By Kate Bennett, KF16, Peru
The challenges of rural and agricultural microfinance are many: the least of which, in the case of Kiva Field Partner Caja Rural Señor de Luren, is living in the middle of the Sechura Desert. But Caja Rural’s clients show the same impregnable determination I witnessed during my first fellowship in Ecuador. Against all odds (and weather patterns), they’re growing their businesses, investing in their lives, and laying the foundation for a thriving future.
This week I had the pleasure of getting to know Kiva borrowers Mirian Dora and María Victoria. Mirian and María have a lot in common- they’re in the same line of work, they support generations of family members, and they represent successful Kiva borrowers in Ica, Peru.
Mirian is at all times a caretaker: when I met her on Tuesday, she had the same granddaughter in her arms that she does in her borrower profile photo on Kiva (María is now 1 ½; when the photo was taken she was just a year old). Mirian says she was born in 1958, so she’s seen the growth of Ica, its destruction during the 2001 and 2007 Peruvian Earthquakes, and its slow and painful rebuilding afterwards. And all the while, as the city grows and shrinks, has its successes and setbacks, so has her family. She bounces her granddaughter María Victoria on her knee and tells me about her 20-year-old son, María Victoria’s father, is doing extremely well in high school and is planning to pursue a university degree in engineering next year. This is a higher education than Mirian or her husband, Jose Manuel, achieved, and Mirian glows with pride.
In April of 2011, Mirian received a loan of 700 Peruvian soles, or about $250, from Caja Rural Señor de Luren, Kiva’s Field Partner here in Ica, Peru. Since that date, on every 15th of the month, Mirian makes a repayment of 90-110 soles (about $37) to Caja Rural. This money then returns to you, the lenders, to reloan, donate, or withdraw.
Mirian’s loan is a complete success story: she has made each repayment on time. In fact, she is usually early with her repayments, and this month she fully paid off her loan (about four weeks early). Before disbursing a loan, Kiva field partner Caja Rural Señor de Luren ensures that their clients’ existing monthly income exceeds their monthly repayment quota, to make sure that they’ll be able to repay their loans in full without sacrificing payments in other areas of their lives, such as education, health, and nutrition. Mirian’s monthly income of about $283 enables her to pay these $37 monthly installments.
Her income breaks down like this: every day, Mirian sells about 17 plates of food for 5 soles each. That’s 85 soles per day. However, her everyday costs are high: the cost of production (food inputs) is about 3 soles per plate, or about 50 soles per day. Her operating costs, which include occasional appliance repair and gas, cost about 5.25 soles per day. Finally, her administrative costs are about 2.34 soles per day. Overall, her daily profits come to about 27.50 each work day- that is just about $10, 28 days a month.
Because Mirian has had access to capital and microloans in the past, she has been able to afford capital investments like her stove (600 soles, $220.60), refrigerator (700 soles, $257.35), and tables, chairs and dishes (1000 soles, $367.65). Making a $10 profit each day makes it difficult for Mirian to make other investments in her life and business without taking out a loan. She doesn’t keep her savings in the bank, which is common in countries in South America with a history of high inflation and a shaky financial sector. Mirian’s savings, about 150 soles, are hidden in her home somewhere.
Interestingly, Mirian is well versed in the microfinance industry. She has had a number of successful loans in her credit history with five different banks. She says she’s been happiest with Caja Rural’s service and plans to take out another loan with them in December.
On the other side of Ica, last week I met another María Victoria (and another successful Kiva borrower). María Victoria and her twenty-six-year-old son sat and spoke with us about her home, her business, and how her loan was going. She is about 60% repaid on her loan disbursed in February, but she hopes to refinance or take out a new loan before the holidays begin this year. María used her loan to buy raw materials for her cooking business.
For years, she has been cooking out of her home, and on Sundays, out of a small restaurant she has in front of El Cemeterio Viejo (the Old Cemetery) in Ica. In fact, on the day of our visit, although she was in the middle of preparing ceviche for a one-hundred-person wedding feast, she was kind enough to take us by her restaurant and show us the space.
Once there, María and loan officer Luis began to discuss her options for refinancing her loans. María was hoping to buy new tables and chairs for her restaurant in front of El Cemeterio Viejo before el Dío de los Muertos (the Day of the Dead), but will need a loan refinancing to afford it. In Peru, the Day of the Dead (on November 2nd) is a day of feasting and celebrating those that have left this world. These celebrations are sure to bring María lots of business due to her restaurant’s location.
At typical financial institutions, the challenge would be a successful refinancing in so short a time. With a traditional bank, refinancing a loan could take weeks, even months. However, with Caja Rural Señor de Luren, María was able to do in within a day. I stopped by her restaurant (regrettably without my camera!) on Día de Todos Santos, or All Saint’s Day, on November 1st and enjoyed a delicious meal of arroz y ají gallina with her swarms of other customers. For María Victoria, business was booming.
María Victoria’s first loan with Caja Rural and Kiva allowed her to gain solid footing in terms of her finances. With a keen entrepreneurial spirit, María Victoria is now eagerly hoping to expand her business so that she can keep the restaurant operating year round.
Kate Bennett (KF16) is thrilled to be working in Ica, Peru with Kiva Field Partner Caja Rural Señor de Luren. For more on Kate’s experiences with Caja Rural Señor de Luren or life in Peru, follow her work here.