James Dick '10
Banking on the Land of the Incas: A Summer of Spanish and Microfinance in Peru
My Johnson Opportunity Grant enabled me to take a unpaid internship with a small microfinance organization on the outskirts of Trujillo, Peru. I conducted the first client study in Sinergia's history and immersed myself in the Spanish language and the remains of the Inca culture. I'm an Economics & Classics major, minoring in Poverty and the freedom of my grant allowed me to pursue each of those interests in my 9 weeks in Peru. The microfinance bank was in the center of a poor community with sand roads and thatch huts, allowing me to spend my weekdays surrounded by the culture of subsistence day-laborers and developmental economics. On the weekends, I had the opportunity to indulge my inner classicist and explore Incan ruins. I never would have had such a well-rounded experience apart from the Johnson Program. The Johnson Program invested in me as a person, not in a rigid project and I think W&L benefits greatly from this far-sighted kind of investment.
Our organization served almost 300 female entrepreneurs, all of whom were self-employed. In Peru, the men of the poorer classes work manual labor jobs, such as making bricks or driving taxis, leaving the women home all day. To supplement their income many women will attempt to start a business out of their home, sometimes a restaurant known as a menu, sometimes a bodega-a convenience store run out of the front room. Starting these businesses requires a substantial amount of capital either to purchase inventory or durable goods such as stove or salon equipment.
Sinergia, started in 2007 by a recent college graduate, is ministry of Peru Mission designed to help these poor small business owners step out of poverty by making loans to them. Most clients were too poor to post collateral, so they could not take advantage of traditional banks. Sinergia relies on "social collateral," lending to groups of five women and making them all responsible for the repayment of the loan. If one woman falters, the others are there to supply the lack.
My research showed that about 1/3 of our clients were over 50% likely to be below the Peruvian National Poverty line of NS/8.20 per day. Essentially, there is a very good chance one-out-of-three Sinergia clients lives on less than $3 a day. I was able to design a survey based on my research on client and impact studies done by other microfinance organizations. I found my Econometrics classes at W&L gave me solid foundation to conduct responsible research and enabled me to write up my results honestly and in a way that would benefit Sinergia. My research will enable Sinergia to paint a more vivid picture of its' clients poverty for future capital campaigns.
More importantly, my research was able to uncover a flaw in our methodology. I discovered that over 80% of clients do not currently save, chaining them to a lifestyle of poverty. We realized that lending to clients who aren't saving only fosters a dependency on our organization. One woman said quite frankly in an interview, "I want to borrow from Sinergia until I die." In response, I was able to organize a strategic plan for a savings program that will be implemented in the next few months, greatly increasing Sinergia's efforts at fostering sustainable development.
Outside Sinergia, I had the opportunity to take private Spanish classes and start to understand the culture of Peru. My Spanish still hurts the ears of natives, but the immersion experience has inspired me to continue studying Spanish back at W&L. I also had the opportunity to experience Macchu Piccu, the crown jewel of Peru's 15,000 archaeological sites and wonder at the artistry of the Incan culture. One weekend I was able to go to Huaraz, the hiking capital of South America, and hike the mountains of the Cordillera Blanca-the highest mountain range outside the Himalayas.
Most importantly, I was able to live in the world I now want to be a part of-the world of international economic and social development. I left the United States wondering what to do after I graduate and I returned knowing exactly what I want to do upon leaving W&L. My time at Sinergia has given me the vision to start a similar microfinance organization in Africa, the continent with the greatest potential for development.