Working Together, World's Apart

By Josh Lieto, BA Anthropology & Spanish, 2012
By
Daniel Zaharia, BA Economics, 2012

The United States Central Intelligence Agency lists Nicaragua, a small Central American country about the size of Ohio, as the western hemisphere’s second most impoverished nation. Despite—or perhaps because of this—nonprofit organization Esperanza en Acción decided to set up shop there.

Meaning “Hope through Action” in Spanish, Esperanza was founded over a decade ago with the intention of empowering people around the world through the practice of fair trade. Custom-fitting the principles of the well-known Fair Trade Federation to its own mission, the company is committed to ensuring that its clients in the third world are paid a fair price for their work and that they can, with that fair wage, cover basic needs such as food, shelter, healthcare, and education for their families.

Plates and bowls are a popular export. Here, a sculptor smoothes the clay on a pottery wheel—the first step of many.

Plates and bowls are a popular export. Here, a sculptor smoothes the clay on a pottery wheel—the first step of many.

Many of these clients are artisans, people who weave textiles or make pottery. Esperanza buys directly from these artisans, whose crafts are then placed in fair trade shops internationally, such as Kirabo, a fair trade store in East Lansing. In this way, the company provides their clients with access to international markets in addition to the fair price Esperanza paid up front for the merchandise.

Among other things, this way of doing business respects these artisans’ cultures and traditional lifestyles, allowing them to carve their own path out of poverty. It also leaves room for Esperanza’s workers to create long-lasting relationships with the people they help.

Taken together, all of these practices mesh well with Spartan Global’s mission of alleviating poverty through microfinance—a method in which entrepreneurs in the third world or other people in need are given small loans to grow their businesses, smooth their incomes or otherwise better their lives. Recognizing this, and in search of a fresh organizational partnership, former Spartan Global president Dan Zaharia and former vice-president Josh Lieto contacted Esperanza en Acción to inquire about a potential partnership.

Esperanza’s response was more than enthusiastic. From October 2011 to November 2013, 8 of Esperanza’s artisans have received microloans. What’s more, the loan contract stipulated that these loans would form a revolving door of credit—that is, once the loans were paid back, the money would stay in Nicaragua and be lent out over and over again. In addition to the capital that they receive from Spartan Global, artisans get solid business consulting and advice in risk management from Esperanza en Acción—in effect, the alliance between Spartan Global and Esperanza provides them with “the best of both worlds.” In turn, the partnership and resulting loan contract, pioneered by Zaharia and Lieto, was the first of its kind in the organization and became a major component of Spartan Global’s field presence.

Esperanza artisan hand-sculpts small clay llamas. With the help of Esperanza, these handcrafts are exported to fair trade shops throughout North America. 

Esperanza artisan hand-sculpts small clay llamas. With the help of Esperanza, these handcrafts are exported to fair trade shops throughout North America. 

In fact, this loaning venture has been so successful that Spartan Global members began planning a research trip to Nicaragua. In September 2012, the Associated Students of Michigan State University offered Spartan Global a grant to defray the expenses of traveling in January 2013. Unfortunately, logistical problems prevented travel during that time, but Spartan Global was happy to have the support of ASMSU and looks forward to the possibility of collaboration with the Association in the future.

In turn, Spartan Global’s plans for its future research trip to visit field partners are broad in scope and ambitious in design. In addition to touring organizations' in-country facilities, members will meet and interact with entrepreneurs and artisans who have received microloans from Spartan Global. Participants in the trip will also gain practical research experience, collecting survey data using a question template developed by Spartan Global’s executive board members.

Currently under revision, this template is modeled on Grameen Bank’s insightful Progress out of Poverty Index (PPI). Principally, this Index takes into account ten non-financial indicators, such as access to drinking water, type of housing, and the number of children attending school. This index also takes into account factors relative to each community and culture, such as traditional family size. Basing its survey questions on indicators from Grameen’s PPI index, Spartan Global will custom-fit its survey for the country of Nicaragua.

In conclusion, the past few years have been both an exciting and informative time for Spartan Global and its members. We have successfully reached out and formed a lasting connection with Esperanza en Acción, extending lines of credit to hardworking entrepreneurs in Central America and expanding our group’s international reach. Looking forward, we hope for the possibility of more fruitful partnerships and the ability to provide people around the world with the opportunity to better their families, their communities, and themselves.

A Life of Corn

By Josh Lieto, BA Anthropology & Spanish, 2012

On a hot day in the mountains of Chiapas, Mexico, a group of students and professors stepped out of a bus and onto a farm – the farm of a friend, Don René. He invited us to explore one of his fields with him, and it was there that I really began to get a sense of how important maize is in southern Mexican society. Don René took his time to walk us through his field, showing us the varieties of corn he grew there. Each had its own feel, its own texture, its own color.

Upon harvesting corn from their fields, Maya farmers hang a significant portion inside their houses to let it dry out. 

Upon harvesting corn from their fields, Maya farmers hang a significant portion inside their houses to let it dry out. 

“We are made of corn,” Don René told us flatly, as we were baking under the hot sun. He was unrelenting; corn was his livelihood; it was his life. Later another friend, Don Manuel, would stress this again, “If we eat anything,” he said, “we have to it with some kind of maíz.” But with the advancement of the NAFTA treaty, the United States has been flooding Mexican markets with cheap corn produced in the U.S. heartland. As a consequence of this, un-mechanized Mexican farmers working with fewer resources—like Don René—now have to unfairly compete with the subsidized and heavily mechanized agriculture done in the fertile breadbasket of the United States. Throughout my trip to Chiapas, I discovered that, to cope with this, many southern Mexican farmers are having to shift away from the production of their traditional varieties of corn to hybrid varieties, created by the state, which, despite being more productive, are less tasteful and do not carry with them all the nutritional benefits or, importantly, the cultural significance of more traditional varieties. If they are not using these new varieties, then they are most likely shifting to producing a different—and often unfamiliar—crop, or they are leaving the profession altogether. In both cases, they are setting down an ancient heritage—the production of corn—and the face of this heritage is not just taking on a new form, as it has in the past: it is disappearing for good.

As farmers who traditionally harvested corn move away from their maize-based subsistence practices, large plantations of foreign crops such as this have become commonplace throughout the state of Chiapas. The plants in this picture are West African palm oil trees, the seeds of which were provided to local farmers by the Mexican government. Though the oil harvested from these trees yields a hefty economic return, Chiapanecan farmers have expressed uneasiness with this shift in production due to their unfamiliarity with the palm oil tree and the environmental dangers it poses to their once-fertile maize fields. 

As farmers who traditionally harvested corn move away from their maize-based subsistence practices, large plantations of foreign crops such as this have become commonplace throughout the state of Chiapas. The plants in this picture are West African palm oil trees, the seeds of which were provided to local farmers by the Mexican government. Though the oil harvested from these trees yields a hefty economic return, Chiapanecan farmers have expressed uneasiness with this shift in production due to their unfamiliarity with the palm oil tree and the environmental dangers it poses to their once-fertile maize fields. 

Just south of Don René’s farm sits the sprawling city of San Cristóbal de las Casas, founded in the 1500s by settlers from Spain. While its central district is known as the cultural and economic capital of Chiapas, its outskirts are populated by poor farmers, many of them facing economic circumstances identical to Don René’s. In response to the struggles that these people are facing, institutions and entrepreneurs from around the world have taken it upon themselves to introduce microfinance, a powerful tool for combatting poverty, to Chiapas.

One organization, called AlSol, has lent over $400,000 in the form of small loans to impoverished Chiapanecos, many of them having been socially or economically marginalized by agreements such as NAFTA. The money that AlSol provides its clients serves a variety of purposes, from buying supplies for a fledgling entrepreneur’s business to ensuring that a family has enough food to last the week. In turn, the many uses the money in the hands of AlSol’s clients might have will reveal the larger strengths of micro-finance, and speak to the validity of Spartan Global’s mission.

In the first place, microloans are useful because they are flexible in so many ways: borrowers are able to determine how exactly to appropriate their funds, and they pay the loans back often on their own terms—in many microfinance circles, an informal respect for the borrower is an understood premise of doing business. In addition to this, microloans are generally easy to finance because they are small when compared to the lending capacity of the loaner. At the same time, they are usually substantial to the borrower, providing what might be termed an “adrenaline shot” of capital—and because the borrower is usually allowed to use the money as he or she pleases, it most often goes directly to where it is needed most. When the loan is repaid, the same money is lent out to another person in need, thus working good in the lives of people over and over again.

In the case of Don René and his fellow Chiapanecos, the world around them will probably keep changing, sometimes to their advantage, but sometimes not. We at Spartan Global believe in the power of microloans to help those in need, and we are fueled by the encouragement, support and resilience of the communities we work with. Resolute in our aims, Spartan Global is dedicated to the model and the practice of microfinance, determined to continue improving lives around the globe.

Why International?

By Nikolai Wasielewski, BA Political Science - 2013

When communities in the United States are in need of aid and investment, we are often asked why we at Spartan Global loan exclusively to developing countries. Why don’t we focus our energies on invigorating domestic economies, instead of international ones?

No two nations are the same; vast inequalities exist between countries around the world and there is no denying that governmental institutions differ from one country to the next. As a result of this inequality there are institutions that are available to citizens of one country that may not be available to citizens of another. These political and financial institutions are also based on different ideologies.

Generally, financial institutions in the United States are easily accessible and aim to help people prosper economically. The U.S. government also ensures the stability of the financial system by setting countless regulations to protect borrowers and lenders alike. From a $250,000 FDIC guarantee on savings accounts, to usury laws that prevent moneylenders from charging excessive interest, to a central bank that sets the benchmark for global monetary policy: countless safeguards exist. The system, while not the most equal and transparent in the world, is leaps and bounds from many in the “global south.”

It is not a question of whether Americans need aid; the real question is, “who needs it more?”

Many people in the developing world face issues that are unknown to us in the United States. An individual seeking access to capital in a developing nation may be left with no choice but to travel, in most cases a vast distance, and wait in an obscenely long line to apply for a loan with an interest rate that can fluctuate anywhere from 50% to 150%, or more. It is even more unfortunate that some individuals in the developing world are effectively barred from accessing these resources altogether due to the high cost of capital, their limited means of transportation, and lack of collateral or credit history. So while it is difficult and time consuming for many to obtain a line of credit, it can be physically or financially impossible for others.

Access to credit is not something enjoyed by those living in impoverished countries. We are aware that there are areas within the U.S., such as Appalachia or California’s Central Valley, where poverty levels are as dire as the developing world; however, a social safety net exists that ensures a basic level of welfare in this country, whereas in the developing world many are left feeling helpless and disenfranchised by their governments.

In the developing world, a little goes a long way and the effects of a microloan are more far- reaching than in the United States. According to the World Bank, there is a strong correlation between financial development—microloans, insurance, savings, currency stability—and a reduction of individuals living on less than one dollar a day. This concept guides us to allocate capital where it will have its greatest social impact: the developing world.

Our goal is to help alleviate poverty in areas of the world where government assistance is a foreign concept. We believe that our method of loaning empowers those who have been excluded by their governments and financial institutions. Microloans treat borrowers as human beings, not faceless charity cases. Our cause is to perpetuate financial equality and we believe that every individual should be allowed access credit to better themselves, on their own terms.

Poverty: It's Complicated

By Josh Lieto, BA Anthropology & Spanish, 2012

A stone hearth to my right and a straw roof above, I hunched over a tiny table, sitting at an even tinier chair. Directly across from me a few gourds were swinging carelessly from a sturdy pole, playing games with the few rays of sun that filtered in from outside. Smiling faintly, the woman at my side—Doña Natividad was her name—reached for a round, orange gourd and placed it gently in front of me.

“Yaan in pak’achtiko’on,” she said. After weeks of intense, twisting dialogues in an obscure and exquisitely foreign tongue, it was a relief to hear such a grammatically simple sentence. In Maaya t’aan, the language of people throughout the Yucatán peninsula, Doña Natividad had just informed me that we were about to make tortillas—which, incidentally, was one of my favorite things to do.

Straw-roofed structures such as this one are well-known as traditional Maya houses and are common throughout southern Mexico.

Straw-roofed structures such as this one are well-known as traditional Maya houses and are common throughout southern Mexico.

Maaya t’aan, or Yucatec Maya as it is known in English, is the language of around 800,000 people in Mexico and parts of Belize and Guatemala. An ancient indigenous language of Central America, its linguistic ancestor is attested in the famous Maya hieroglyphic writing system of pre-Colombian times. While living in Valladolid, Mexico and conducting homestays in the nearby Maya village of Xocén, I spent 6 weeks intensively studying this tongue. Doña Natividad was a native of Xocén, and she and her husband, Don Eustolio, welcomed me into their house. By western standards, it was a modest dwelling—a thatched roof house with a stone hearth and few hammocks—but to them, it was home.

To anthropologists, Xocén is known as “el pueblo en el centro del mundo,” “the town in the center of the world.” This speaks to the belief, pervasive throughout Maya- speaking communities, that the Yucatán peninsula is situated at the midpoint of the entire universe, the stars, planets and rest of the world rotating around it. To geographers, of course, the peninsula is simply a tropical limestone slab jutting out into the Caribbean Sea, north the equator but south of the tropic of Cancer.

Who is right?

At first, the question seems silly. And maybe this is because geographers are not actively telling people that their conception of the world is wrong, and vice-versa. But on a more profound level these two worldviews—the indigenous, Maya perspective on one hand and Western, scientific view of the world on the other—have and continue to collide, sometimes with dramatic consequences. During my stay in Mexico, I learned about more than simply Yucatec Maya—I learned about the interactions between these disparate worldviews in the Yucatán, the complex situation in the region that Westerners would label “poverty” and the implications of this for Spartan Global in its mission to bring microfinance to economically neglected populations around the world.

Since the 1500s, people from distinct parts of the world have migrated to Latin America, most notably Spanish-speaking settlers from Europe following the trail of earlier conquistadores. As is commonly known today, conquistadores sought not only to enhance the size and wealth of the Spanish political domain, but to dominate the lives of their newly conquered indigenous subjects— changing their religion, language, and social systems. The Yucatán itself is an exemplary case study of this arrangement, and the mix of Spanish culture and indigenous Maya culture is easily observable throughout the peninsula today.

With the advent of academic disciplines in the nineteenth century like anthropology, sociology and archaeology, western scholars flooded the Yucatán. This trend continues today, and it overlays the social system the Spanish superimposed upon the indigenous peoples of the peninsula. In other words, contrasts between indigenous Maya culture and non-Maya European cultures, Spanish or otherwise, are evident in everyday life. These distinctions and their connections to the western understanding of “poverty” provide the most tantalizing point for further reflection.

This wheelbarrow resting against a makeshift storage shed is a snapshot of life in rural Mexico. 

This wheelbarrow resting against a makeshift storage shed is a snapshot of life in rural Mexico. 

Perhaps the clearest contrast between Maya and non-Maya peoples is economic. As the majority of opportunities for work in the area require an extensive knowledge of Spanish, Yucatec Maya is seen as the language of farmers—it is the language of the field. This automatically denies monolingual Maya speakers from many opportunities for work in the bigger cities, which in turn severely hampers their social and economic mobility. Of course, this situation has only been exacerbated by the rise of tourism throughout the peninsula in the last thirty years, especially at places like Cancún and Playa del Carmén. Working there often requires Spanish and English knowledge—but no Maya.

A western visitor to Xocén would immediately notice this economic contrast—by any western measure, Xocén is “poor.” Don Eustolio and Doña Natividad, living in a thatched-roof hut, seem no exception to this. However, I challenge this understanding of “poverty.” Keeping in mind the history of the peninsula as outlined above, it is important first to remember that poverty has a variety of causes—often owing to the idiosyncrasies of each region and its inhabitants – and that, moreover, “poverty” as we most often understand it is in many ways an invention of the western imagination. This statement, of course, demands an explanation— an explanation which will get to the heart of our mission at Spartan Global.

By “poverty” I refer to a perception, a set of understandings, common throughout the western world and utilized most often by conventional charities to garner money for their causes. “Poverty” is talked about as a lamentably wretched condition, and “poor” people are seen as helpless in their poverty, needing financial support. Emotional catch-phrases and infomercials implore people for donations to help “the helpless.” It is this condition of “poverty” that I call simply a part of the imagination.

At Spartan Global, we believe that this understanding of “poverty” does not get at the core of what it means to live in the developing world. Instead of seeing economically downtrodden or socially neglected people as “helpless,” we try to understand their situations and begin to work with them on their own terms. A short visit to the Yucatán will show that the indigenous, “poor” Maya— despite the fact their heritage and language has been devalued and their economic and social mobility has been thoroughly limited—are indeed a vibrant group of people. It is both unfair and degrading to characterize an entire segment of people as “helpless,” and in the end pity and appeals to emotion do not make much of a difference in these “helpless” people’s lives.

Microfinance, Spartan Global-style, is one alternative to the traditional charities that paint people as “helpless.” Seeing our clients as active participants in a complex and ever-changing world, we reach out, build relationships, and financially support people as they carve out their own path. We realize that—like the Yucatán and its inhabitants— regions, states, cities and families have their own idiosyncratic histories. Remaining cognizant of this, we happily navigate the course to financial betterment with the people we help.

I am certain that I will return to the Yucatán; in addition to having a complex and fascinating history, it provides intriguing cases for the examination of what we call “poverty” and important lessons for how institutions like Spartan Global can continue its work on a global scale.

Why Microfinance Matters

By Joan Campau, BA James Madison College of Public Affairs, 2012

As Americans, we don’t often consider our own ability to access credit: with the exception of business owners and financiers, many of us think about getting a loan only when we are making a large personal investment, such as a house or a college education. Thus, it is relatively easy to take for granted the ability to borrow money.

In the developing world, however, the transition from a subsistence (and highly impoverished) lifestyle to lucrative employment is often severely limited by unequal or nonexistent access to credit. In such cases, traditional lending institutions, like banks, are unlikely to loan money to individuals with few valuables to use as collateral. Private companies often charge exorbitant interest rates, and friends and family of the would- be borrower often have very little money to loan.

In situations like these microfinance can be a powerful tool for social and economic transformation, as it provides fair, transparent, and low- or no-interest loans to entrepreneurs. A case study from Nicaragua demonstrates the need for intelligent, proactive microfinance and helps to shed light on some of the difficulties faced by individuals without access to this kind of credit.

A women sells dry goods and other food and pharmaceutical items out of her small store in the town of Pearl Lagoon. She is hoping to purchase a refrigerator soon in order to serve chilled beverages.

A women sells dry goods and other food and pharmaceutical items out of her small store in the town of Pearl Lagoon. She is hoping to purchase a refrigerator soon in order to serve chilled beverages.

The Caribbean Coast of Nicaragua is divided into two autonomous regions, the Región Autónoma Atlántica del Sur (RAAS) and the Región Autónoma Atlántica del Norte (RAAN), which are geographically, politically and ethnically distanced from the Pacific side of the country. Similar to the tumultuous national legacy of contested political power, legal jurisdiction over the Coast has only recently reached a relatively stable situation. Significant conflict between Atlantic and Pacific leadership, as well as feelings of disempowerment and mistrust among the Costeños (RAAS and RAAN residents), led to the adoption of the Autonomy Statute in 1987, which recognizes and clarifies the rights of the coastal people to communal land, local governance and educational opportunities in their own languages.

There is not, however, a single culture or language that is representative of the Coast; just as Costeños differentiate themselves from their Pacific countrymen, so too do people differentiate between various ethnic groups and geographic regions within the Coast. In addition to white and mestizo citizens, the Coast is also comprised of five main ethnic groups: the Miskito, Sumu, Rama, Creole and Garifuna. The Spanish, English, Creole, Miskito and Sumu languages are all spoken to varying degrees, and each ethnic group celebrates a unique cultural history.

Though they account for nearly 50 percent of the landmass of the country and much of the natural resource base, the RAAS and the RAAN only hold about 10 percent of the total population. Many of these people feel exploited by both foreign interests and historical national policies, and have successfully lobbied for an official demarcation process that will clarify their rights to land and resources.

These past and present tensions significantly inform the manner in which Costeños conduct their business. In the 1970s, Bernard Nietschmann documented the beginnings of a shift from a reciprocal exchange system to a money-based economy among the Miskito peoples of the Coast. In the 40 years following his research, this trend has continued and many, if not most, of the exchanges among all of the peoples of the Coast involve some sort of monetary transaction. This is especially true of goods that have been imported: shop owners must pay their Pacific suppliers in currency, and are thus obligated to charge their customers money, rather than the ability to return a favor.

The wharf at Bluefields, regional capital of the RAAS, bustles as Costeno fishermen bring in their catch for sale. 

The wharf at Bluefields, regional capital of the RAAS, bustles as Costeno fishermen bring in their catch for sale. 

During my research on the use of inter-firm credit among small shop owners in communities around the coast, I interviewed about 50 shopkeepers from seven communities. From behind the counters of their one-room variety stores, they told me about the transition from substance farming and fishing to this new occupation as small business owners and their difficulties getting started. In general, their narratives went like this:

Joe farms a plot of communally owned land and fishes in the Pearl Lagoon during the rainy season to provide food for his family. He notices that with a new road from his small community to Managua, Pacific vendors have increased access to the fish, sugar cane and vegetables of the Atlantic Coast. With increased frequency (but still sporadically), Spanish-speaking men drive trucks filled with new clothes, ropes, buckets, tools, small candies and soda from Managua down the road into his village, where they sell these items to Joe’s neighbors. In return, the truck drivers purchase and transport the Costeños’ surplus fish and agricultural products for sale in the big city.

Joe sees a business opportunity here: his neighbors have expressed the desire to purchase the processed foods and imported housewares more regularly, but they aren’t able to because the trucks only come once a week. So Joe decides that he will fill this niche: he will set up a small shop where his neighbors can purchase the things that they want any day of the week. Joe is realistic. He knows that he will still have to farm and fish to fully support his family, so the store will have to be small—just one room—and probably adjoining the house so that his wife and children can tend it while he is planting the cassava and hauling in the nets.

And here’s where Joe’s problem begins. While the wood and other natural resources necessary to actually build the shop are readily available on the communal land, he doesn’t have the money to stock the store. So Joe travels for many days to arrive at the regional capital in search of a bank. When he gets there, however, his loan application is denied because the rights to the land that he farms and the Lagoon where he fishes are communally owned, meaning that Joe doesn’t have any collateral to stake.

Undaunted, Joe instead goes to Gallo, an appliance store where he hopes to purchase a refrigerator for his sodas. He asks if he can purchase the small fridge on credit, and is promptly shown into the manager’s office. The manager brings out a multi-page document written in a language foreign to Joe, and tells him to print his name on the line so he will be able to take the appliance home with him that day. Intending to pay back the loan as soon as he can, Joe signs his name, and soon after installs the first piece of equipment in his new store. Still in need of items to stock the shelves and new fridge, he goes to a wholesaler and asks the man there to advance him some of the products he thinks will be most likely to sell in his community. Again a bargain is struck, and within a week Joe has officially opened his shop.

Within two weeks, however, a stranger has come into the village and is asking around for Joe. His neighbors give directions to Joe’s house, and the stranger knocks on the door. Following the traditional coastal greetings, the stranger informs Joe that he’s there to collect the first payment on the refrigerator. Joe is confused because this isn’t the man he had spoken with at the appliance store, and he’s sure that there must be some misunderstanding. Joe informs the stranger that the store just opened two weeks ago and has been doing only small but steady business: he doesn’t yet have the 500 córdoba (about $25) the man seems to expect. The man makes a mark in his book and leaves, promising to be back in two weeks.

Over the next few days, business picks up and Joe sells out of his inventory. Excited because he’s almost collected the 500 córdoba for his first refrigerator payment, he returns to the wholesaler for more supplies. The wholesaler tells Joe that he will only be allowed one more round of goods on credit, and then he will have to pay up front. Sure that he can make enough profit with this inventory to pay for both the first installment on the refrigerator and the next set of items, Joe gratefully agrees to these terms and returns home with the supplies.

Over the next week business continues to grow, and by the time the stranger has returned for the refrigerator payment, Joe has scraped together 750 córdoba: enough to pay the first installment on the refrigerator and to repay the wholesaler. When the stranger comes to the door this time, though, he informs Joe that he now owes 1000 córdoba. Protesting that the second installment isn’t due until next month, Joe asks the refrigerator company representative why the amount has doubled. “Interest” is the man’s one word reply as he makes another mark in his book, takes the 500 córdoba Joe is able to give him, and leaves. Over the next couple of months, this pattern continues, and finally the wholesaler refuses to give Joe any more supplies on credit, and the refrigerator company comes to reclaim their appliance. Although he borrows small amounts of money from his extended family members and even asks his neighbors for help on the payments, Joe can’t keep up with the huge interest rates and ultimately has to close the store.

Of the fifty people I interviewed that summer, not a single one had obtained credit from a banking institution. As a Garifuna and of Afro-Caribbean descent, (or a Miskito, Sumu, or Rama and of indigenous descent), the shop owners are considered minorities in this predominantly mestizo Spanish-speaking country, and many reported significant racial and ethnic discrimination. Moreover, the communal ownership of the land they farmed (as decreed by the Autonomy Statute of 1987) gave them very little personal collateral to stake.

The smallest stores are set up in living rooms and on porches, often selling produce directly from the shop owner's farm.

The smallest stores are set up in living rooms and on porches, often selling produce directly from the shop owner's farm.

Instead, they often relied on loans from private companies—like the appliance store that sold Joe his refrigerator. Without fail, the small shop owners reported that the interest rates charged on these purchases made it impossible to keep up with the payments. The contracts they had signed in the managers’ offices were often in a language unfamiliar to the Costeños, who had difficulty reading even in their native languages.

Several business owners suggested that instead of these traditional lending institutions, they instead relied on financial assistance from their friends and family to get the shops started; however, it was still difficult to pull funds together from people who still generally participated in a reciprocal exchange system rather than a market with currency. Some people who had children or cousins working on American cruise ships saved up the remittances sent home to them, but the seasonal and uncertain nature of that work again made it difficult to collect enough money to get started.

Microfinance matters because people in the developing world often don’t have any other access to fair and reliable credit. When entrepreneurs are unable to use traditional lending institutions, microfinance loans provide a critical leg up to get them started in fledgling economies. Sometimes racial and ethnic discrimination makes a bank loan impossible, while other times legal structures or poverty mean that borrowers don’t have collateral to stake. In other instances, credit is offered by their suppliers or other vendors, but at exorbitant interest rates (made legal by contracts that are difficult to understand). Microfinance offers low or no-interest loans that often require only the promise of repayment.

And this faith in people is well rewarded: with extraordinarily low default rates and huge multiplier effects, microfinance has the potential to transform entire communities. In the United States, we don’t often think about the need for access to capital: it is easier to comprehend an immediate need for food and clean water rather than the underlying issue of self-reliance and economically viable communities. But in the developing world, the true transition out of poverty requires the establishment of local enterprises which are self-sustaining, rather than a continued dependence on charity. It is here that microfinance has an important role to play: instead of a hand-out, it offers a hand-up to entrepreneurs around the world. When those of us in the developed world participate in these loans, we offer our fellow human beings the chance to determine their own futures with dignity—and in doing so, we are advancing humanity by funding opportunity.