Thursday, April 21, 2011

Passport Series: Bolivia: Part 2: Microfinance

Each month, the Kiva Blog profiles a Field Partners' new country through a three-part profile called the Passport Series. This month, we are taking a look into Bolivia! This is the second part of this month's series and focuses on microfinance in Bolivia. The first was a country profile that can be found here, and later this month, we will give you a look into the lives of borrowers in Bolivia. Kiva works with Field Partners in Bolivia to lend to a wide array of special populations with innovative loan products. Some of these include: women, indigenous populations, rural farmers, underprivileged entrepreneurs, and even the environment.

Weekend Market in La Paz – Photo Credit: Steve Gilbert

Microfinance in Bolivia:

Bolivia struggles to achieve long-term socioeconomic development but its advanced microfinance sector is a great boost towards attaining that goal. Due to the lack of credit available through commercial banks in Bolivia, microenterprises can be traced back to 1984 when a group of Bolivian entrepreneurs wanted to give people access to resources and credit. In 1992, this idea expanded into NGOs that began offering small loans to groups of workers with similar interests. Bolivia’s microfinance history is not only a model for Latin America but also acts as an example for the whole world.

Bolivia’s cultural uniqueness is exemplified through its indigenous citizens, whom not only represent the majority of the population, but also the poorest portion. Bolivia has the largest proportion of indigenous people in South America and according to National Institute of Statistics in Bolivia 65% of the population is indigenous, and the country suffers from high poverty rates. More Bolivians have identified as native descent since the first indigenous president Evo Morales was elected in 2005. The Stanford Journal on Microfinances highlights Bolivia’s president in the report What Does Evo Morales Mean For Microfinance In Bolivia?

Desfile de Las Teas "Parade of the Torches" La Paz - Photo Credit: Steve Gilbert

The microfinance market in Bolivia continues to expand and maintains a high concentration of active players. Bolivia currently has 23 microfinance institutions (MFIs) reporting on, 4 of which are current loan raising Kiva Field Partners: Pro Mujer, Impro, Emprender, and Cidre. These four MFIs target a large portion of typically discriminated and marginalized groups in Bolivia – women, indigenous, rural farmers, and impoverished entrepreneurs.

Bolivia had roughly 872,655 borrowers (with a population over 10 million citizens) in 2009. The country reports over $1.9 billion gross loan portfolios and has an average loan for borrowers in country of $1,483.9 (more than 30% of the country's per capita GDP of about $4,800). The figure below depicts the recent growth and relevance of the microfinance industry in Bolivia.

Notably, Bolivia was ranked second in the Global Microscope for the Microfinance Environment in 2009. The Global Microscope analyzes the regulatory framework, institutional development, and investment climate in 55 countries and aims to rank countries accordingly. A synopsis of the Global Microscope 2010 can be further investigated here.

For more information, Sergio Navajas and Mark Schreiner wrote a wonderful report on the history of the industry in Bolivia.

Kiva and Bolivia’s Microfinance Relationship:

Kiva has 4 active field partners in Bolivia: Pro Mujer, Impro, Emprender, and Cidre. Pro Mujer, an early player in the microfinance industry, has been providing women with financial and non-financial services to help them improve their lives since 1990. Impro offers microcredit to the working poor in the cities of La Paz and El Alto and is also a great example of a field partner that’s beginning to make environmental issues a priority. Emprender provides financial services to micro-entrepreneurs in small towns and rural areas. Cidre supports and contributes to the development of the farming and livestock sector in rural regions of Bolivia.

Not only is Bolivia home to a large indigenous population, but it also houses the Amazon basin. Protecting the Amazon and using its resources sustainably is a priority, especially for Bolivia. President Evo Morales recently proposed a law that gives the natural environment the same rights as a human. More about this amazing law and the indigenous mentality of Pachamama (Mother Earth) can be found here.

Las Yungas, Bolivia – Photo Credit: Steve Gilbert

Recently, Bolivia suffered from unexpected prolonged heavy rains attributed to climate change. This recent phenomenon caused mudslides, which have destroyed homes, farms, and lives in La Paz and the surrounding. Clara Vreeken, KF 14 is located in Bolivia, her blog highlights theses issues and the effects they have on specific Kiva borrowers. Clara’s article “Mud torrent, climate change and food crisis in Bolivia” illustrates the importance of prioritizing environmental issues as a part of Bolivia’s future.

A Kiva Borrower Story:

Placinda Nina is a Kiva borrower through Impro who certainly demonstrates the success of microfinance in Bolivia. In 2008, a loan of $100 helped Placinda keep the indigenous traditions alive in Bolivia by purchasing fabric, lining, thread and other supplies to make traditional skirts. Placida creates these indigenous skirts called polleras, which are worn by cholitas (indigenous women who wear the traditional clothing).

Placinda is separated and has six children, most who are grown and independent. She still has one daughter dependent to her and Placinda is the sole provider of income for her family since she cannot count on any other help. Her home is in the Irpavi II district of La Paz. This is the first time she has requested a loan from Impro and has already successfully completed the loan process and repaid it 100%. The loan secured the income necessary for her family’s wellbeing.