Blogging Microfinance:Wagner 2007

Beginning work at the Egmore Office

Monday I began work at the Center for Micro Finance’s office in Egmore, Chennai. It is in a nice office on the eighth floor of shabby building with a very rickety elevator and with stairs stained by beetle juice. Its inconspicuous location suits it well and is highlighted by the BEST juice/fruit stand on the first floor (think mangosteen, mango, watermelon, lychee, lime, apple, papaya…).  I began this week not really understanding how my work in Chennai would play out but things are becoming clearer. I spent much of Monday pouring over literature on domestic remittances and the survey that will be used for the evaluation’s baseline survey. The survey is enormous and is expected to take more than 2 hours. Additionally, there are brief adult and child surveys for each individual in the household. For this reason, it is estimated that surveyors will only be able to complete (it is complete when the household is finished) 2 surveys a day. It will take a lot of planning to create a surveying schedule that will effectively and efficiently get the work done, especially since household members may be at work or at school at certain times.

In addition to going over the survey with Jyoti Mukhopadhyay, the Research Associate with whom I will be working, we also discussed the design for the randomized evaluation. Essentially, once the experiment is underway we will have four test groups who will be provided with various products (services) from the Micro Finance Institutes (MFIs): those receiving remittance services but no savings, those not receiving remittance services and not receiving savings, those receiving remittance services along with savings, and those not receiving remittance services but are receiving savings. Since only those families with a migrating family member will take-up the remittance products, if we survey households in communities without considering their migration status it is likely that only a small porportion will participate in the remittance program (since some of the household will not have migrating family members). This is especially important since Adhikar and Ajiwika will only be able to provide services to migrants who are seeking work in Gujarat.  Therefore, this will further limit the number of households interested in the product by excluding households with migrants headed to places like Mumbai or Calcutta. (FYI: Adhikar is an MFI based in Bhubaneshwar, Orissa and Ajiwika is a MFI operating in Jharkhand and Bihar but are setting up two small offices in Gujarat). Carefully planning the baseline survey is essential because it is a huge investment and cannot be altered after the fact. Speaking with Jyoti in depth about these details and about the survey in general finally made me finally feel like I was in the loop and part of the process. I am increasingly excited about what I will see and experience once in Orissa. I am also just beginning to understand how much work this survey will take to complete and the importance of this survey to the migrant community. More about that soon...

A break after training at Mamallapuram

Friday was the final day of the "Total Immersion Program in Finance and Development." It is amazing how much I learned in two weeks but I think I speak for all the interns when I say that I was eager to get to work. The last week of training moved beyond various micro finance models and explored products that can accompany and complement credit programs. Speakers from the Center of Micro Finance and other organizations came to discuss insurance, health care, pensions, and savings (to name a few). On Friday, interns completing their time at CMF presented their projects to the group.

In regards to the remittance project I will be working on, last week we completed a proposal that will (hopefully) partially fund the survey of migrant households CMF is conducting with two MFIs, Adhikar and Ajiwika. For now, I am in Chennai catching myself up on domestic migration in India before doing an estimation exercise on future trends. I will be leaving for Brahmpur, Orissa at the end of this month. I have to admit that I am eager to get out of Chennai but am also enjoying spending time with the interns and CMF staff who are working in the city since once I am in Orissa I will stay there for the rest of my internship. Also, on Friday I learned that I will be housed at the small office in Orissa (apparently it is in a flat and it is in a residential building).  Once there I will be doing a costing exercise on available remittance services (formal and informal) in communities served by Adhikar and will assist in the baseline survey. I will elaborate on all of this in future blogs.

Saturday morning, I escaped the city and caught a bus south with some interns to a coastal town called Mamallapuram. I have been to nice beach towns but it was quiet and had beautiful temples both on the shore and inland.

The carvings were beautiful. They depicted gods and mythical creatures along with elephants, domestic livestock and women milking cows. The temples and carvings inland were spread out among these large rock outcroppings. It was nice to have a chance to stretch my legs and explore after having spent so much time pouring over the details of micro credit. I also got a chance to eat granola and fish both of which I have been wanting since arriving in India. I returned on the public bus on Sunday afternoon after a long walk on the beach on Sunday morning.

Lessons from Lima

Spending a week in Lima was a great opportunity for Giordano and I to work with the other people at IPA Peru. In addition to getting feedback and advice on aspects of our project from seasoned randomized trial researchers, we had a series of interesting presentations by each of the IPA Associates on their respective projects. It really brought home how much we have to learn in the development field, and the vast range of opportunities for research and improvement that exists in microfinance alone, not to mention other poverty interventions. Each study requires an impressive amount of detail and careful thought and planning. One person is working on a social networks project in Lima, which involved physically mapping how people are connected and to what degree in certain poor communities. The resulting map is being used to measure the price people are willing (or not) to pay for taking a loan through someone closer to them in the social network. So for example, if they want to take out a loan sponsored by a friend, they pay a slightly higher interest rate than doing so through a stranger or more distant relative. Other projects measure the effect of incentives, such as adding health education to a microfinance loan package, and how the use of gain and loss frames and the threat or promise of higher or lower interest affects repayment. Another project examines the affect of different interest rates, as does our project with Arariwa, but combines it with positive and negative incentives. Partner organizations include Prisma, Freedom from Hunger, Manuela Ramos, and Caja Municipal. In addition to academic contribution and to policy change, I would hope and expect that through these partnerships, the organizations we work with are given an opportunity to better their products, sustainability and breadth of service.


Things are moving along in the Arariwa project. We’re continuing to prepare the loan officer training, as well as getting the initial census survey data organized and entered. Its amazing that there are communities relatively close to Cusco that don’t even exist on any maps or in any official documents. We had 3 surveys done by each of the 16 surveyors repeated by another surveyor, and in crosschecking the first few, we’re a bit nervous about some information discrepancies. It is clear that the surveyors did talk to the same people, but we’re finding some substantial differences in the answers. We have to balance that we know that to some extent this is fairly normal (especially considering that some of these people aren’t even sure about answers to questions such as their age) with our concern for the validity of our study results. It will take crosschecking the rest of the surveys and thinking through the overall results before we can determine what this means for the study. One of my goals next week is to talk to and maybe accompany more loan officers at Arariwa and attend another village bank meeting to learn as much as possible about the processes and issues that arise for MFIs in starting and maintaining the banks. In addition to my own learning process, another reason for me to gain more knowledge in this area is to anticipate any problems that we may have in enforcing our randomization zones that correspond with different interest rates, and to brainstorm in advance ways to mitigate and solve them.

A Tour of Peruvian Cuisine

On a non microfinance-related note, I now understand why Lima is known as the gastronomic capital of South America. I don’t eat nearly as well in New York as I did last week in Lima– I can’t afford it! But each meal was a real treat. We arrived Friday and our IPA colleagues took us to an indulging dinner at T’anta, one of Gaston Acurio’s restaurants, a famous Peruvian chef. I ordered tacu tacu with shrimp, Gason’s take on a typical mashed rice and beans dish. Saturday involved a tour of central Lima and Chinatown and a chifa (Peruvian Chinese) lunch, which was a buffet offering an interesting mix of Peruvian and Chinese food, including ceviche, tofu stir fry, fried rice, papa a la huancaina, and sweet and sour cuy (guinea pig)! On Sunday we went to Barranco, an artsy neighborhood in Lima that has a market with booths serving typical foods from all the different regions of Peru – the coast, the mountains the jungle… our group ordered a variety of plates so that we could all taste the different dishes. They included tacu tacu; a rice and chicken mixture wrapped and cooked in banana leaves; bolitas de yucca, stuffed with cheese and fried; corn tamales; green rice with vegetables and chicken; and an impressive spread of desserts, including the ever-present suspiro – a pudding type substance made of condensed milk, sugar and eggs and topped with a merengue. On Monday we went out to a special IPA bonding meal at La Mar, Chef Gaston’s cevicheria. The seafood was incredibly fresh and creatively prepared. Among the delicious spread we had a parilla (grill) of octopus and calamari, a tuna ceviche in an asian sesame sauce, and a variety of causas, a traditional dish of finely mashed potatoes with a variety of filling layers – in this case, seafood. Tuesday we had a typical menú lunch, where I tried ahi de gallina, chicken with rice and potato in a traditional huancaina (bread, chilli, milk and peanut) sauce. For dinner we had wonderfully fresh sushi. Most meals came with the ubiquitous chicha morena, a sweet juice drink made out of purple corn – an acquired taste that has grown on me (I prefer it to Inca Kola, the other national beverage which is a soft drink that tastes like bubble gum). Before I came to Peru, I don't think I had seen corn with kernels so big before. Is your mouth watering yet?

As fun as it was to eat and go out on the town in Lima, I’m happy to be back in Cusco, where the sun shines and people are tranquila.

ATMs for the Poor

Yesterday after lectures, we went to the Indian Institute for Technology (IIT) to view some technological innovations that students and faculty have created to help the rural poor. The show piece of the visit was an ATM machine that is cheap (about 1,200 US dollars), light, and uses only 50 watts. A short machine (because rural Indians are rarely very tall) it uses software that can display in all 18 of India's languages (official) and can dispense very small, used bills. Also, it uses biometrics. Since it requires a card, pen and fingerprint, someone who is illiterate can get help with the machine without worrying about revealing their pin number. Their fingerprint is their seal of approval. Overall the machine's low cost, use of biometrics and use of low denominations has potential. Already 1000 have been ordered by India's State Bank and interest has been shown from Nigerian parties.

IIT also then showed us other projects they have been working on like a 100 dollar computer (not a laptop) that uses less energy. Also we saw an efficient wireless transmitter that can transmit signals publicly up to 15k and telephone rerouter. Admittedly, new technology always fascinates me but mostly I was impressed by the Institutes efforts to improve the livelihoods of the rural poor through technology. The students seemed excited about the impacts these innovations would have in villages. It is good to think of development in today's terms, to imagine how using modern technology to connect and power communities might allow them to avoid some of the negative aspects of modernization that currently plague much of the world.

One lingering thought, however, is if these projects could be improved if they used alternative energy sources. It seems the ATM machine, using only 50 Watts, could run off of solar energy.

Images of Madurai

Below are some pictures from Madurai this past weekend. I believe that if you click on them there will be a link to a larger image.

A Mahasmam Trust lending group. The women sit in rows that make up joint liability groups. The women on the left side are group leaders.

After visiting some women's groups the first day, we visited a temple. This is in front of the bathing pool outside the temple.

A SLG initiated by the Dhan Foundation. These women lend directly from a bank as a group. They have hired an accountant to help them keep track of their funds and to act as a third party.

Veena, another CMF intern, helped translate for the group. In this picture she is with a leader of the group who has a small business making and selling yogurt.

A bride before her wedding at the Meenaksi Temple in Madurai. The women around her are helping prepare. She was one of many brides I saw this past Sunday.

Interning at the Center for Microfinance: Starting Off

I arrived in Chennai, India, a busy industrial city, just over a week ago. Brimming with people, Chennai’s infrastructure seems to be unable to keep up. Taking auto rickshaws to work and crossing the roads can, at times, feel like a brush with death. The food however is delicious. Luckily, at this point, I am happy to eat Indian meals three times a day with an occasional mango and cup of tea thrown in between. Especially, since I have been able to share these meals with the interns and CMF staff who come from all over the world. Along with Indians, who make up the majority, there are 15 interns originating from Germany, France, Switzerland, Mexico, Sri Lanka and the United States who represent prestigious universities from the US and abroad. Since we have all come to Chennai for the same reason, love to travel and are graduate students, we often continue to discuss policy issues and more over dosas and lassis.

The Total Immersion Program in Finance and Development conducted by the Center for Microfinance began last Monday (June 4, 2007). Originally, when I decided to intern in India I had not expected that I would have the opportunity to take an intensive course on microfinance. Last week was full of lectures. We met daily from 10am to 6 or 7pm listening to lecturers and researchers from Institute for Financial Management and Research (IFMR) and other institutions in and out of India. The topics ranged from the history of banking in India to high default rates in Cashpor to current policy discussions regarding a microfinance bill currently being discussed by the parliament. We also have been given papers to read that supplement lectures and topics. The result has been concentrated learning at an exhilarating (and some times exhausting) rate.

This past weekend we left this routine when our group traveled by overnight train to Madurai, a city known for its temples. While there for three days, we visited two organizations with microfinance groups. The first, Mahasmam Trust is an MFI that uses partnership model. The second, the Dhan Foundation is a non-profit that facilitates microfinance through Self Help Groups (SLG). In both instances met with the organization in the morning and with women’s groups in the afternoon. Splitting into smaller groups, we observed meetings and then discussed the programs and details of the schemes with the women in the groups. (I hope to have a chance to write a bit more about this soon…). On Sunday, we were given a chance to rest and spent the day touring Meenakshi Temple and walking around Madurai. The temple is one of the most famous in India and was enormous. While were there were many weddings and I was told that they expected 60,000 guests to pay their respects in the afternoon (I decided not to stick around for that chaos). Apparently, it was an especially auspicious day.

The course has little time for anything else, however last week I was able to meet with Jyoti, the Research Assistant with whom I will be working with this summer. With Aparna Krishnan, we discussed upcoming plans for the remittance project in Orissa. It seems I will be staying in Chennai for one week after the training to summarize migration trends within India as requested by Adhikar, the MFI who is piloting remittance services. I will leave on the 25^th for a just over a month and a half of work in Beganpur, Orissa.

Playing Tourist

This past weekend I ventured into the Sacred Valley with Lancey and Chloe, friends from New York. We hired a friendly taxi driver named Aurelio to drive us first to the Inca terraces of Moray, and then on to the beautiful town of Ollantaytambo. Moray was interesting and mysterious. There are three large deep formations of concentric circles, which they say were used as a sort of laboratory for the Incas to test agricultural crops in different microclimates. The drive there from Cusco, and then through Urubamba and on to Ollantaytambo, was dramatic and gorgeous. The Andes tower over the valley carved with precarious roads, and the dry landscape is spotted with patches of eucalyptus trees and clustered villages along the way. Sticks with red plastic tied to the end jetting out from adobe houses signal that chicha is sold there, a local favorite fermented corn drink. I haven’t tried it yet, but it’s my goal to do so soon.

We stopped in the town outside of Moray at the only restaurant we could find. By its deserted appearance, it was clear this was a farming town - everyone was out in field. For two Nuevo Soles (approximately 70 Cents) I had a delicious plate of arroz a la cubana, which consists of rice with fried banana and a fried egg on top. The food in Peru is actually quite delicious. I might turn into either an avocado or a giant ear of corn before I leave. I’m addicted to both: the corn mainly in the form of sweet tamales, and the giant avocados plain or with just about anything. Once in Ollantaytambo, we found the bed and breakfast on the train tracks that my father’s friend opened there almost three decades ago. It was interesting to meet her son, a child born to American parents who has lived his entire life in Peru, and to see this beautiful place that I had heard so much about – not to mention its eucalyptus-scented sauna that we got to enjoy. The town is built on the ruins of an Inca village, and the next day we climbed up to the fortress that towers above it to take in some pre-Colombian history and breathtaking (literally) views.

Back in Cusco, work is going well. I am off to Lima tomorrow to spend about a week with the rest of the IPA gang, including the new country director. I’m still very much enjoying going to work at a Peruvian organization every day, where Banco Comunal meetings take place below me and the staff is warm and entertaining. Soon we’ll start entering data from the baseline surveys, have a party for our surveyors, and train the new loan officers who will be working in our study areas. It will be interesting to see what kinds of issues and information comes out of offering different interest rates on loans to people in different zones in nearby rural areas. I think the week in Lima will be a good opportunity to hear about the projects that others are working on, as well as get some important feedback and guidance on our study with Arariwa.

The Ropes

I’ve been here for just a week and a half, and I think I’ve learned the important and delicate balance between heat, water pressure, and avoiding electric shock when taking a shower. I know that I should only pay two soles to take a taxi anywhere in Cusco, and that “above” and “below” are perhaps the most important words when it comes to giving directions anywhere. I’m getting settled in to an apartment with my coworker, and now that we have a fridge, life is grand! I thought I was ready to go for a run at 11,000 feet, but my body told me - not so fast.

I spent a few hours with Dora this week, one of our IPA surveyors, who kindly went with me shopping to buy a mattress. It was definitely a lesson in subtly skillful bargaining. I then took her out for pollo a la brasa, where we talked about everything from religion, to culture to our families and relationships. The people I’ve met here are genuinely eager to help me settle in and learn about life in Peru, and the Arariwa staff have made me feel right at home, inviting me on daily coffee and tamale breaks. Having only one other English speaker around is truly great for my Spanish!

This week I have been working on designing the training that we will provide for the Arariwa asesores (loan officers) who will be working in our two pilot study regions. Within each of these two districts, there are randomization zones which are designated as either one of two treatment groups (to receive credit offers at one of two interest rates) or control groups (to receive no credit offer). Arariwa will open several new banks in this region, and so it is crucial that these asesores understand the study and where and to whom they can offer credit, and at what rate. I’m working on activities to make sure they have a good understanding of what we’re asking of them, and that they are comfortable locating communities and deciding which zone they are in – even for communities that aren’t on any maps. I also had the opportunity to interview one of the current asesores yesterday to ask him in detail about Arariwa’s process for starting new village banks in rural areas. This was not only very informative for my work in microfinance, but will help IPA to better design a system that will track new banks and clients in the study region. In addition to preparing for this training, we currently have surveyors in the field doing random checks of the surveys we’ve collected, which will complete the data collection for the initial census. Things seem to be progressing well, and from June 8-14 we’ll go to Lima to meet with the other IPA folks and the new Peru country director.

Tomorrow I'll embark upon an adventure into the Sacred Valley with Lancey (a recent Wagner grad who is visiting Cusco) and her friend Chloe. We’re heading to see the Incan agricultural terraces of Moray, and then we’ll stay the night in Ollantaytambo, which is nested below an Inca fortress. On Sunday we’ll check out the famous Pisaq market, where we’ll surely be talked into buying something made of alpaca. Stay tuned for pictures of our excursion.

Winter in the Sacred Vally of the Incas

Even jogging up my six floor walk-up in New York could not prepare me for how winded I become walking up one flight of stairs here in Cusco. At 3326 meters (over 11,000 feet), the altitude and thus lower level of oxygen in this city perched in the Andes Mountains takes some serious acclimation. I have fortunately not become physically sick, as do some, but have endured some intense exhaustion and headaches, which is partially helped by the local remedy, mate de coca (coca leaf tea). Even so, my first week here in Peru has been vigorous and exciting, and I’m looking forward to an eye-opening and adventurous winter/summer.

I arrived in Lima early Monday morning, and soon went to the Innovations for Poverty Action (IPA) office to meet my new colleagues, and to immediately begin to learn about how IPA conducts its various studies here in Peru. The day also included a delectable ceviche lunch and sushi dinner. The seafood in Lima is incredibly fresh and wonderfully prepared; Peru’s large Japanese and Chinese populations have left a distinctive mark on its cuisine. The next morning Dan (from IPA) and I headed out on a morning flight to Cusco, which provided a stellar aerial view of snow-capped Andes Mountain peaks, as well as the Sacred Valley and Cusco city.

During my first few full days here in Cusco, I have spent most of my time with Dan and Giordano, who is managing the interest rate study with Arariwa, an organization that does microfinance as well as other community projects in the department (i.e. state) of Cusco. IPA is currently in the pilot phase of its project to examine how interest rates affect demand and impact of credit among poor households, and has partnered with Arariwa in order to conduct the study. Arariwa is embarking upon a major expansion of microfinance services into new and more rural areas of Cusco, and so this provides an excellent opportunity to survey households before and after access to credit, and at different rates. The entire expansion area was first divided into randomization zones, which were then divided into control and two types of treatment groups: one to receive offers of credit at low interest rates, and the other at higher interest rates. We are currently completing the initial household surveys in the pilot areas, and during the summer Arariwa will begin to open new banks in these areas, following the guidelines we have given them regarding treatment and control groups. My work this summer with Giordano will involve finishing this initial survey process and data entry, as well as coordinating with Arariwa and the loan officers to ensure that the study guidelines are being followed throughout their expansion process.

Most exciting so far was my opportunity to attend a Banco Comunal (village bank) meeting in the Sacred Valley community of Yanahuara. I was warned that we would be served breakfast which would of course be rude to refuse, and that it would likely include red meat – something I have not eaten for about 12 years. I prepared myself to suck it up and at least eat a bit of it, at the risk of my stomach punishing me later. I was slightly worried when I walked in to see several cuy (guinea pigs – a local delicacy) running around the dirt floor. But I lucked out – it was fish. So I happily ate trout and rice for breakfast with the socios of the San Isidro de Yahahuara Banco, while watching the community bank members conduct their monthly business of reviewing the bank methodology and repaying principal and interest on loans to Arariwa. As is typical in microfinance, most of the members of this 21-person bank are women. They walk up to the table one at a time, for all to see, repaying the soles that they owe as the transactions are recorded by hand in a notebook. In a mix of Quechua and Spanish, they then negotiate how to allocate funds that some place into the communal savings bank and which will then be loaned out to others. We had the opportunity to speak a bit with the bank members at the end, and I asked them if and how their life had changed since joining the bank. Several members chimed in to explain that their lives had improved and that before, banks in the city had required a land title or other forms of collateral that they could not provide.

I’ve spent the last few days trying to soak up as much of the information that is coming at me as possible, so that I can make the most – in terms of both my own learning, and my contribution to the project – of the next two and half months here in Cusco. Between the Quechua names, my rusty Spanish, and adjusting to the altitude, all while being thrown into a new project - my brain is feeling a bit saturated! But I think the IPA folks did a good job of placing me on this project, and with someone who posseses a complimentary skill set. I will have the opportunity to learn some data management and statistical programming from him, while I will be able to help out with my project management and organizational experience. I’m happy about my choice to spend the summer here and look forward to reading the posts on others’ adventures on this blog!