Dear Clients and Friends:
My perspective on micro-finance…the result of my work starting, managing a program 
in Honduras. It includes dos and don’ts…and descriptions of some who are being helped with small loans.
Together with colleagues, we looked for the right partner for 17 months. We checked out a dozen different programs, traveling to Honduras twice to interview the heads of various agencies. It’s easy to give money to a large microfinance organization in the states and let them direct it as they see fit to different parts of the world. We wanted to make sure it worked in a specific community in a specific country.
During our search, we concluded…
Don’t run the program yourself. We didn’t have the expertise, we weren’t on the ground in Honduras full-time, and we didn’t have enough money to start a stand-alone organization with staff and offices. The money to run a program comes from the interest on the loans.
Loan the money, don’t give it to an organization. That way all would not be lost if the organization didn’t perform. And we could start anew.
Secure substantial, proven technical expertise in managing the money. The experts know best how to lend the money, collect the payments and provide advice, including business assistance, to loan recipients. Our program would yield even better results.
Pair with an organization that understands rural as well as urban loans. Urban loans are easier for most microfinance organizations, but those we wanted served live in rural areas and grow crops. 
An agency that serves rural clients knows how to reach them and is geared to absorb the additional cost, about 30% more than in urban areas, knows how to structure the loans so they’re paid back when the crops are harvested.
Insist on periodic reports detailing exactly where the money is working.
Doing so would help us understand exactly which rural communities would use the money and how they would use it. It also would give us a measure of oversight.
We started our program last November when we formalized an agreement through my church with FUNED or The Fundacion para el Desarrollo de Honduras. We started with $50,000 and agreed the money would go first to rural villages, including Santa Cruz Arriba, outside the 
Honduran capital of Tegucigalpa, where we had been working on other projects…including water, schools, cooperatives, health. Average annual income per household in the villages runs $1,800 to $2,400. Unemployment is 50% or higher. Villagers live in one- or two-room houses with outdoor kitchens. No running water. Little electricity. No social safety net.
In the first six months, FUNED loaned a total of $48,000 to 138 clients, 90% of them women. The average loan was $340. The default rate was less than 1%.
The money went to form community banks…organizations in a community with up to 20 members who cross-guarantee each others’ loans. The loans range from approximately $50 to $500. Money was also made available to individuals who had larger loans…up to $1,500. Borrowers used the money to buy supplies for a business, to run a small store, to buy seed for tomato, cucumber crops.
Formation of banks are another way to build social capital…which we were especially interested 
in doing. Our approach to working in Santa Cruz has been to concentrate resources…which has precipitated the start of new organizations or improvement of existing ones.
With more social capital, a community is more likely to thrive and, research shows, its residents are healthier and more prosperous.
Meet some of the clients in our program. I visited with them in person:
Three sisters…Maria Cruz, 37, Hilda Turcios, 21, and Maria Cruz, 40.
All are members of a recently formed community bank and turned to our program when another microfinance organization proved unreliable, jeopardizing their $250 monthly incomes. Together they received $1,300 in loan money.
They get up at 1 a.m. to make 1,000 tortillas a day to sell at market. At 4 a.m. they begin the 45-minute trip to market in the capital city where they sell their food until 11 a.m. With the proceeds, they buy clothing and other items which they bring back to the community to resell at a higher price. All of the effort nets each sister about $21 a day or about $5,000 a year.
A father and two sons…Carlos Amador Padilla, 72, Carlos Amador, 36, and Denis Amador, 31, also members of a newly-formed community bank, cultivate six acres of tomatoes, cucumbers and other vegetables. A community bank composed entirely of men is unusual but reflected the agricultural 
nature of this bank’s purpose. The men had relied on loans which were cancelled last year when Honduras’ new president abolished the microfinancing program he inherited from his predecessor.
All the new bank’s members were borrowing money to buy seed…about $150 for a bag of 1,500 cucumber seeds and $260 for a bag of 500 tomato plant seeds. They will pay the loans back in three to five months when they harvest the vegetables, sell them at market and hope to net about $1,000.
A father, mother and their eight children make and sell 2,000 tamales a week. Jorge Cruz, 38, the father, manages the week-long cycle which ends in the market in the capital city on Saturday. Cruz
took out an $800 FUNED loan five months ago to start the business.
Preparation is outdoors with vats sitting atop wood-burning stoves or fires. Eric, 15, chops through 160 pounds of chicken and 200 pounds of pork his father purchased the day before. Meanwhile, Estella, 38, Cruz’s wife, supervises the other children who use long spoons to stir the corn, rice, potatoes and salsa cooking over the fires in separate pots. Valeria, 24, the oldest daughter, assembles the tamales in a room inside the house. They are cooked in boiling water for three hours.
Cruz sells the tamales at market for 12 lempiras or about 60 cents each. His and his family’s hard work nets them about $12,000 a year, a number well above the average annual household income in the area.
Is the microfinance market saturated? No. In the small area where we’re working, FUNED estimates there are 1,000 potential clients who need $300,000 in loans. Remember, we’re reaching 138 clients with $50,000. Clearly, there’s more work to be done.
Call or write me with your questions or comments on microlending. My e-mail address is bbancroft@conbrioamericas.com. I’m glad to respond.
Yours very truly,
Principal, Conbrio
For more about our processes, tools and practices – including our visual tools – visit our website
at www.conbrioamericas.com, e-mail me at bbancroft@conbrioamericas.com or call me
at 214-941-8199.