As a Kiva Fellow on my own in a new country, I’ve listened to a lot of podcasts. One of which, the Marketplace Tech podcast, has a game called Silicon Tally. Every week on Silicon Tally, the host and a guest try to guess the significance of numbers from that week’s tech news headlines that have been stripped from their context. Here’s my version, Mexico Tally, with this week’s focus on Sistema Biobolsa.
The numbers to guess are… 17, 196, 6%, 11, $260, $28-$40, 2.4 million+
While you prepare your guesses, I’ll provide a bit of background.
Sistema Biobolsa (Biobolsa) is a social enterprise that produces biodigesters for smallholder farmers. Since 2012, it has partnered with Kiva to provide 0% interest financing for its clients who cannot afford to pay for the full price of a biodigester upfront (financed by lenders like you!).
In January 2015, Biobolsa began an intensive effort to revamp its credit program and by the time I arrived in June 2016 it had already made astounding progress, much of which I described in my previous blog post. In that post, I promised to provide a progress update on what I had termed Biobolsa’s “rural microloans 2.0.” It's hard to believe that it’s already time for that update!
So has progress been made? Absolutely. Time to unveil a few numbers in our Mexico Tally:
• 17 – the number of Biobolsa clients that have been reviewed by the new Credit Committee that began in early June. While the notion of a credit committee is not novel for many microfinance institutions (MFIs), Biobolsa took a unique approach by creating a risk assessment that accounts for the specific circumstances of its clients, including the seasonality of farm income and qualitative data from field staff observations on items such as the farm's cleanliness and the animals' health.
• 196 – the number of mass text messages sent via the new SMS platform. This new technology enables the Credit Coordinator to send messages such as payment reminders in bulk with personalized information fields. This automated process saves hours of time each week that the Credit Coordinator used to spend sending manual texts to clients (or often she didn't send a reminder at all!).
• 6% – the increase in the percent of the portfolio that Biobolsa defines as on time (from 64% to 70% in one month). I worked with Biobolsa to begin collecting historical data in June, which now enables the organization to quantify improvements in its loan portfolio. Thanks to increased efforts to collect and monitor payments, a new recurring Collections Committee meeting, and new collections strategies, the quality of the portfolio is improving.
• 11 – the number of clients that had never paid a single credit payment as of mid-June that have now made at least one payment. This represents a 30% decrease in the number of accounts with zero payments! With the new dashboards that surface delinquency metrics, Biobolsa gained the ability to automatically identify clients that have not made any credit payments. The Credit Coordinator focused on collecting from those clients and has made amazing headway.
These numbers represent significant progress made via months of hard work. Yet in the end, what is the impact? The question of quantifying impact is increasingly prevalent in the non-profit and social enterprise sectors. Especially for microfinance, many have doubted its efficacy: does it really work? Are microfinance borrowers better off for having taken a loan?
An article in the Stanford Social Innovation Review argues that in order for MFIs to benefit their clients, they have to put their clients first by providing loan products that fit the specific contexts of their clients’ financial needs. Yet as MFIs develop and professionalize, they increasingly adopt traditional banking metrics which often leads to losing sight of the essential goal of poverty alleviation:
“…the pressure to instill more financial discipline often shifts organizations’ focus away from their original mission. As a result, many firms can recite their portfolio at risk (PAR) percentages to two decimal places, but few have even rough estimates of the percentages of their clients who eventually move out of poverty.”
This article resonated strongly with me. I arrived at Biobolsa with a background in US financial services, ready to begin measuring delinquency rates and to encourage declining credit applications to balance risk exposure. I allowed traditional banking metrics to overshadow what mattered most. Midway through my fellowship when Kiva’s co-founder, Premal Shah, asked me to quantify Biobolsa’s impact in the lives of the farmers it serves, I couldn’t.
Though I didn’t have line of sight on the most important metrics, Biobolsa certainly does. In this regard, it is far ahead of most MFIs and social enterprises. Biobolsa focuses on improving the lives of its clients in all that it does, from its core value of client empathy to its client-centered servicing model. After installing the biodigester, Biobolsa provides three follow-up visits to its clients to ensure that the farmers are reaping the benefits of the biogas and biofertilizer through full adoption of the biodigester in their daily life. These benefits have a profound impact on the quality of life of Biobolsa’s clients. Which brings us to our final numbers in the Mexico Tally:
• $260 (USD) – the average dollars saved on fertilizer in one year for a farmer with 3 hectares (~7.4 acres) of land. With a biodigester, farmers can replace costly chemical fertilizers with biofertilizer which not only saves money but also generates a larger, more flavorful crop yield.
• $28 -$40 (USD) – the range of average dollars each farmer saves per month on fossil fuel-based LP gas previously used for cooking and heating water. The biogas produced from the biodigester enables farmers to significantly reduce or eliminate the amount of LP gas they have to buy to power their homes and farms.
• 2.4 million+ – tons of animal waste treated by Biobolsa. This helps the environment by reducing contamination of land and waterways and by reducing the amount of carbon dioxide released in the atmosphere. For individual farmers, reducing the amount of manure that piles up on their farms improves their quality of life by reducing smells and flies.
The phenomenal progress that Sistema Biobolsa has made on its credit program enables this world class social enterprise to continue doing what it does best: deliver a powerful, innovative technology to improve the lives of smallholder farmers in Mexico and beyond!
Your contributions enable Sistema Biobolsa to expand its outreach to more farmers. Click here to lend to farmers on Kiva's platform. As the farmers pay back their loans, you receive your money back and can reinvest in another farmer!