After the huge turnout at the “What is Microfinance” seminar, we arranged to have interviews with recently established solidarity groups. This is an important step to getting more specific stories from community members about how they run their farms or businesses and their ideas about they see this loan program succeeding.
During these group interviews, people were quick to voice their reasons for choosing the members in their group, how hardworking and trustworthy they are, and what they would do with a loan. They told me with complete sincerity, “We are established, we just want to be pushed.” Pushed to expand their businesses and improve their livelihoods. It was quite reassuring to hear this, and evident in the way they interacted that these solidarity groups really did know and trust each other.
Faces from the second Group Interview, posing in front of the lovely mural painted by Adventures Cross Country GAP Semester students!
Questions I asked ranged from, “what is your biggest expense?” to “how do you keep track of what you are spending and earning?” I learned that the majority of interviewees keep their savings in-kind, for example by storing away a few bags of coffee or keeping some livestock such as pigs or cows. Things they can sell quickly in case of an emergency. In regards to market and pricing, many who cannot afford transport have no control over the pricing of their items, and have to sell at whatever the buyer that comes to them is offering. Otherwise, they may miss out on selling their products all together.
Participants were also quick to express how worried they are about “changes in weather” and the fact that the dry and rainy seasons have become unpredictable. What will they do if their plan for investing their loan does not produce the yields they were expecting because rain does not come? A valid concern. I explained that our team is researching this issue by talking to other organizations to find out the best solution to ensure no one is hurt by situations that are out of their control.
But when it came to explaining to me how they imagined the structure of these loans working, it was difficult to get participants to share details about what would be best for them. It was as if they are not used to being asked for their opinions. Instead, many people would start asking me how they would repay loans, and I would have to throw the question back at them, “How do you want the repayments to work?” “We want to hear your ideas on how to structure this program so that it works for you.” Yet, open-ended questions were not leading to detailed, helpful responses.
So after gauging how participants interacted and responded during interviews, I decided to add another question using the HCD interview tactic Sacrificial Concepts.
One important factor we are trying to assess is the importance of grace period versus loan amount and repayment amount. By creating two concrete examples for potential borrowers to choose from, they were quick to respond and explain their thinking.
I gave this example and asked all to choose which option they would prefer:
A.) 1,000,000 USH Loan over 16-months, (about $385)
-Grace period 4 months
-Monthly payments of 83,000 USH for 12 months (about $32)
B.) 3,000,000 USH Loan over 16-months (about $1,150)
-Grace period 2 months
-Monthly payments of 215,000 USH for 14 months (about $83)
Almost everyone answered that they would prefer option A. They told me the reasons why grace period was so important and why certain repayment amounts would be too much or not. One person described the seasons and the fact that if it were July, he could take the 3million, but since it is now a rainy season the coffee would never dry in time. “If it were the right season, I would take the 3million,” he said with confidence.
Someone else explained that, “as I am a farmer, according to what I am doing, the 1million is good money and the grace period is good.” I also heard that the size of their farms and their capacity to produce and pay back bigger amounts in a timely manner is an important factor. “If I had a big big plantation, like 10 acres and it is very well looked after with fertilizers and I could cut monthly like 20 bags of bananas, this 3million could do. But if you don’t have that, then I think it is a problem, that 215 per month would not be easy.”
However, when I crossed off the 2-month grace period in option B and changed it to a 4-month grace period, almost everyone said they would then be happy with that option. “Even with the monthly repayments being so high?” I asked, wondering if they were still considering the monthly amount that would be due. They said yes, “with 4 months this option could be good, but if you could put it to 6 months it could also be good.” Pushing the limits and telling me their best-case scenario ideas – finally!