your money? If so, do you use a savings account? If not, would you save if you could? What would you save for? Do you keep a budget at home and in your business? How many microfinance organizations do you work with? Why do you work with more than one? Etc. etc.

My findings so far have been that very few people keep a personal spending budget, no one has ever been taught money management skills, no one saves their money and most of FONCRESOL’s clients have at least 2 other loans with other NGO’s. When I asked why no one saves most people just said that it was impossible given their current financial situation. A surprising number of people said that they used to save, but they are no longer able to due to dramatic increases in the cost of living that have occurred since the Morales government has come into power. Previous to these conversations I was unaware that Bolivia had seen such a substantial change in the economy since the Morales government. At the same time, I need to remember that I am in Sucre, which isn’t known for being a MAS lovefest... I don’t really know what to make of these complaints because I have no way of knowing if prices have simply gone up because that’s what happens over the course of time (my Mom used to buy hot dogs for 10 cents) or if it is a result of the worldwide financial crunch or if the Morales government is in fact guilty of financial mismanagement.

I have been speaking with FONCRESOL’s rural and urban clients and there is a surprisingly amount of variance between the two groups. In the rural zone the problem of over indebtedness isn’t as prevalent as it is among urban clients, which is primarily due to the lack of service in the rural areas. Also, there were way fewer general complaints from rural clients than from urban clients. Urban clients went on about how disorganized their fellow group members are and how the loan amounts are too small. I’m pretty sure this has to do with how over saturated the microfinance market is in the urban zones. The growing availability of loans have made clients less responsible with their borrowing habits and more impatient.

These pictures and the ones of the señoras above are taken from a caja I visited outside of Sucre.

I had a question fired back at me during one of these chats, which was whether or not Canada (and other countries) were going to start decreasing their financial aid to Bolivia because of the MAS government. Luckily, I was able to answer that with a firm ‘no’ because the only country that really has anything against the Morales government is the United States and they have already severed most of their ties with Bolivia and vice versa. One thing I’m not so sure about though, but that I chose not bring up with our clients, is how the global economic crisis is going to affect Bolivia and more importantly whether or not it will affect the micro-economy and it’s microenterprises. My guess is that the crisis will hit Bolivia eventually, maybe not as fiercely as other parts of the world because the economy isn’t that tied to the United States, but there will surely be effects. Many people in the field of microfinance (specifically in Bolivia) are expecting that the number of people living on less than $1/day will likely increase over the next few years and that more people will be looking to access microfinance services. Sadly, this increase in demand will not be met by an increase in supply. Instead, as funds shrink in North America and Europe the amount of money NGO’s have access to will also shrink. As a result loans will get smaller and interest rates will have to increase to accommodate the large administration costs involved with processing so many small loans. This is a shame for many obvious reasons, but especially because microfinance institutions, like FONCRESOL, have worked for years to get their interest rates as low as possible and now these efforts will be erased.

Newscasters, journalists and politicians are often quick to use the word crisis. There was the oil crisis, the food crisis, the housing crisis, the climate crisis and Mexico even had a tortilla crisis. The funny thing is, although we don’t hear about those crises anymore, they still exist and they have all contributed to the economic crisis we are faced with today. Our refusal to act upon problems that have existed for years has brought this all upon ourselves. So as governments start to moan and whine about having to clean up the messy economy, we have to be careful that they don’t start using these ‘hard times’ to justify cutting corners around money allocated to social services and international aid. Harper has already been accused of using the recession to legitimize the slashing of government spending that isn’t aligned with his neo-conservative agenda. Real solutions need to start happening fast and I don’t think that saving the people and institutions that provoked these problems is the right idea. Nor do I think doing nothing is the right idea- Yes, I’m looking at you Harper...
I guess when parliament gets back from their vacation we will have a better idea of what he has up his sleeve and lets hope that it’s a least something. Even one of those funny, long, multicolored handkerchiefs that magicians use would be better than what he’s been serving up lately.