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Microfinance in Timor-Leste: Why KIF is travelling 8 hours to reach borrowers

I write to you from Dili, the still sleepy capital of Timor-Leste, Southeast Asia’s newest and least developed country. I’ve spent the last month with Kaebauk Investimentu no Finansas (KIF), a long time Kiva Field Partner and one of only two microfinance organizations in the country. Most of Timor still lack access to basic financial services and KIF fills a vital role in closing that margin. With 22 total branches, KIF has a footprint in every district, one of the few local organizations that cover the breadth of the country.

While Timor is small, it is very mountainous and still struggles with underdeveloped infrastructure outside of the capitol. I’ve been fortunate to be here in the dry season, which means most of the dirt tracks are passable, but with good weather comes construction. Many roads turn into single lanes and traffic jams in remote and rural areas are common occurrences. It took nearly eight hours on the coastal road to cover 200 kilometers to visit Lospalos, a town in the far west, while trips to the south side of the island can be even longer.

The beach road on a dry day

The small branch offices are both an office and a place of respite for loan officers. Mobile banking is almost non-existent in Timor and it can be expensive for a borrower in a rural area to find public transportation to the branch office to make their repayments. So this puts the responsibility on KIF and it’s loan officers to go out into the field to collect repayments and strengthen the relationship between borrowers and KIF staff. When I schedule a visit to a branch, the loan officers would already know where to find the borrower, whether their business was doing well or how far along their children were in school. KIF builds a community twice, by providing financial services and by connecting distant communities to larger towns and then onward to Dili.

One of the borrowers I met was Domingos. Domingos purchased a water pump and has doubled the size of the farm that he works on with his extended family. They are now better equipped to handle the dry season, and with his increased income he has made other improvements to his farm. I was also able to meet with Jonia and her daughter and was given a tour of her small grocery kiosk. She sells packaged noodles, instant coffee and baby formula, amongst other sundry goods. Jonia provides a second source of income to her household. Her children help with the store while they do their homework and they were all grateful for the time spent together.

Regina and her loom

My favorite borrower was Regina, a weaver from Lospalos. We visited her early in the morning and she was half through a tais, the traditional woven ceremonial cloth that is found throughout Timor. It was hard talking to her while she manipulated the loom, I could barely take my eyes off the process and focus on her story. Regina was able to use her small loan to purchase the base materials for making tais and turn her unique skill into an independent small business. Instead of falling out of practice, or working via a subsidized scheme to create tourist ready souvenirs, Regina was able to keep unique patterns from her region alive, and produce tais for her own community to purchase. She expressed gratitude to all of the lenders that supported her and joked easily with the KIF team while never stopping her loom. I had a schedule to keep but she’d be there all day, working for her business, earning the admiration and respect of her neighbors and taking pride in her own independence and talent.

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About the author

Bruce Martinez

Bruce is excited to return to development work after honing his organizational and leadership skills as a logistics expert with Amazon for the past two years. During his graduate studies in international development, with a specialization in post conflict environments, Bruce conducted his field work in Lebanon to inform his dissertation on the localized challenges of implementing the Lebanon Crisis Response Plan. After graduation, Bruce’s desire for further field work in challenging environments led him to a role with Street Child, a UK based child protection charity, working as an ambassador in Sierra Leone during the aftermath of the Ebola crisis. His team was primarily focused on a mid-project assessment of income generating initiatives in the Bombali chiefdom. He has had previous career stops as a business manager at the Port of Oakland and as a substance abuse counselor at Walden House. Bruce is eager to begin working with Kiva and gain greater experience in social enterprise and development finance.