How It Works

Before departing later tonight, I figured I would post a brief outline here describing how Esperanza's microfinance operations work. Most of this information is available on their site, but I'm going explain it here for the convenience of anyone reading.

Esperanza more or less follows what is known as the "Grameen model" of microfinance services, taking its name from the practices of the world-famous Grameen Bank, pioneered by Dr. Muhammad Yunus. Additionally, they offer health and education services to complement the core program of microcredit.

Here's how it works:

• Poor entrepreneurs are organized into groups, called Solidarity Groups in Esperanza. Each group receives its microloans together and are collectively liable for the sum total of their loan repayments; if one member cannot pay, the others are responsible for covering their payments. In the event of a default, the entire group is disqualified from borrowing again (I am not positive if Esperanza enforces that particular rule, but it is how Grameen has traditionally operated).
  
• Members are required to deposit 2% of their loan balance into savings and are encouraged to deposit more into a voluntary savings account.
  
• Business training is available to entrepreneurs who want it. Solidarity groups normally undergo business training together before receiving their loans.
  
• Health services through local clinics are offerred free of charge. These services include but are not limited to basic vaccinations, PAP tests for women, and dental exams.
  
• Educational services are also offerred free of charge. Available courses teach skills ranging from basic literacy to computer skills to vocational training.

I'm sure I will have more to say about all this later but for now I need to finish getting ready to leave!
10:50 PM flight out of SFO.
DR here I come.