Working with Kiva field partner Cooperativa San José, I was able to participate in the dances in the parades throughout Carnaval with the MFI.  Being a 6’3″ gringo (white person) in Ecuador and dancing at the front of the group does not exactly help take the target off my back, however, as merciless children all armed with water balloons and carioka (foam spray) first aim at the eyes, then cover you from head to toe.  And once completely drenched in water and foam, someone is guaranteed to come rub it all in with polvo (powder) on your face and hair.

After the parade finally wraps up, the party is just beginning because each day, a dance with live music typically begins following lunch.  The music at these dances typically encompasses all types of genres, ranging from salsa and folk music to Daddy Yankee’s reggaeton, and even Michael Jackson’s “Beat It”.  Drinks are shared among friends, the most popular of which being Pilsener beer and pajaro azul, a famous Ecuadorian hard liquor.

The food during this time of year is also just as traditional as the dancing.  Chancho (pig) in the form of hornado (roasted pork) or fritada (fried pork) and cuy (guinea pig) are ubiquitous throughout the week.  Chiwiles (ground corn filled with cheese wrapped in a corn stalk leaf) and mote (boiled corn) are other accompanying dishes that also are commonly prepared only during the Carnaval season.

While the after effects of an entire week of festivities are a bit rough on the body, I’m already looking forward to hopefully returning to experience it all over again in 2011!

Throughout my Fellowship in Peru and now in Ecuador, I have been bestowed the opportunity to launch Kiva partnerships with 2 microfinance organizations and teach loan officers in various communities how to administer loans and interview borrowers.  However, after visiting the town of Chillanes, Ecuador with new Kiva Field Partner Cooperativa San José, this time I didn’t leave with the exciting feeling that I am helping bring the Kiva support and hopefully positive change to more people in underdeveloped communities.

Chillanes is a small, rural cantón (county) of 18,000 inhabitants in the Andes Mountains.  Upon my arrival, I was told that it is also the third poorest cantón in all of Ecuador, which is quite significant given that Ecuador consists of 226cantones.  Needless to say, the conversations I had with the borrowers of Cooperativa San José turned a bit more somber when the discussion turned to business goals and dreams for the future.

The vast majority of these residents work in agriculture, harvesting corn, potatoes, and beans, among other produce as their only form of income.  While the land is very fertile and they encounter no unusual additional challenges compared to other farmers in the province, the area in Chillanes suffers from a severe lack of commercialization.  Too often are the farmers of Chillanes taken advantage of by the comerciantes (traders) who purchase fruits and vegetables in the markets and transport them to the surrounding cities to sell for a much higher price, pocketing the profits.  The comerciantes often work as a team with each other, agreeing to only buy from the farmers at low prices.  This often allows them to sell the fruits and vegetables they obtain for as high as a 100% markup to distributors or markets in other cities.  The farmers, however, have not organized themselves efficiently and thus must resort to selling to the comerciantes at the low prices since they have extremely limited trading options.  “After laboring for 10 months in the fields to harvest our corn and potatoes, and then to get ripped off in the end just isn’t right,” claims one borrower. “The prices of the products are so low right now.”

After an extensive discussion with William Silva, the head of the Chillanes branch office of Cooperativa San José, I learned that what is severely lacking in Chillanes that exists in other areas is a centralized distribution and communications network to link the farmers of the high-quality produce to the buyers in the major markets such as Guayaquil.  William says that the first step would be to create a centro de acopio (collection and distribution center) and improve the methods of communication to expand commerce to other parts of the country.  In contrast, further south on the coast less than 2 hours away, extensive banana plants as far as the eye can see are being cultivated to ship all over the world.

So why hasn’t this already happened?  What barriers are stopping them?  The biggest obstacle, from what I gathered from my friend William, is not an extraordinary hurdle, but rather themselves.  People in Chillanes have become accustomed to and complacent in their economic situation.  They lack the motivation to come together and invest in creating better trading opportunities.  The 5- or 10-year business plans that are so commonplace in American society have not been instilled in the minds of most people in third world countries.  They have more immediate needs at hand, such as ensuring food and shelter for their family and trying to put their children through school.

Another idea to jumpstart the economy would be to increase tourism.  Currently, the small town is old and relatively bare, but the surrounding landscapes and nature are picturesque.  The neblina (layer of fog) appears below Chillanes like a soft pillow across the hillside and the views from Chillanes are famous within the province.  Marketing the beauty and attracting the attention of domestic and international tourists is a much more difficult task to take on, however.

At the end of one borrower interview, after hesitantly asking the question about hopes and dreams, I was told, “I once had a lot of hopes and dreams, none of which I have been able to realize.”  By beginning to administer Kiva loans to those in obvious need in Chillanes, I am hoping we can at least start to provide a small piece of the support they need in order to help them help themselves.

Josh Wilcox is serving his second and final Kiva Fellows placement with the KF10 class at new Kiva partner Cooperativa San José in the Bolivar province in Ecuador.  There are currently fundraising loans available so please consider helping the farmers of the Bolivar province in Ecuador here.  Also join the recently created lending team here.

Cooperativa San José will be working with Kiva to administer loans to their ventanillas rurales (group loans in the countryside).  The majority of these borrowers works in agriculture and predominately grows corn, potatoes, beans, tomatoes, among other crops.  Many also raise small animals or have a small store within their home to augment their income, since their harvests often do not provide them with adequate income to support their families.  These farmers will also travel weekly to the fairs in the village to sell their grains, fruits, and vegetables.

Each ventanilla rural consists of 12-30 people within the same community who all take out a loan of the same amount.  Upon forming the groups, the borrowers have the opportunity to choose the terms of the loan depending on the needs of their businesses.  During the harvest season, for example, loans are often paid back in one lump sum after 10 months once their crops have been harvested.

Cooperativa San Jose also offers informal education to all members of the groups during their monthly meetings with a loan officer and is instilling the importance of saving within its borrowers by requiring each member of the group to save $10 each month over the course of the loan term.  These funds are put into a group savings account and can be used as the group sees fit once the loans have been successful repaid in full.

Greetings from KF10!  As the first to start a placement with the most recent Fellows class, I’d like to share my first New Year’s experience outside the good ol’ US of A.  During the first week of my Kiva Fellows placement at brand new Kiva Field Partner Cooperativa San José, I was fortunate enough to spend December 31 recognizing and celebrating the Año Viejo (Old Year) while also welcoming in the Año Nuevo (New Year).  At Cooperativa San José, one of the Cooperativa’s suppliers of office materials gave the entire staff a cooked chancho (pig).  As is the tradition every year to recognize the Año Viejo on December 31, the employees of the Cooperativa celebrated by eating la carne (meat) and el cuero (pig skin) of the pig accompanied with salad and mote (boiled corn) around 10am!

The Cooperativa San José is also one of the main coordinators of the New Year’s festivities within the small town of Chimbo.  Following tradition, we spent much of the afternoon drawing various signs and setting various paper maché effigies and decorations outside for later that night.  My personal favorite was the 10 ft. Michael Jackson effigy, who refused to moonwalk, despite my numerous efforts.

Later in the evening, I witnessed the tradition of the impressive juegos pirotecnicos (fireworks displays) around 11pm.

Unfortunately, my friend Michael had to go.  Before the clock strikes 12am, the paper maché creations are put in piles along with cardboard boxes and other paper, and burned in the streets.

At the stroke of midnight, the custom is to walk around and greet all your neighbors with a hug, wishing them “Feliz Año” (Happy New Year).  And finally, no Latin American festivity can be complete without hours of dancing, often until daybreak.

Josh Wilcox is serving his second and final Kiva Fellows placement with the KF10 class at new Kiva partner Cooperativa San José in Chimbo, Ecuador.  We are planning on posting our first loans very soon, but please loan to other South American microentrepreneurs here in the meantime.

As many Kiva supporters submitted entries to the Kiva Video Contest, I unfortunately was not able to upload my own version of “How Kiva Works” due to Internet issues in Peru.  In order to not let the precious hours I spent go to waste, I have included below my attempt at describing how Kiva maintains their innovative model, particularly highlighting the role of the Field Partners, who perform an incredibly vital role in the Kiva cycle.  Enjoy!

Josh Wilcox recently finished his KF9 placement with Caja Rural Señor de Luren in Ica, Peru and is beginning with Cooperativa San José in Chimbo, Ecuador as part of KF10.  Become a part of the Kiva cycle by lending here and join the Caja Luren lending team!

Below is a short video of the party.  Gotta love the dancing, the music, and of course Silvia blowing a kiss to the camera.

Blowing out the candles:

While Kiva Fellows work diligently with their host microfinance institutions to implement the Kiva processes, verify borrowers, and write insightful journals on the impacts of the loans, it is easy to miss the other behind-the-scenes projects that microfinance organizations are crafting in their lair.

Those of us from the developed world often do not realize that we are not the only ones brainstorming and designing how microfinance will evolve, determining the most effective means to empower individuals in emerging nations to improve their standard of living.

At Caja Rural Señor de Luren, a firmly established microfinance institution with over 30 branches throughout Peru (and my current MFI placement), they are currently in the process of developing three projects that will broaden the financial products offered to the poor and cement themselves as the sought-after destination for any microentrepreneur in need of capital in the region.

• ATMs and Debit Cards: Currently being installed in three locations in Ica and Lima, Caja Luren customers will not only be able to withdraw money from their savings account which they maintain with the MFI, but they will also have access to their microloan.  The funds from a loan to a borrower with a debit card will automatically be transferred to the personal account of the cardholder, which they can either withdrawal or use their card to purchase goods at stores and restaurants.  This opportunity serves multiple purposes.  The borrower is able to avoid the horrendous lines, which often stretch around the block at financial institutions in Latin America, and they will benefit from having a secure location to store their money (definitely much safer than a mattress).  As a business, Caja Luren also gains in this situation, because having a greater breadth of financial products is critical when facing increasing competition not only from EDPYME’s (i.e. Peruvian institutions that only offer small microloans), but also from other larger private and public financial institutions, including even foreign NGO’s (non-governmental organizations).

Below is a promotion for debit cards from Caja Rural that has been shown over the airwaves in Ica, Peru:

• Micro leasing: As one might deduce based on the name, this is a Caja Luren project that will, in the future, allow microentrepreneurs to lease equipment, machinery, or vehicles from the MFI.  All goods will be purchased new and officially owned by Caja Rural, while the microentrepreneurs pay monthly installments to the MFI to lease the equipment.  Finally, at the end of the leasing term, the individual will have the opportunity to purchase the item from Caja Luren at a reasonable, discounted price.  This way, a construction worker in Ica can afford his cement mixer to re-build the destroyed houses from the 2007 Peru earthquake and a seamstress in a rural neighborhood may own her sewing machine to make children’s clothes to sell during the Christmas season without requiring a significant up-front investment.
• Factoring: Offered to customers who have proven to have an established business with a steady income, factoring allows a microentrepreneur to place 30, 60, or even 90 days worth of one’s income as collateral to guarantee a loan.  While not yet implemented at Caja Luren, factoring will allow someone to take out a sizeable loan to invest in their business when no other guarantee is available, such as a title to a house or car.  This is just another technique to allow those with few tangible belongings to still have access to funds to invest in their microenterprises.

Josh Wilcox is a Kiva Fellow at Caja Rural Señor de Luren in Ica, Peru as part of the KF9 class.

Remember to LEND to Caja Rural’s entrepreneurs and JOIN the Amigos de Caja Rural Señor de Luren lending team!

Taking a quick break from borrower profiles and repayment schedules for a few hours at Kiva’s MFI pilot partner Caja Rural, I escaped to visit the small town of Huacachina, the “oasis of America”, located just a few miles outside the sandy metropolitan hub of Ica. Having become famous for its natural lake enclosed by sand dunes in all directions, the tiny city of about 115 people has become an immensely popular tourist destination not only for its aesthetic appearance but also the sandboarding and dune buggies.

For those unfamiliar, sandboarding is very similar to snowboarding except, yep you guessed it, it is performed on sand. First popularized in California in the 1980s, there are now annual Sandboarding World Championships held in Hirschau, Germany. Who knew???

As is the case with many natural phenomenon in Peru (e.g. the Nazca lines), there is a legend behind the picturesque beauty. It is said that a beautiful princess was once apprehended while bathing in a pond by a young hunter. She escaped and fled, leaving behind the pool of water she had been bathing in to become the lagoon. As she retreated across the desert, the folds of her mantle flowing behind her became the surrounding sand dunes. Rumor has it that she still lives down in the lagoon as a mermaid.

Unfortunately, while the lagoon has attracted significant tourist dollars, such economic growth does not come without its downfalls. The Ica province has a very arid climate and private landowners near the oasis began to install wells to access the groundwater. In order to compensate for the reduction in the water level and maintain the lagoon as an aesthetically pleasing tourist destination, the city began a process of pumping water into the oasis from a large water tank kept just outside the oasis. Also, with the influx of wealthy tourists from around the world, the city has experienced an increase in petty theft. Those perusing the dunes alone or at night are particularly vulnerable.

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Josh Wilcox is a Kiva Fellow at Caja Rural Señor de Luren in Ica, Peru as part of the KF9 class.

Please check out Caja Rural’s LOANS or LEND to other South American entrepreneurs and JOIN the Amigos de Caja Rural Señor de Luren lending team!

With a significant new source of funding comes considerable responsibility and opportunity for those who represent the funds at the local MFIs (aka the Kiva Fellows).  One of the most exciting privileges about working at a brand new pilot partner is the opportunity to influence how Kiva is best utilized and implemented.  When discussing just this topic with the credit manager of Caja Rural Señor de Luren, we brainstormed how the new “Kiva product” could benefit the community within Ica where other capital did not penetrate:

• The major benefit decided upon will be that new “Kiva clients” will be charged a 1% lower monthly interest rate than their other clients, which is quite significant on an annualized basis!  This will not only ease pressure off clients who struggle to pay the high interest payments that microfinance institutions typically charge but it will also attract additional microentrepreneurs whose access to funding has been limited due to their inability to make the monthly repayments from solely their standard business operations.
• Another aim for these loans will be to support new microenterprises in need of funding to get on their feet.  These entrepreneurs may struggle either because they do not have sufficient credit experience/collateral or because they need an injection of capital to start all over again after their previous business or home was destroyed in the severe Peru earthquake of 2007.  By promoting the “Kiva product” to these entrepreneurs who may typically be viewed as higher risk and not eligible for a normal loan, we will provide the funding necessary for many hard-working men and women to realize their business ideas.

Only time will tell how these factors may or may not impact the lives, families, and businesses of those within the Ica community.  However, I was quite grateful to be bestowed the opportunity to provide input on how microcredit will be disbursed to entrepreneurs in Peru!

The following is Chapter 2 of my video diary.  Enjoy!

Josh Wilcox is a Kiva Fellow at Caja Rural Señor de Luren in Ica, Peru as part of the KF9 class.

Don’t forget to LEND to other South American entrepreneurs and JOIN the Amigos de Caja Rural Señor de Luren lending team!