Liveblogging from Guatemala: Don Schlosser on the ground with Global Partnerships and Global Visionaries

November 17, 2008 No Comments

Don Schlosser, SeaMo’s resident finance expert, is traveling in Guatemala this week visiting projects supported by Global Visionaries and Global Partnerships, two of Seattle’s most exciting development organizations. We’ll be posting his dispatches as they come in. Don’s first dispatch relates an interesting critique of microfinance:

I’m here in Antigua, Guatemala visiting the local staff and work sites for Global Visionaries, the group that works with high school kids in Seattle (with service trip to Guatemala each year to build schools, work in hospital, replant trees, and work on coffee finca).

GV works with a small one-man NGO called “As Green As it Gets” run by Franklin Voorhees (originally from Minneapolis but down here a long time). Franklin’s work is to help a small group of coffee farmers (cooperative? I’m not sure) with various aspects of improving their lives…better growing, more environmental attention, better roasting, better marketing of their coffee, working with students who are creating marketing ventures for them (GV market their coffee as “Café Esperanza”).

When Franklin heard I was interested in microfinance, he introduced me to two farmers standing there. Both had borrowed (from banks, not MFIs), 12mos loans, interest at 5% per month, principal due after a year. Both nearly lost their land (one was forced to sell the land but repaid his loan and wasn’t damaged too much, the other had to scrape to repay). In any case, Franklin pulled out bunches of NGO brochures (none of the NGOs were ones I was familiar with), and pointed out that they all were charging 60% + interest and how could ANYONE make a business at those kinds of rates??? He was convinced that the whole microfinance thing was just a way to make the intermediaries –whether US NGO’s or local MFI founders and employees rich at the expense of the poor.

I didn’t really have time to point out differences in MFI loans and loans secured by land, or that the real question was how you COULD make money available to potential poor borrowers and still have the whole “cycle” work unless you charged rates high enough to attract capital and cover your costs. Whatever.

Not new, but it was an interesting experience and a little different when it takes place in a small cramped coffee roasting facility with the farmers standing around and listening in and participating!

Off to Guatemala City today (Sunday) to start the GP microfinance tour. Will give you all some more perspectives later if I have any.

Best,

Don

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