In the first installment of my impact journey to Ecuador story, I focused on the very stiff headwinds Ecuadorians face as their economy navigates some seemingly insurmountable challenges. In this installment, I want to focus on my experience “in country,” how I witnessed the individual resiliency of the microfinance entrepreneurs and the life lessons we can all learn from their work.
Let me begin my personal story by telling you a bit about the two Global Partnership (GP) partners we visited within Ecuador and about microfinance in general. As noted in my previous blog, GP is a Seattle-based enterprise that seeks to bring essential goods and services, including microfinance lending, to underserved people and marginalized communities. Across all of its invested capital, Ecuador represents 20% of GP’s aggregate investments. Our GP group of 13 (including my better half) spent two days each visiting clients of Fundacion Alternativa (FA) and Fundacion Faces (Faces), two microfinance lenders providing additional value-added services in both urban and rural Ecuadorian areas. It should be noted the majority of FA and Faces’ loans are made to women, a key impact indicator for GP, FA, and Faces.
In this situation, GP makes loans to these partner organizations that then make individual loans to clients based on an impressive amount of both explicit and tacit knowledge obtained about each client. According to FA and Faces, loans average approximately $2,140 and $1,711 respectively, for each client-unit. The loans often start at incredibly modest amounts (several hundred dollars), with durations ranging from weeks to a few years, and come with interest rates ranging from 18% to just below 30%. They are made for a variety of purposes, including agriculture, manufacturing, retail and service businesses, home improvements, and other short-term, emergency needs. Both of these organizations have 10+ year histories of not only making what appear to be solid credit decisions (until very recently, bad debts averaged under 3%) but also doing so to the most vulnerable people, using a remarkably light documentation process.
Over the course of those four days of visits, we traveled and spoke to FA’s and Faces’ smart, transparent, and dedicated senior management and had the opportunity to visit 13 different clients. In large part, these clients produce for both household and local community consumption. Most impressive were the client stories, of how one after another, they had conquered each withering challenge the Ecuadorian economy and their immediate world threw at them. Given their often virtually non-existent tangible resources and education, their grit was the differentiator, a match for any venture capital backed Silicon Valley entrepreneur. I could not have walked away more inspired or humbled. GP’s partners are committed more now than ever.
Perhaps the person and life story that moved me the most was Gloria, a seamstress in the tiny town of Catamayo, not too far from the Peruvian border. Having lost her wealthy husband at 39, she was cut out from any family inheritance and thrown into a world which required her to care for 5 adolescent children with no source of income. She turned to the only thing she knew – seamstressing – and borrowed money from Faces to purchase her first sewing machine. Today, some five years later, she appears to be the “go to” resource in town for both commercial and individual seamstress projects, with three machines and a thriving business. She spoke with an almost “aw shucks” attitude about how women young and old from around Catamayo stopped by to learn how to cut and sew fabric.
But the most satisfying thing of all was Gloria’s pride in her work and the joy that was her very being. It was a terrific reminder of how the greatest emotional satisfaction comes from conquering life’s challenges and bettering a life for those whom we care most about.
So why is this story so special? For one, Threshold Group is truly fortunate to have intrepid friends like GP, who tread where so many others would certainly turn and run. GP does not simply stay committed based on blind faith. Yes, they believe in doing the right thing, but they do so knowing they are supported by very high quality, local partners that know their clients and provide the financial education that helps them weather trying economic circumstances. It is this combination of institutional courage, sound client intelligence and diligence, and an undeniable conviction in the good intent of the human spirit that makes me proud to be in the orbit of GP’s force for good. It is but one important reason I choose to dedicate my professional life to the work Threshold Group supports.
And if you have thought about starting or furthering an impact journey, I encourage you to take action today, to better our planet and the people who call it home - and Threshold Group would be humbled to help you find and navigate your personal impact path.
©2016 Threshold Group is a registered investment adviser. The information presented herein is general in nature and for discussion purposes only. It is not intended to be investment advice or to convey any specific investment recommendations. Threshold Group and any third parties listed or identified herein are separate and unaffiliated and are not responsible for each other’s policies, products or services.