Greetings, and happy Monday! Writing to you from Chiquimula near the border with Honduras (Copan Ruinas to be exact). Today was the first day of our very last week of field work in Guatemala, and what an interesting day. Today I shadowed the same loan officer I went with last Friday, a nice spunky young girl with tons of drama in her life. Not the drama the clients tell you about, nothing life or death, but the kind of drama I am used to hearing back at college (who´s dating who, fights with boyfriends, etc. etc.). Nice girl, just strange to hear her talk about such pointless things while traveling to poor communities to help people.

And that´s where my interesting story for the day comes in to play. Today, we went to several communities outside of the city, one of them very isolated and obviously very very poor. We got off the bus, hiked a bit, and arrived at a home with dirt floor and adobe walls. Children everywhere with ragged clothes and no shoes, I think there were six of them under age 13. It was noon when we arrived, none of them were in school. The family obvious dedicated themselves to subsistence farming and agriculture as they had several chickens and a pig running around as well as a small garden and some corn. The six year old was cooking a meager lunch of beans and tortillas when in came a random gringa and a loan officer.

All of the sudden, the loan officer begins scolding the women for not paying. Apparently there have been problems with 2 women in this community who have not paid three months in a row now. However, she didn´t just scold them. She proceeded to tell the women that I am from the headquarters office in the United States and they sent me to make sure these women pay their debts. She told them they are accountable to me and that I will be waiting in the office for their payments in two days (before the month closing– a key time for the loan officers). The women apologized but explained how they tried to pay at the bank and they gave them a piece of paper. What it said, they had no idea. They can´t read or write and didn´t know they didn´t pay. They also proceeded to explain how they can´t pay because recent heavy rains have prevented them from harvesting crops and going to the market to sell them. They asked for more time, but the loan officer insisted that I have to receive the money before Wednesday or there will be big problems.

I stood there, speechless. The whole family stared at me with angry, yet desperate eyes. I couldn´t contradict the loan officer, they obviously had not paid and were having major financial problems and she was clearly using my as the bad guy. What a horrible feeling. Microfinance is meant to help the poor and vulnerable, but if they don´t pay, the loan officers suffer. Central offices put immense pressure on the women to force clients to pay however possible so they have 0 debt at the end of every month. There really is no forgiveness for natural disasters, health issues, and other major problems that make it impossible for one to pay. I left the meeting confused and frustrated.

“Why did you tell them I came from the Washington office”, I asked. The loan officer then told me about the major debt these women were in and how the last time she visited to remind them to pay, the husband of one woman threatened her and pushed her. So, apparently that´s why she wanted me to be the bad guy. She also explained again the major pressures being put on loan officers to have zero debt at the end of every month. There´s no room for forgiveness in the system, she said. Later that afternoon, I interviewed a former client who said the same thing. The woman had major health costs after complications with the birth of her daughter. She was not able to pay her loan for that month and the loan officer threatened at her until she finally found a neighbor to lend her some money at an outrageous interest rate.

Is microfinance truly helping if there´s no forgiveness built into the system? Recent heavy rains and landslides left 10 clients in this office homeless, with nothing but the clothes on their backs. At this point, there has been no forgiveness for these women– I believe they are supposed to pay in two weeks. But, how is one supposed to pay when living in a refugee camp at a church? Today definitely has left me questioning microfinance, or at least how this organization is run. Industry pressure to become a “sustainable institution” is ridiculous. MBAs in their air-conditioned Washington offices have absolutely no idea what happens here on the ground and put immense pressures on country directors, who in turn put immense pressure on loan officers, who in turn force women with major life problems to pay.

Is it possible for a bank on the road to sustainability to maintain its social mission and truly serve the poor?