Blanca Méndez works at Oikocredit’s international office in Amersfoort, a lovely, green city in the heart of the Netherlands. We at MicroPlace know her as we work closely with Oikocredit on a daily basis to source many of the listings that you see on MicroPlace.  Blanca recently went to South America and wrote a series of blog posts on this trip. You can see all her posts here.

Not only do microentrepreneurs stay loyal to a microfinance institutions (MFI) for years: they stay loyal for generations. I did not realize it until I met Juana Mayta Wanka, her son Leonardo Torres and his wife Karina Cori in La Paz, Bolivia. 

It was not easy to find their house. With much effort, the car rode up the very steep hill on the border of La Paz city. “There, that is the bakery,” said the FIE loan officer. While the loan officer rang the doorbell, I looked around for a bakery sign. The view down to the city was amazing! I was trying to find Oikocredit’s office in the jungle of buildings 500 meters below, when the small door opened, and Doña Juana greeted us a lovely smile. She is 63, but she crossed the garage and walked up the stairs to the second floor much quicker than all of us.

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Investors on MicroPlace have enabled 27,000 loans to date.  And it’s not just one Daddy Warbucks making one huge investment.  It’s lots of folks from all backgrounds, all walks of life, believing enough in helping someone to help themselves to take the plunge and make an investment.  Wow.

Muhammad Yunus, when he spoke at MicroPlace’s one year anniversary celebration, said:

“I get a chance to talk to various groups of people, trying to explain.  Sometimes a very difficult crowd, very difficult to get [the message] across, because they can not figure out why this thing should be like that.  Sometimes very friendly crowd.  Sometime bankers, those who are doing the conventional banking and look at me with disbelief.

The reason I am telling all these varieties.  I never met a group like this.  The investors.  For me, this is my first experience.  And I am delighted.  And I want to start with giving ourselves a big applause [insert wild clapping!].  It’s really something, it’s not just investing in eBay’s MicroPlace.  It’s also building a community by itself.  This is a community which believes in a common cause.  And that’s what makes a difference.”  (see the video of this here)

So who is this community?  Well, take a look at some of our investors on our flickr stream and what they have to say…

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Rachel Aram is a journalist working with MicroPlace.  She recently returned from Central Asia where she documented microfinance in the field. You can see the stories she captured here.  She can be found most mornings with her son Thomas at Bernie’s Coffee in San Francisco.

“Raise your hand if you know where Kyrgyzstan is?” I ask the benchload of “work from home professionals” loitering at Bernie’s Coffee in San Francisco. Notice how the group suddenly stares in unison at their recyclable coffee cups. I continue to fight with my jet lagged 7 month old and a jar of organic peas and smile, smugly. Our absence on the bench was noted by this group and I was SO excited to show off my son’s full page Kyrgez visa. We are, of course, educated, affluent, SRI types. I expected at least a glint of recognition, but no.  Ah hell. I admit. I didn’t know where Kyrgyzstan was two months ago. I didn’t know about any of the tiny struggling post Soviet countries see-sawing between cultural history, communist identity, Islam, and a healthy obsession with sexy women’s footwear. More on that later. I begrudgingly admit to googling most of my pertinent preparatory information.
 

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I blogged before about how microfinance appears to be a safe haven during these times of economic collapse.  While there are some potential risks (I’ll get to those later), it’s still holding strong and still repaying investors without increased default levels, despite all the chaos happening in the markets.  Why is this?  It’s because the credit markets made loans based on asset values without looking at the person who was taking the loans – giving a $750,000 loan on a NINJA (No Income, No Job, and no Assets), for example.  Microfinance, on the other hand does not make loans based on asset value, but on character of the borrower.

When a poor woman takes a microfinance loan, she usually doesn’t have any assets to secure the loan besides the work living in her hands, the brains in her head, and the determination in her heart.  She’s poor and she may only own a chair and a couple of pairs of clothes so what assets could she use to secure a loan?  So she has to find five friends who will vouch for her.  More than this, these five friends have to become a group where they all take loans and guarantee the loans for each other.  If you were her, which friends would you pick?  The lazy one who never seems to pull through for you or your most industrious friend?  And if you were taking a loan and you knew that your five friends, who you see every single day when you walk to the village well, would have to pay your share if you didn’t make your payment, how hard would you work not to let them down? 

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The Justice Foundation interviews our very own Ashwini Narayanan on their radio show.    They talk about how access to capital is a lifeline in anyone’s economy, not just ours.  Ashwini tells the story of when she met Harina Barin, a microfinance borrower in the field.  To find out more, listen to the podcast: 

http://redtapsessions.com/?p=108

or

http://itunes.apple.com/WebObjects/MZStore.woa/wa/viewPodcast?id=298359172