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UNITED NATIONS CAPITAL DEVELOPMENT FUND Microfinance |
Issue 3 / May - June 2004 |
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News | Working in Microfinance Perspectives from the field By Lillian Wasvary, MBA candidate at Yale School of Management By all measures, David Park was a success. A Harvard graduate with a great job as an investment banker in San Francisco, he nevertheless felt he wanted something more out of his life and his job. He remembered reading about microcredit in a development economics course he took in college. The idea intrigued him and he started doing research on the internet. Eventually, he left his investment banking job and, through a lot of hard work, became the Director of Microfinance Institutional Development at World Relief, a Christian relief and development organization. David is not alone in his desire to work at something that is ‘more than a job.’ Many people wish for a career they believe in and feel passionate about. Working for a microcredit organization can be that career; it is a burgeoning field that combines the best in economic strategy with humane policy making. Microcredit programs, and other developmental economic initiatives, represent a new way of forging international relations through humanitarian and financially viable aid. It is the branch of microfinance that involves lending small amounts of money to very poor people. The borrowers, often women, use this money to start a business or improve upon an existing one. The money is often used to buy goods that the women can later resell at a profit. These small loans give women the capital they need to create sustainable businesses enabling them to support themselves and their families. Microcredit as a Career What fuels people’s interest in microcredit? David Park and Nadia Akbarali who completed a microcredit fellowship through the Aga Khan Foundation in Canada, and three Yale School of Management students, Farah Samanani, Siddhartha Chowdri, and Shoshanna Matney, were asked this and other questions – in order to give some insights and perspectives on what it is like to have a job in microcredit. Farah, who previously worked for SEWA (Self-Employed Women's Association) in India, grew up in the developing world and has had first-hand exposure to the poverty that is a reality for millions. She saw that giving women small business loans to start cottage industries could help them and their families. Siddhartha previously worked in India for the Society for Elimination of Rural Poverty (SERP). He plans on staying in the field and says that microcredit enables him to “use the talents that I have in a creative way. My job gives me the opportunity to help empower people.” Shoshanna worked for several years at both FINCA (Foundation for International Community Assistance) and Mercy Corps, two organizations that provide microcredit. For her, going into the field enabled her to help people acquire access to the capital they need to take care of themselves and their family. “It’s not that people are lacking ideas or skills for what they want to do. They are lacking the capital to make those skills earn money for them,” she said. “Microcredit is a very critical part of helping communities grow and achieve sustainability.” Nadia had a slightly different motivation. “You see health care workers in these poor regions working diligently to keep people alive. But what were people being kept alive for? What was it they had to live for? With microcredit, people can do more than exist.” A Day in the Life of a Microcredit Worker The day-to-day activities in the life of someone who works in a microcredit office in the developing world are as varied as they are interesting. Training, business planning, researching, and writing proposals are regular duties. Building a network to ensure the success of a project requires meeting with clients, potential donors, bank officials, local politicians, and staff of nearby offices. Siddhartha recalls meeting with a group of women in a remote village in India. “These women – they work all day, come home, cook dinner, clean up and put the kids to bed. The only time they can meet with us is at nine at night. More often than not it is by flashlight, where they talk about what they want to do and the projects they are working on.” Shoshanna says much of the job involves listening to the people. “When you meet with a client, it’s not about telling them what to do but learning from them.” Work can vary radically from day to day. “One day you are out on the field and the next day you’re in a meeting with the president of a large commercial bank,” says Siddhartha. Types of Jobs in Microcedit What are the different careers available in microcredit? Many jobs are critical
to the success of a microcredit organization. David works in the technical support
group of World Relief. His team plays a variety of roles including market research,
training, writing reports, and managing donor relationships. There is also the
research-oriented side of microcredit for those who are academically inclined
and interested in studying the social impact of financial services for poor
and low-income people. Evaluation where you analyze a microfinance program and
provide recommendations is also a necessary function. And, as with all organizations,
traditional roles such as accounting and bookkeeping are essential. Although there are many microcredit jobs available in the U.S. and Canada, doing ‘field work’ - working with people in the countries where loans are provided – is the best way to understand what microcredit involves and how it works. Siddhartha worked at the Calvert Foundation in Bethesda, Md., an organization that supports microfinance groups and microlenders. He then moved to India to work for the Society for Elimination of Rural Poverty. According to Siddhartha, “You can only understand so much working at a desk. When you are out in the field, you can see how the money gets channeled to people. It’s fundamental.” Farah echoes his sentiments. “Field work is extremely valuable when you are first starting off. Once you’ve done your time and understand what happens in the field, if you want, you can transfer to an administrative role. If you want a job working at headquarters, field work gives you credibility and an understanding that is critical to effectively communicate with the workers out in the field,” explains Shoshanna. Breaking into the Field A good first step to finding an entry-level job is to research different organizations that are doing the type of work you are interested in. Most groups do not have the money to pay people who have no experience. To break into the field, you often must agree to work without pay or for a wage that will just cover your expenses. “There is money to be made in the field, but it’s not available to people who are inexperienced. Once you develop some expertise, you are in demand – there is a huge need for people with experience,” says Farah. The good news is that the learning curve is steep. Once you secure a position, you are likely to gain valuable experience quickly. Success In order to successfully work in microcredit, you must start with a sincere belief in the value of the work. In addition to that, basic finance skills such as accounting, cash flow modeling and understanding financial statements are important. Shoshanna says these skills are critical because, “microcredit is not a charity. There needs to be an emphasis on sustainability.” Getting yourself up-to-date on the most current microcredit practices is also useful so you can compare what your organization does with the different methods available. ‘Softer’ skills are also extremely important; especially the ability to listen. “There are huge variations from country to country. What works in one country will not necessarily work in another. As microcredit workers, we need to really listen to what the people are saying and respond to market demand,” says Shoshanna who has worked in both Azerbaijan and Afghanistan. Also, as with most international jobs, patience is a must. “In America, when someone says there is a meeting at 2pm, it’s at 2pm. In rural India, things do not work that way,” according to Siddhartha. Finally, the ability to work without structure is essential. “In the field, there are very few nicely packaged job opportunities. You have to get used to doing things that are way outside your job description,” says David. This lack of structure does, however, provide an opportunity to gain valuable experience, as it gives you the opportunity to manage a variety of people and situations. Finally, Shoshanna explains that
true success comes in an unexpected way. If you are not working in your native
country, “you are putting yourself out of a job by doing your job well.
Your goal is to get local people, not the ex-pats, running the organization.” All jobs have their own unique challenges and opportunities and microcredit is no exception. Many people who want to work abroad, go alone. “It was very lonely. I hardly knew the language and I didn’t know anyone. Occasionally you are in areas where there are riots and that can be unsettling,” said Farah. She continues, “Development work is often slow and you can’t have the attitude that you can solve everything. Things take time.” Shoshanna agrees. “What you are trying to accomplish does not happen overnight. The work is about building an institution and access to capital which is a slow process.” Even when people have access to microcredit, loan programs can be hard to implement. Farah explains, “In some cultures, men will restrict their wives from taking loans.” Although thousands and thousands of women have received loans, it can sometimes be an arduous process for them. “One of the more difficult things about microcredit is seeing people denied access to capital when they cannot make it into a ‘group,’” says David. Often, lending is done using a group-lending methodology where people are lent money, but only if they are part of a larger group. Many microcredit institutions loan money to groups with the assumption that the group members will keep tabs on each other, increasing the likelihood of loan repayment. However, people who have AIDS or are part of a marginalized population are often stigmatized and excluded by their peers. Although individual microcredit loans do exist, there are usually fewer ways to offer capital to these clients. Another problem is the bad reputation some microcredit agencies acquire because of the interest rates they charge. “People in the United States hear about some of the interest rates we charge and think that we are stealing from the poorest of the poor. But that is not the case. It’s important that people understand interest rates are set to create sustainability beyond grant money, and that nobody is making a profit or getting rich. Loans are priced fairly and often at a significantly lower rate than is available from local lenders,” explains Shoshanna. The Personal Impact Stories abound of the positive impact microcredit has on people’s lives. However, the benefit is not only to the borrower. Challenges not withstanding, everyone agrees that a job in microcredit is one of the best in the field of international development. Farah says, “Thinking back
on my life and what I’ve accomplished so far, my experience in microcredit
is by far the biggest thing I’ve done; it’s given me the most satisfaction.”
Recently, a proposal she pitched to funding agencies was accepted - positively
impacting the lives of 35,000 women. “As much frustration as there may
be at times, you get out of the experience a hundred fold of what you put in.” For Shoshanna, much of her joy came
from watching her staff grow. “You see the women you work with grow and
become excellent managers and committed to the field. It’s my favorite
part.” With a big smile, she continues, “If you believe in the mission
of microcredit, then every day you get to do something you love that changes
people’s lives. How can you beat that?”
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