Review: It's Our Turn to Eat

It's Our Turn to Eat by Michela Wrong

My rating: 5 of 5 stars

Terrific book. By now I have a real soft spot for Michela Wrong so I'll probably like anything she ever writes again, even if that's a turgid write-up of all the Chinese meals she's ever had. It's Our Turn to Eat is, to borrow an over-used term from the literary "cognoscenti", a very important book. For anyone not convinced (how could you not be?) of the deleterious effects of corruption and tribal / ethnic loyalty (as against loyalty to principles or ideas), this is a must-read.

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Conquering Kilimanjaro. Almost.

[The events hereunder described took place from 5th to 10th July 2010.] 

Day 1
 

The glory of Kilimanjaro was first apparent to me in 2006 during a visit to Amboseli National Park in southern Kenya. Scraping together what remained of my holiday allowance from work, I headed to visit my girlfriend who was a journalist with Reuters in their Nairobi office. A five day trip packed in three days in the wonderful game park on the border with Tanzania whence we could see, from our hotel room window, the still snow-capped peak in a remarkable couple days when the entire mountain appeared free from its usual nebulous shroud. In yet another demonstration of the turns life can take it probably wouldn’t have occurred to the Erik of April 2006 that a little over four years later he would have been living in Kigali for a year and a half via Mexico, Peru, California and Nevada and would be climbing that mountain from the other side in Tanzania.
 

An early wake-up, for a vacation. Up not long after sunrise to have breakfast, ensure all our gear is packed and get on the bus which is to whisk us to the start of the Rongai route. After multiple stops we eventually get under way around two in the afternoon. Rongai is a quieter, less traveled path up the Eastern side of Kilimanjaro. The more popular means to climbing the mountain is via the Marangu route, colloquially known as the Coca Cola route. We set off from an altitude of two thousand meters, through a forest landscape. Eventually the forest gives way to tall shrubbery. Our guide is Hadji who claims to be from Chicago but who is clearly Tanzanian born and raised. No sign of the mountain which is obscured by cloud. We’re hiking in t-shirts but it’s not long before we’re adding fleeces at the first rest stop. After just four hours we have arrived at our first camp (altitude 2,650m). We set up in our tents and almost immediately it’s time for dinner. Just as with the hikes I went on in Peru (Choquequirao and Macchu Pichu) our meals are served in a tent with chairs and a table. The food isn’t as good as it was in Peru but then the South American country is well known for its culinary artistry whereas, for the most part, East Africa isn’t. An hour or so of chatting and in bed by nine. We all sleep until nearly seven.
 

Day 2
 

Wake-up call with coffee delivered to the tent. Hesitate a few minutes before emerging from the tent whereupon a slice of Kilimanjaro and an entire neighboring peak called Mawenzi appear majestically. As we prepare for the day the clouds clear until we see Uhuru Peak, the Roof of Africa. The Sun hits the two snowcaps and behind us the rising sun casts a red glare across the entire horizon and the mountains of western Kenya. After breakfast we set off as the clouds close in again. Still in t-shirts we ascend to three thousand meters before our first rest. The fleece goes on as the temperature drops. The guide informs us that we are halfway to our objective for the day and it’s yet to hit ten in the morning! As we resume the tall shrubbery recedes. Yellow, white and purple flowers (elder flowers we are told) appear. Bees, so unusual to the Rwandan resident, fly by. The Sun breaks through the clouds and in no time we’re above the white haze looking back on an endless expanse of off-white cumulus. A little further ahead and we’v reached camp (altitude 3,480m).
 

Lunch is served and is swiftly followed by a guilty stretching out under the warm afternoon Sun. The landscape has morphed yet again into a cross between the lowlands of Scotland and the hinterlands of the Cote d’Azure; dry, craggy rock, parched earth and green heather and gorse. After a couple hours of intense Sun a cool breeze sweeps across the mountain from north to south enticing the dry grass and heather into a lazy dance. Mist begins to form just above the clouds and threatens to engulf our camp at two in the afternoon but the breeze and Sun do their part to ensure a few more hours of basking in the warm embiance. The sensation is not unlike skiing in April, stripped as we are of shoes, socks and sweaters. Little birds provide a sonorous backdrop while large black crows lend a vaguely ominous air to the scene. Every time we crane our necks there looms Kibo Peak which marks 5,000m, two snowcaps bookending the crown with a small smattering of white in between. In the afternoon we go for a stroll a couple hundred meters up at which point our guide declares that the snowcaps used to extend to the point at which we are now standing, a good kilometer and a half in altitude below the lowest evidence of snow today. We are surrounded by thinning bush and tenacious tussock grass. From here we can see that no more than half a kilometer away the vegetation line delineates yet another terrain. From this vantage point it appears moon-like and portends a strenuous final day.
 

Our original itinerary had laid out a six day roundtrip with Uhuru Peak reached by sunrise on the fifth day. Following two days of no more than four hours of less-than-challenging hiking and the prospect of a pathetically short two-and-a-half-hour effort scheduled by our guide for the third day, our group puts in a polite request to up the pace. (In retrospect this was a misguided determination, the effect of which would be strongly felt on day four. Six alpha-type individuals with no mediating influence bar the accompagnateurs whose salaries we were paying.) An alternative plan is hatched; we’ll be climbing over a kilometer tomorrow instead of less than half that and beginning the final 1,200m ascent to the summit at around midnight on day three. This fine day draws to a close with what we believe will be a cinematic viewing of a spectacular sunset over the northern ridge of Kilimanjaro and out over the vast expanse of cloud stretched out ahead of us. And then disaster strikes. For the third time in the space of just a few hours the white blanket spews forth a wall of mist which rapidly clambers up the mountain towards us. In under five minutes we are enveloped. All hands snatch warm clothes from their resting places and our hopes for a technicolor show dissipate into the surrounding fog. And just as soon as it comes in, it goes out. The Sun lingers a few finger-widths above the ridge and our show is back on. And what a show! Every shade and hue from lemon yellow to ketchup red backlights the ridge and accents the clouds. The orange-glowing orb swiftly dips below the ridge and leaves in its wake a strong chill. The final act of this dramatic scene has the slopes of Kilimanjaro turn orange-grey before the curtain falls.
 

Day 3
 

“Tea!” Our wake-up call comes just after daybreak and the tea delivered to our tent flap provides welcome relief from the night spent tossing in unsuccessful attempts at avoiding contact with the ineffectual sleeping bag rented from the guide company; the cold permeates the inner lining with such ease and at such low altitude that concern brews all around at what is to come. In the small hours I had had to slip out of my sleeping bag and tent to answer nature’s call and found myself not only shivering wildly but struggling for breath camped as we are two kilometers higher than is my habit. Not even a glance up at the starry, starry night could break the mild panic my body was experiencing so I scampered back inside and told myself to calm down. Our hike that morning sees the vegetation thin until there is virtually none left. The tree-line is in sight when we stop briefly for lunch. By this point our group has developed its dynamic; Barbara and her boyfriend Tobi lose their individual identities and become simply, “The Austrians”; Courtney spends the entire time reminding us to, “hydrate!” in her regressed-to-the-age-of-five voice; Asli sleeps; and I stride ahead of the pack at my natural pace which occasionally has me turning around to search for my companions like a child who has wandered away from her parents in a supermarket. Joe was too busy taking one of five hundred or so pictures to notice any of this.
 

By mid afternoon we are well on our way to completing the 1,200m ascent for the day and mysteriously found ourselves traipsing across the moon; Kilimanjaro is a dormant volcano which hasn’t unleashed its fury for many thousands of years. Given our surroundings it would have not been in the least surprising to see Neil Armstrong bouncing by in a space suit. Someone suggests the we should all sing our respective national anthems, better to make the time go by. Asli the Turk kicks off and because no-one is quite sure whether she is singing the Turkish national anthem or a Klingon nursery rhyme, her rendition elicits little comment. Next up are the Austrians who meekly mumble Saxon lyrics without much national pride (which seemed to appear more emphatically whenever Red Bull was discussed). Then it is the turn of the US contingent which gets off to a shaky start when Joe, a US Marine, admits to knowing perhaps a fifth of the lyrics to the Star-Spangled Banner. By way of explanation or apology, I cannot say which, he assures us that he could recite backwards the Pledge of Allegiance. Our assumption that his more complete recollection of these words results from years of commencing each day at school with a collective recital proves amusingly misplaced. It turns out that this is Joe’s proven mechanism for staving off an embarrassing early finish with the ladies. In any case Courtney and I do Francis Scott Key proud. And I round off proceedings with a breathless version of La Marseillaise. In mid afternoon we stumble into Kibo Hut having completed by far the longest day in terms of distance hiked and altitude ascended.

For the first time on the trek we have all expended some energy and are grateful for the opportunity to down poles for the day. Taking in our surrounds it feels as though we have arrived in a mountain-top skiers rest-stop albeit with no snow and not a sprout of vegetation to behold. There are stone huts for porters and trekkers who have paid for the privilege and dotted around them are various tents for the likes of the rest of us. A larger proportion of the trekkers present have come up the (in)famous Coca Cola Route (Muhanga). The setting has more the look of a refugee camp in the Hindu Kush than an international mountain-climbers’ campsite. Plans are made for the final assault due to begin at midnight, the idea being to reach the summit in time for sunrise. Dinner is swiftly inhaled and all are in bed as early as possible. As Joe and I, tent buddies all along, get settled in he starts complaining of stomach pain. It has become common by this stage for all of us habitually to produce an impressively reverberating array of bodily excretions, which we ascribe primarily to the food. What begins to emanate from Joe however is of a different order entirely. Sufficiently so for Courtney to enquire from her adjacent tent as to Joe’s well-being. It soon becomes clear that for Joe to take part in the approaching climb would require a significant focus on mind over matter. Any thought that he might do so is however laid to rest when in one rapid acrobatic movement he sits up, reaches for the tent-flap zip, dives head-first through the opening and violently expels the full contents of his stomach. He lays back down, apologises and concedes defeat.
 

Day 4
 

Not much sleep has been had by the time our porters announce it is time. Given the low temperatures we are all fully attired in our sleeping bags, and consequently not a little fragrant. Preparation is quickly completed, plaintive expressions of regret directed towards Joe and headlights illuminated. The terrain is now what climbers would refer to as scree, something of a cross between gravel and shale. Looking up the mountain one sees many groups that have set out before us, their headlights indicating the path up to the peak. The five of us march up the slope at a clip which matches our pace over the previous days but which is perhaps ill-advised given the steeper incline and higher altitude. Our goal is to ascend from 4,700m to the Roof of Africa at 5,895m over the course of the next six hours. The means to achieving this is to zig-zag in single file up the slope , attempting to lose as little forward momentum as possible with each step in the scree. Our heads are all pointed down at our feet; in the absolute darkness this is the only means to assuring we know where we are placing our feet. It is not long before we hit traffic. With few opportunities to pass this slows our progress considerably. By this stage many trekkers are already feeling the effects of the thin air and consequently speed of movement is variable. One lady is moving so slowly, not more than three quarters of an hour into our effort, we are left wondering at what time she will reach the summit.
 

The folly of our speed has yet to have its impending deleterious effect on us. At advantageous points where the path widens to allow two bodies to walk side-by-side our group is ready and moves up a few gears to pass slower walkers. With each zig and zag the temperature drops a little and the amount of water available to us decreases through consumption and gradual freezing. All along the trek I have been consuming Haribo bears to keep my energy levels up. I am by now throwing them in my mouth three by three every ten minutes. Much of the first minute in my mouth is spent warming them back into their normal chewy state but the impetus they provide is vital to my progress. About halfway to our target the altitudinous effects become more pronounced. Courtney is experiencing significant discomfort from the cold on her extremities. Asli is slowing and expressing that she has begun to hallucinate that she is treading a wide asphalt road with her a band of her close Turkish friends. I am feeling light-headed with a dull ache beginning to pulsate in my crown. The Austrians are complaining of the cold and Tobi’s knees are beginning to bother him. Everyone’s humor is ebbing. Our guides, well used to this sort of collapse in fortunes among their charges are firm in their demeanor. We will get to the top. A little further up and Courtney is buckled on the ground, the lack of sensation in her fingers and toes breaking through her mental barriers and causing her to lose faith. One of our guides slaps her gloved hands together to restart the flow of blood and cause some heat to permeate. The loss of warmth is starting to affect my hands as I witness Courtney’s pain. A constant chorus from our guides of “nearly there” drives us on. The Austrians soldier on in silence. Asli is reaching her breaking point and starts to fall behind. One of the guides insists that she will make it to the top even if he has to carry her.
 

Our path to the Roof of Africa takes us first to Gilman’s Point at 5,685m, whence a much more gentle gradient transports hikers to the summit. After what seems an eternity, the Austrians, Courtney and I reach the rocky outcrop which marks Gilman’s and are greeted by an icy wind. We clamber over some rocks to a pocket of relative stillness but the elements have by this stage done for me; my hands hurt from the cold, my head is a thumping, pulsating mass and my emotions have spilled into tears. Courtney has by this stage recovered sufficiently to whisper comforting words in my ear and apply the same hand-warming technique the guide had taught her. It occurs to me that this experience ranks with running a marathon as the most physically challenging of my life. All I can think of is wanting to climb back down, and we are still 200m below our goal. That objective is however no longer an option in my mind. A quarter of an hour later a hoarse shout from below signals Asli’s arrival and the strength of her resolve; she has made it. The sky has been very gradually changing in hue and now portends the imminent arrival of the Sun. A few minutes pass and the red ball breaks through the sea of cloud below us, a few degrees to the left of Mawenzi. It is a magnificent sight. A sense of wonder and accomplishment are however no palliative for my physical distress. No sooner have we taken photographic evidence next to the sign indicating Gilman’s Point than I am on my way down. Note to self: next time, get a helicopter!

Enjoying the Calm While It Lasts

It's a beautiful Summer evening in Kigali. There is neither even a whiff of a breeze nor a cloud in the sky as the Sun heads swiftly for the Horizon, glowing bright red as it does the closer you are to the Equator. Being as close to the Equator as Kigali is (2 degrees south) the days don't vary enormously in length from Summer to Winter. At their longest, as they are now, the Sun sets at around 6.20pm. In Winter closer to 5.30pm. Which means no long, sunny evenings to sit on a terrace having a beer during the Summer (as I recently enjoyed back in New York, London and Toronto) nor does it mean mood-destroyingly short days during the Winter. At the other end of the day, the Sun is always up by 6am and the Rwandan people on the move not long after. This is still a country that walks to work even in Kigali. Only the elite and the taxi drivers have cars. Some can afford to take the little mutatus ("bus" in Swahili lingo, exactly the same little vans were in use in Lima and were called "micros"). Otherwise as you drive to work in the morning or home in the evening you see lines of people walking along the sides of the roads, which are frequently lacking in pavements / sidewalks. The reason that activity starts so early here is that everyone is in bed very early. After darkness descends only 28% of urban residences and a very low 2% of rural ones have electricity to make use of. What else is one to do but sleep? Or that other activity which the Rwandan government is actively discouraging in order to bring down the 5.5 fertility rate amongst Rwandan women.

In case anyone happens to be interested in further stats on Rwanda, mostly related to health, check out the newly released Interim Demographic and Health Survey (http://www.measuredhs.com/pubs/pub_details.cfm?id=936&srchTp=home). If you're a geek like me, it makes for fascinating reading. It has its drawbacks as a survey (much of the data is self-reported and impervious to verification and there is little comparison to previous years for trend analysis) however it's still for the most part pretty good as an indication.

As for work it never sits still. When I arrived three new people had been hired all starting the same day as me who would form the team I would manage. Two of those have now left, one to do a masters in Belgium and the other on loan to our sister organisation Partners in Health. What's more we're on the verge of hiring nine or ten additional people who will all have the misfortune to be managed by yours truly. It's exciting. I'm engaged in three broad areas: advising the Ministry of Health in Kigali on policy and planning; working in one of the 30 districts of Rwanda to help them manage their health system, consisting of a district hospital and thirteen health centres; perhaps most interestingly of all developing a large-scale data collection, storage and analysis tool/engine which will collect several hundred data points on every health facility in the country (450 and rising) every six months and allow every level of the health system (from rural, isolated health centres to the Ministry of Health in Kigali) to manage their investment and operational decision-making. This last piece of work is all the more fun because it's probably one of the first to be developed on the continent and is being built with one eye on other countries where we could deploy it. Right now we're going through a certain lull as most CHAI (Clinton HIV/AIDS Initiative, just one of several initiatives run by the Clinton Foundation) staff are out on vacation. However the storm clouds are clearly visible and due to arrive in the first couple weeks of August. From then until Christmas, and beyond, work is going to be wild. Our donors and the Ministry expect.

A New(ish) Beginning

Four and a half months into my life in Rwanda and I’ve managed to say virtually nothing about my life here so far! My intention was to round out my experience working on the Obama campaign with one further entry detailing the micro-managed, super-focused, hugely rewarding and in the end massively successful two months that I spent in Las Vegas but the task of writing that piece has seemed so overwhelming that all I have to show for it is two months of silence. So I’ve decided to skip that and move on to the present.

Where to start? Let’s begin with the personal. That large house I referred to a few posts ago which was one of two options I was considering to move into is now my home. My bedroom, whence I’m writing this, is large enough for a huge bed and could comfortably accommodate a table tennis table and a pool table besides. I’ve no doubt this is the largest bedroom I will ever inhabit and would probably compare favourably in size to the entire flat I lived in before leaving London. It’s ridiculous. I share the house with three people, all girls and all Canadian. That they are all girls is entirely unsurprising; the NGO crowd here is overwhelmingly female (clearly not a problem, at least not for the minority gender). That they are all Canadian is much more so albeit that they’re an interesting mix: one Scottish-Canadian; one Eritrean-Canadian; and one US-Dutch-Canadian. In Kigali though one mostly comes across Americans, Belgians, Germans and Brits. And virtually no French. For those who don’t know the history, these last have not entirely covered themselves in glory in their dealings with this country and continue to shoot themselves in the foot diplomatically by pursuing government officials for war crimes and generally being on the wrong side of the argument. However I’m teetering into the political sphere about which I will unfortunately have to be less talkative than I was in Peru. (Incidentally the trial of Alberto Fujimori which I discussed a fair amount over a year ago is due to come to a close very shortly. A conviction is likely assuming the trial doesn’t collapse on the technicality that he’s in ill health and his absence from the courtroom for 12 days would entail starting all over again.)

Work at the Clinton Foundation is fantastically fun and extremely rewarding. And constantly in flux. Amusingly in some ways it’s very similar to what I was doing at Goldman Sachs, i.e. sitting in an office working with Excel all day. In important ways though it’s very different. Whereas my work at GS for six years was almost entirely inward facing, here I am daily in meetings with Ministry officials and every couple of weeks am out in the field meeting with regional health managers. At GS it was always difficult to explain to people what I did, particularly to those who didn’t work in finance, which led some to think I really worked for the intelligence services, but here it’s essentially very simple. We are here to help the Rwandans build up their capacity to successfully manage their own affairs and to do ourselves out of a job.

Unfortunately success isn’t going to come rapidly and someone will likely still be doing what I’m doing by the time I’m considering retirement but you would go mad in this line of work if you didn’t consider and accept the long view. And in Rwanda things happen. I’m constantly hearing from my NGO colleagues who work across African countries that there’s a level of thought, coordination and direction here that isn’t to be found anywhere else on the continent. From the Big Man on down there’s a will to pull this country up and to do so in a systematic, government-driven and clean way. It’s impressive to behold even for someone as inexperienced as me who has nothing with which to compare it. Of course the Rwandans have no resources. There’s very little to drive tax revenue so the country is massively dependent on foreign funding. And as previously said, this will not change anytime soon. But there is the will and there is the understanding of how to do it even if with other people’s money. It’s extremely exciting to be a part of. Over time I want to talk more about the challenges and the opportunities, the hopes of this tiny little over-populated country, the expectations of the international community and the tensions that result when the two rub each other the wrong way. There are endless anecdotes that constantly have us thinking about how to improve and make more effective our work to help Rwanda. The goal is nothing short of colossal.

A Short Backgrounder, Part Two

Amongst the political entertainment during my time in California (New York Governor Eliot Spitzer the unwitting tangential prize of an organised prostitution-ring bust, Detroit Mayor Kwame Kilpatrick charged with eight felonies, Alaska Senator Ted Stevens charged with improperly compensating a building contractor, etc), a very serious one was continuing its eighteen month-old machinations. What had begun in the snows of Iowa had really started in February 2007 when Barack Obama declared his candidacy for President of the United States and even much before that. My memory of Barack Obama entering my consciousness is a little hazy although I recall that by the time he delivered the keynote address at the Democratic National Convention in July 2004, I had been following his progress for some time. When the Big O declared he would run for the Presidency two years after becoming the junior US Senator from Illinois this came as little surprise to any political egghead.

Around early June I slowly started to realise that a golden opportunity lay before me to engage in a political process which I had enthusiastically been following from the comfort of my armchair and the earphones of my iPod for well over a year. Being the type who respects those who walk the walk rather than talk the talk, it became clear that not only would my job-search take time, but if I were so convinced that the Big O would be a better alternative to any Republican then I ought to do some’at about it. By this stage Hillary was for practical purposes already out of the race. So in amongst travels to Europe for aforementioned family reasons and a fantastic 4th July holiday around the southern United States (I highly recommend Savannah and New Orleans) I looked for ways to become involved. One aspect of the Big O’s now famous campaign was his harnessing of the “new” technologies first employed on a large scale by Howard Dean during his not-so-successful run for the Democratic nomination in 2004. Obama’s website, being designed as it was by the guy who developed Facebook, was set up such that people could publicise events, rallies, organizational meetings and so on and allow others to get involved. I started attending various events, mostly talking up Obama to people passing in the street and at summer fairs. Obama had also decided that his policy framework (for which read high-level principles) would be decided democratically by a wide swath of his supporters rather than just those who attend the Convention. Thus I attended various policy discussions to elaborate a submission to Obama’s staff which taught me a whole lot about education and healthcare in the States. And allowed me the opportunity to educate a few people on what goes on in “Europe” (expressed by some as though it were somewhere close to the Moon).

Another event posted on the website, MyBO as it became known, was a voter registration drive in Las Vegas. One of the most impressive organizational decisions by the Obama campaign was to pair rock-solid states with geographically proximate swing states. Thus California was paired with Nevada and a large number of events were set up for Californians to travel to Nevada to help the local effort. So I drove up to Las Vegas with three other people I’d never met before, a girl who does public health work in developing countries and who was in LA between jobs, a guy who had run for local elected office in Southern California unsuccessfully and whose day-job is computer programming and an octogenarian battle-axe who provided constant hilarity. She was part Muhammad Ali, part Erin Brockovich. We spent the weekend standing outside WalMart (not generally considered Democratic-friendly terrain) and signed up large numbers of voters. It was hot. It was very, very hot. But it was also a lot of fun. The best ploy to get people to stop is to make them laugh combined with an overly strong appeal to their better sense. And never ask a question to which the answer is “yes” or “no”. “I would love to register you to vote today.” “I don’t have time.” “It will only take a few minutes to register and it will give you a voice.” “It doesn’t make any difference.” “Yes, that’s how Floridian Democrats feel too.” And so it went.

That weekend was so much fun that I went back with Sara (the public health girl) and a friend of hers the following weekend. And that one turned out to be so much fun again that I started talking to the regional managers about coming up full-time to volunteer. At the time I was semi-serious about it. But by the time I’d got back to LA I realized that it really was something I should do. When was I going to get the opportunity again to work on a presidential campaign? When was I going to get the chance again to work on a campaign which I had heard from at least a dozen people had not roused their passions to such an extent since 1960? So a week later I packed up my car and headed back to Vegas, this time to stay until the election. I had little idea of what was to come; 60 uninterrupted 16 hour days at the grindstone. No weekends. No days off. The hardest I’ve ever worked.

A Short Backgrounder, Part One

How did I get here? And where have I been? Questions I’ve asked myself a few times of late. After seven months in Lima, the last one and a half of which I spent separately traveling with parents and friends from London, I decided the time had come to move on. But move on to what? I had looked into a few jobs which would make some use of my combined experience in the finance and non-profit arenas. I had even had a telephonic interview between Lima and my interlocutor in Nairobi (where she was visiting on business) for a job based in Washington DC. The line was bad and my interview sharpness not much better. The outcome was as expected.

Around the same time I pursued a connection I had made shortly before leaving London. During the whirlwind few weeks between leaving Goldman Sachs and leaving on a jet plane in June 2007 I had breakfast with the lovely Cassia who I’d been put in contact with by a colleague. Cassia worked at the Clinton Foundation, regularly commuting between London and various places in Africa, working in a division of the Foundation called CHAI. It sounded like tea, it sounded like fun. We spoke for about an hour at the conclusion of which she told me to give her a call when I was done in Peru because they were always looking for “people like you”. At the time my thoughts were more focused on microfinance than health system strengthening as I felt my finance background was more suited to the former. However a few months’ reflection led me to realise that my passion lay in international development generally not microfinance specifically. So come December 2007 I did what Cassia suggested. Unfortunately she didn’t answer my emails and I had no contact number for her. I did find out through our mutual friend the Goldman Sachs colleague that Cassia had gone on maternity leave but that she didn’t know much more than that as they hadn’t been in touch for a while. As practitioners of the espionage trade would say, the lead went cold.

As my pre-planned departure date of mid February slipped to late February, I did at last book my flight out believing that my future lay in the States, leaving behind some great friends and a wonderful Peruvian family who had taken me in as their sixth (and eldest) child. My grandmother in California was in failing health and I decided to move in with my uncle there to spend some time with her, a grandmother who had been a major influence in my life. This turned out to be fortuitous timing as just eighteen days later I watched as she breathed her final breath, thankful that I’d been able to spend a couple weeks with her. Her passing was to foretell further sadness in the family as both my French grandparents succumbed to old age just three months later and within a week of each other. My French grandfather had similarly loomed large in my formative years and I was fortunate to be able to spend some time with him just prior to his passing when I visited France in June.

From early March, when I arrived in California, until exam day in early June I had been studying for the second level of the CFA, the first level of which I had passed in 2003, since when I had concertedly avoided any further participation. By this time my decision to resume the qualification resulted from the combined desires of pursuing something useful to my career as well as giving me space to contemplate my next move. It succeeded on one of those fronts at least. By early June I was back into job-searching again in full force. Applications went out to various non-profits and a further attempt at contact with Cassia was made, this time successfully. I was extremely saddened to hear from her that she and her husband had experienced a tragedy in the intervening period and despite this Cassia was as helpful to me as could be and excited that I’d contacted her. She ran me through the various possibilities available at CHAI (Clinton HIV / AIDS Initiative) and asked me to forward my curriculum vitae.

A set of interviews ensued for a position which would have involved travelling around a third of Africa on a fairly constant basis assisting countries in their procurement and internal distribution of drugs. (That would be malaria prophylaxes and HIV anti-retrovirals rather than cocaine and ecstasy tablets.) Fortunately for me some combination of the three interviewers decided I wasn’t suited to the post and immediately it was suggested that I consider a “managerial” position. The job would have been very satisfying but too restless and clearly would have upped my carbon footprint by a not insignificant number of cubic metres. The Foundation’s suggestion was well taken. There followed two interviews, one with the CHAI Country Director for Rwanda and Burundi, Pascal, and t’other with the gentleman I would be replacing, the Program Manager for Rural Health, a Kenyan by the name of Kisimbi (which, I would later learn, is his family name; apparently all six sons in the family refer to themselves by their last name which causes no end of amusement when friends call their house in Nairobi). The interviews failed to entice me to say anything controversial or stupid and a visit to Kigali was hastily arranged for a tête-à-tête. After a mammoth Las Vegas – Washington DC – Rome – Addis Ababa – Kigali country-hop I arrived in Kigali for four days to seal the deal.

Thus am I now in the employ of the Clinton Foundation providing technical assistance to the Rwandan Ministry of Health. This has prompted several observers (as though I have those) to ask what exactly in my professional experience qualifies me to provide technical assistance on health matters to an African government. Or any government for that matter. Allow me to explain.

And onwards to Rwanda

[ This is an entry which I had previously circulated via email, not knowing whether I'd resume the blog. Since I have now decided to do so, I'm republishing this November 26th summmary from shortly after my arrival in Kigali. For those who are wondering "Kigali? WTF? How did you end up there and what have you been doing since you left Peru? When did you leave Peru? Why did you leave Peru?", the short answer is 6 months in California, 2 months in Las Vegas, now Kigali, Rwanda working for the Clinton Foundation. I'll come back to all these themes later! ]

13 days into Kigali life and it has flown by. I feel I'd better grab every experience by the horns else two years will go by in a flash and I'll look back wondering what I've been up to! I can't wait for some visitors to tell me they're coming so I can book a trip to see the gorillas! There's a trip prospectively happening in early January to Bujumbura (capital of Burundi). Two girls I've met here have recently moved to Buj and I figure what better reason to go to Burundi! I mean it's not like I'll be sitting later in life thinking, "where should we go on vacation, hmmm, Burundi is a good option". Apparently it's very different to Rwanda. There's a fairly spectacular beach there from what I hear, on the shores of Lake Tanganyika. Of course another likely trip in 2009 will be to Dubai to visit an old friend.

Work is starting to become a little clearer in its goals and responsibilities. I have a team of two and a half (two people full time, one person who works with me half of the time). One Kenyan and two Rwandese. Almost everyone I met when I came in September [for the interview] will be gone by Christmas, which is a little strange but I knew that was a possibility. So I have a brand new team. My boss is still the Swiss guy, Pascal, who hired me. He's a really interesting character who grew up in a UN family and who is very well respected within the Foundation and without.

Our dealings are entirely with the Ministry of Health, other NGOs working in the health field and the regional governments of the 30 districts of Rwanda. We had a meeting last Wednesday with the Permanent Secretary at the MoH, the number two person at the Ministry – she's quite the character. We were having a call with a large international NGO about getting some funding from them and she was impressively and amusingly firm in her approach.

On the personal / social side I'm in the midst of figuring out where I'm going to live. I'm currently living in the house of the guy who I'm replacing, but it's too far from everything. It's a pleasant if quiet neighbourhood but a 20 minute drive from the office. Ideally I'd like to be walking distance to the office, or at most a 5 minute drive. I will indubitably have to buy a car. Kigali is not a walking city. I've got two houses in mind, one of which is currently occupied by Guen and Felicia, two girls who currently work at the Foundation but who will both be leaving Rwanda and who have been extremely generous in welcoming me to Kigali. The other used to be occupied by the Minister for Education and is a grand place but a little off the beaten track.

Thus far I've found a tennis partner, a friend of Phil Bowen's who used to work at the Home Office and who now works for Tony Blair's initiative here. And Sunday afternoon is ultimate frisbee with a fun mix of Rwandese and mzungus (including some combination of the six Marines who are stationed in country to guard the US Embassy – they're pretty good). I might potentially take up Swahili but the jury's still out on that one.

Kigali is an amazingly safe place. After spending time in Nairobi where people live in barbed wire-encircled compounds, Kigali is surprisingly different. Even my female colleagues tell me they feel comfortable walking around at night and getting taxis home at all hours. Of course there's a cottage industry here set up just to serve the mzungu crowd. A bunch of taxi drivers whom everyone has stored in their contacts. Real estate agents who only deal with the high end of the property market. Stores which only the elite Rwandese and foreigners can afford. Although even the foreign crowd find the only decent supermarket in town to be excessively expensive. The difficulty is that Rwanda produces very little apart from coffee so even some basic food stuffs are imported. I bought five oranges yesterday and paid £4.60!!

Rent is going to turn out pretty cheap but other aspects to Kigali life will be surprisingly expensive. Thankfully it turns out that the US government is generous to people who earn their living outside the US and promise not to spend more than 30 days per year in the States: no federal income taxes!

Let's not lose sight of human weakness

Is it incompetence? Or pure dishonesty? Sadly, probably the latter. There have been stories in the press recently (see links below) reporting suspected fraud at credit unions in Uganda. These Savings and Credit Cooperatives are set up as societies where members can deposit funds and take out loans, in essence much like any microfinance institution, but due to the law limiting its remit, the Bank of Uganda has no jurisdiction to oversee these institutions. And the body that does oversee these credit unions is reportedly understaffed and lacks expertise. Many clients are reporting that the institutions are making it difficult for them to withdraw their savings. Recent pronouncements by the Bank of Uganda indicate that some of the poor clients may well lose their savings entirely.

It behoves those in positions of authority not to lose sight of what must be one of their primary objectives, supervision. The lack thereof doesn't only exist in Uganda and sadly closer to (my current) home, there are anecdotal stories of heads of microfinance institutions (MFIs) using their loan portfolios to curry favour with friends and influential people. Sad but true. Fraud can occur even in an arena which supposedly attracts those who want to help others. No harm in helping yourself at the same time, I guess the argument runs.

There are three responsible parties when it comes to supervision. The first line of defense is the board of directors. Some may treat being invited onto a board as another line to be added to their curriculum vitae with a couple of meetings to be attended per year as the price to pay. However being on the board carries responsibility and the senior management of the institution must be held to account. Regulators have their obvious role to play and as in the Ugandan case, microfinance institutions (MFIs) of whatever kind must not be excluded from the remit of the banking regulator. These are financial institutions just like those which cater to better-heeled clients. There may be a cost burden to the MFIs of providing information and of course the resultant bureaucracy should be kept to a minimum but this is a necessary precaution. Lastly the rating agencies have an important role to play. There are a handful of agencies which specialise in providing ratings for microfinance institutions, entirely on a voluntary basis for the MFIs. It is an important function of these agencies that they adopt a hard-headed mindset and ask the difficult questions. One would hope that the development world would be immune to such human weakness as defrauding the poor, but knowing that it isn't, all necessary steps should be taken to prevent it.

Microcapital article on Ugandan credit unions
New Vision first report of problems

Recent Peruvian History: An Update

Hot off the press this morning, the Minister of the Interior in Fujimori's cabinet at the time of the dissolution of Congress and the Judiciary in April 1992 has been sentenced to ten years in prison for having participated in and backed what is referred to in Peru as the "autogolpe" (self-coup). Nine other members of the cabinet from that time have been given four year suspended sentences for having been secondary accomplices.

Fujimori himself cannot be tried for this crime as the terms of his extradition from Chile only allow him to be charged for specific offenses, two related to alleged human rights violations and five related to alleged corruption. Fujimori's trial on these charges is to start on 10th December.

Lima Reconnaissance Trip in May

In May 2007 I hitched a ride with Tom Sanderson, Director of Five Talents UK (FT UK), Craig Cole, Executive Director of Five Talents International (FTI), Helga Buck and Kelli Ross of FTI and David Fletcher, board member of FT UK, to Lima. For them it was an opportunity to visit the project they are funding in one of the southern poor districts of Lima called San Juan de Miraflores. For me it was an opportunity to meet the people I was, at that stage potentially, to work with come July. During the trip David filmed our encounters with clients as well as an interview with the Executive Director of ECLOF Peru, Carlos Venturo, one of the most upstanding citizens of the world you are liable to meet. This is the fruit of those labours.

A Primer on Recent Peruvian History

In amongst the microfinance discussion, it would be remiss of me not to mention the political dimension here in Peru. As Jeffrey Sachs repeatedly says in his rather good book The End of Poverty, you cannot think about altering the economic situation of a country without giving ample thought to all the factors which affect it: political, geographical, historical, infrastructural, personal.

The president of Peru is currently Alan Garcia and this is his second go at running the country. He was previously in charge between 1985 and 1990 and left office with hyperinflation causing economic havoc and Sendero Luminoso (Shining Path) and the MRTA (Tupac Amaru Revolutionary Movement) causing havoc of a different kind. Strong evidence for not electing a 36 year old to head the government it might be suggested. With the country needing some strong direction Alberto Fujimori, a half Peruvian half Japanese politician whose birthplace is disputed (he claims Lima, others claim Japan and it's of importance because only people born in Peru are allowed to run for president) beat writer Mario Vargas Llosa in an unexpected victory in 1990. Interestingly five years later Fujimori beat Javier Perez de Cuellar, former United Nations Secretary General in the 1995 elections.

Fujimori turned out to be quite the authoritarian during his two terms. He succeeded in bringing the economy under control and eventually in crushing Sendero Luminoso and the MRTA. On the other hand, because Vargas Llosa's party retained control of Congress after the 1990 election and since Fujimori was finding it hard to get anything done during his first term, he simply dismissed the entire Congress and judiciary in 1992. ("If only...", Bill Clinton must have been saying a few years later when he faced the same problem.) At the end of his second term, Fujimori tried to circumvent the 1993 constitutional two-term limit which he himself had introduced and ran in and won the 2000 election against Alejandro Toledo. The ruse only lasted until evidence of political bribery eventually forced Fujimori to resign the presidency from the safety of Tokyo.

Worse than the political machinations however were the extra-judicial torture and murders. In 1993 Fujimori became close to an army Captain by the name of Vladimiro Montesinos who alerted Fujimori that certain elements of the army were planning a coup. Montesinos later became the head of Fujimori's security apparatus and was responsible for fighting the terrorists as well as for the political espionage and bribery. The findings of the CVR (Truth and Reconciliation Committee) after the downfall of the Communist terrorist groups found that up to 70,000 people were killed during the fighting. Most of these were innocents in the battles between government forces and the terrorists and their blood was not only on the hands of the terrorists. The tactics used in bringing the terrorists to their knees as well as the bribery landed Montesinos with a lengthy prison sentence with Fujimori similarly awaiting trial on human rights abuses. He was extradited from Chile in September 2007 and the trial is scheduled to start in December.

This is likely to be an unwelcome distraction for the Garcia administration as Fujimori still commands considerable public support. I was recently in the centre of Lima and saw a huge banner hanging from a hotel exclaiming "Fujimori Libertad". This time around Garcia is attempting to cast himself as the economically responsible type and is attracting foreign investment to the country as well as looking to get a Free Trade Agreement signed with the U.S. which is likely to be passed by the U.S. Senate in December, having already passed the House of Representatives. It is likely to sail through the upper house of the U.S. Congress as it did the lower house because from the U.S. point of view Peru is an important ally against the "red tide" of Chavez (Venezuela), Ortega (Nicaragua), Correa (Ecuador) and Morales (Bolivia).

For the good of the country, Alan Garcia needs to be careful to attract investment to all areas of the country and not just around the big cities and the mineral and gas deposits. A little bit of money can achieve big results in a country like Peru and a little bit of patronage can go a long way. When I was visiting Puno last month, on the shores of Lake Titicaca, I met with the head of one of the floating islands of Los Uros who told me at least three times that the solar panels they had attached to their houses providing them with electricity were provided by Fujimori. "And what has Garcia done for you?", I asked. "Nothing."

The danger is that Garcia's political base is along the coast north of Lima and in the centre of the country. Outside of those areas but particularly in the south Ollanta Humala, a man the U.S. would lump in with Chavez and the rest, is the popular politician. In the first round of the most recent presidential election in 2006, Humala came top with 33%. Given that an outright majority is required to win the presidency, a second round was held in which Humala lost to Garcia who had lapped up the votes of the third placed finisher from the first round.

Peru has fantastic advantages relative to some other developing nations. Natural wealth (copper, other metals, natural gas), agriculture (top exporter of asparagus in the world, potatoes, maize, fish), access to the sea, an entrepreneurial workforce and significant tourism. Inflation has been below 4% since 1999 and GDP growth averaged 5.7% between 2002 and 2006. What Peru requires for development, to the advantage both of the poor and the country, is leadership which will, in addition to keeping the economy ticking over, ensure that the benefits of increasing wealth are distributed widely. That's not to say the leaders should tax the rich and kill the entrepreneurial spirit. More that the right combination of fiscal, monetary, trade, diplomatic and social conditions are needed to increase the general wealth of the country, which are best managed by a centrist party with an active and targeted social agenda rather than a more extreme party of one wing or the other with misplaced ideas of how to run an economy and a country.

The Word of the Day: Opportunity

It's impressive how much introspection, if not outright criticism, is going on in microfinance. Not long before I left London, and well after I'd submitted my resignation to Goldman Sachs, I went along to a meeting of the Microfinance Club UK held at the Barclays building in Canary Wharf. The talk was entitled "What's Wrong With Microfinance?" If I was in need of a reality check for my off-to-save-the-world ambitions, here it was in flashing neon lights.

Two gentlemen, who had coincidentally just published a book with the same title, stood forth and pontificated on their views that microfinance is really microcredit, with loans being dispensed but with few other financial services being offered. It promotes debt and often excludes the poorest whom microfinance nominally seeks to help the most. Microfinance isn't the basis for a sound economy. Women (to whom the majority of microloans go) don't create businesses, they work for themselves. [This one drew bemused laughter from the assembled.] Self-employment is just a euphemism for survival. There's too much cash pouring into the arena chasing too few real opportunities for investment. A large section of the population being unbanked doesn't mean there's unmet demand. And so it went. A GS colleague who had similarly just left our esteemed employer to join Five Talents, she on a full time basis, was sitting next to me at the meeting. Was it too late to change our minds, we joked?

So is there any foundation to the accusations? Well three months of exposure to a small corner of microfinance in just one country does not an expert make. However having spoken to quite a few of ECLOF's clients and having perused much of the learned writing of microfinance insiders, both pro and anti, the answer, as ever, lies somewhere in the middle.

Richard Posner exclaims (on the excellent Becker-Posner Blog) that "the idea of borrowing one's way out of poverty is passing strange". Furthermore, he states, "I am unaware of any historical examples of nations that climbed out of poverty on the backs of small entrepreneurs financed by credit". He has a point, but it's unfortunate that he chose to express it so starkly without considering the whole picture. Microfinance is, and should be, the provision of financial services to the poor. That is to say that as well as loans, savings and insurance products should be offered. Many institutions in the field focus on the debt and this is what is drawing much of the criticism. And it is valid. Consumer debt cannot solve the problem on its own.

The crucial goal is to provide opportunities. The poor are not just poor of cash, but generally poor of opportunity, mainly because of the view that providing opportunities to the poor is a money-losing (or at best profit-neutral) proposition. Which for some players it is bound to be mainly because they're not set up for this kind of high-cost, low-margin customer interaction (e.g. my former employer). However this is a profitable (but please, not too profitable) business if done right. Though the providers need to be constantly mindful that the goal is not simply to load up the poor with debt. Microfinance needs to be a means of assisting the poor with all of their financial needs. At times and for certain people the need will be to give them a place to keep their money other than under their mattresses. At different times and for other people the need will be for leverage to enable them to exploit a niche they see in the market. And for all of them the need should be to hold inexpensive insurance such that they aren't starting from scratch if an earthquake fells their home.

To profit or not to profit (part II)

Imagine if you will, Mother Teresa finding out that Donald Trump was going to take over her hospice and, although promising to continue catering to the dying, things were going to be run a little differently from now on. This gives you some idea of the shockwave that spread through the microfinance world in April of this year when Banco Compartamos of Mexico, a microfinance lender of 17 years' standing, completed its IPO (initial public offering). The IPO was 13 times oversubscribed and reportedly made US dollar millionaires of some board members and senior officers. Accusations of making money off the backs of hard-working poor people flew.

In the entry from 2nd October I gave a short explanation of the non-profit model of microfinance. The for-profit version involves the same mechanics. Short-term, small-sized loans aimed at poor businesspeople with (comparatively high) interest rates applied. Both the for-profit and non-profit models cover administrative and capital costs (staff salaries, cost of funds, infrastructure) out of interest charged so we'll leave that out of the picture. However there are some very fundamental differences. At first glance, running a microfinance institution (MFI in development parlance) as a for-profit means simply that some of the cash generated from interest on loans is taken out of the cycle as profit, instead of being plowed back into further loans, as all of it is in the non-profit version. Is this making money off the backs of poor people?

Consider two MFIs charging the same level of interest to clients, say the roughly 35% per annum that my firm ECLOF Peru charges. The first, the non-profit uses 30% to cover costs and the remaining 5% goes into enlarging the loan pool. The second, the for-profit uses 30% to cover costs and the remaining 5% goes to infrastructure improvements, staff bonuses and shareholder dividends. From the point of view of an individual borrower there's nothing to separate the two institutions. Whichever she pitches up at, they're charging 35% interest.

One might then argue that the earned interest that doesn't go into increasing liquidity at the for-profit has an opportunity cost which is the reduction in possibilities for an incremental few borrowers to finance their businesses. This is true, but then not providing an opportunity to borrow doesn't count as profiteering from the poor. So in principle a for-profit structure in this field may not necessarily be morally wrong. For-profits bring many advantages which non-profits lack, not least of which is much easier access to funds. Even social investors are more likely to place their available dollars where a financial, as well as social, return of some kind is likely. However, there are also some serious disadvantages to the for-profit model. Not least of which is the profit motive itself.

The returns available in the informal economy are considerable. Which is why MFI loan clients are able to pay such hefty levels of interest. Large institutions are prevented from piling in with large sums of money to take advantage of these returns because the barriers to entry are high and scaling up would be logistically problematic to say the least. In addition to which the margins may be significant relative to the investment (i.e. in percentage terms) but in absolute terms we're still talking about small dollar amounts. An interesting example of this is demonstrated by our recycling clients. There's big demand from large manufacturers for scrap metal, which is abundant in the poor areas around Lima. The same goes for used plastic, cardboard, cans and so on. However there's no systematised collection mechanism. The manufacturers will pay a decent rate for this material, enough to incentivise locals to start businesses and make good money by paying local residents for their scrap and selling it back to the manufacturers. However those manufacturers could never do this for themselves. Having to take on employees, pay benefits, taxes, etc. would likely make them run this part of their business at a loss.

The heads of for-profit MFIs are well aware of this return potential. If the loan clients can therefore absorb higher interest rates, why not charge them? There's clearly a tension between social and commercial objectives here. And even the best-intentioned for-profit MFI head might be at pains to argue the case in the face of agitating shareholders. The current housing situation in several developed countries demonstrates the point. The difference is that intense competition in that arena means that interest rates are set by the market so it's the size of the loans which are being jacked up, with evident consequences. In the microfinance space there's only so much the size of the loans can increase (for now), so the interest rate is the flexible variable.

Banco Compartamos has been skewered on this point from various quarters. Their website is not exactly forthcoming but a report by the Consultative Group to Assist the Poor (CGAP), a kind of industry think-tank, estimates that Compartamos has been charging its clients 100% interest, a quarter of which being profit. Rates are generally higher in the Mexican market for various reasons, however on Compartamos' 2006 reported gross loan portfolio of $271 million, the estimated profit would be around $64 million. Is this profiteering from the poor? Is this the way to fix global poverty?

Further reading / Sources:
CGAP Report on the Compartamos IPO (PDF format)
Commentary on the Compartamos IPO by Jonathan Lewis, CEO Microcredit Enterprises (PDF format)
General discussion on the Compartamos IPO
PBS mini documentary on Compartamos (20 mins)
Banco Compartamos

Change the flower pot

I am linking to the next two videos in the same series on Grameen and Yunus. Both of these are well worth the three or four minutes they last, but my favourite is this one on creating a poverty-free world. "No matter how rich you get under the present [financial] system, you'll have poor people", states Mr Yunus. So let's change the system.

The other video focuses on social business entrepreneurs. A subject close to my heart. There exists a growing population of young people who don't see a contradiction between making money and helping the disenfranchised, but where are the educational and financial structures to accommodate them?

(Our Man in Lima has been Our Man Around Peru and Bolivia these last few weeks, so please excuse my absence!)

Banker to the Poor

Meet Muhammad Yunus. Rock star of the microfinance world. Nobel Peace Prize winner 2006 (shared with the institution he founded). This man started making loans, out of his own pocket, in the mid 70s. He first lent about $27 to a bunch of ladies in a village in Bangladesh, from whence he hails. As of his most recent update Grameen Bank had dished out a cumulative $6.44 billion (that's United States greenbacks) in loans. Rather embarrassingly I would suggest, the Banker to the Poor is starting up an office in Queens, New York City to provide microfinance services there and more widely in the United States. Not sure how it is that the richest country in the world with the most sophisticated financial markets needs to rely on a Bangladeshi to come solve a domestic poverty issue, but there you have it. A shining example of globalisation you might argue.

This is the first of three videos in a series made on Yunus and Grameen Bank. It's an appropriate juncture in my 'basics of microfinance' to include this because Yunus was the original structurer of a microfinance institution as a non-profit venture. These days Grameen Bank is majority owned by its (poor) borrowers. There's a wealth of information out there on Yunus and Grameen. A good place to start, as ever, is with the respective Wikipedia entries (Yunus, Grameen). For information from Yunus himself, see here.

To profit or not to profit (part I)

After two months here, it's about time I got around to explaining what this microfinance stuff is all about. This is going to require several entries, so bear with me. There are a plethora of models around in the microfinance world so in the interests of ease, here's a stab at classifying them. Perhaps the most contentious division and that which splits the microfinance world in two (not in terms of 50% of assets fall into each camp, more in terms of two very different points of view), is the for-profit vs non-profit model. Each model has its proponents with varying justifications as to why their world view is better. Each model also has a range of incarnations with varying service levels and product offerings. But let's make one aspect clear at the outset: they all charge interest, and they all expect the loan capital to be paid back. Helping the poor microfinance may be, but charity it ain't.

Let's start with the non-profit version. ECLOF Peru, whose offices I work in, are of the non-profit mould. Thus interest is charged on loans, but there is no profit taking out of this interest. All proceeds are used to pay operating costs and whatever is left over is capitalised and used to make further loans. ECLOF International in Geneva is the head office of the ECLOF empire. It is an organisation that was set up after the Second World War to help in the reconstruction of churches bombed by various parties. In 1971, after its primary mission had been completed, it transformed itself into a development organisation. In part due to ECLOF's roots in the Christian faith its view of how to implement microfinance in practice is grounded in values of support, justice and humanity. This means that whilst charging what almost anyone in the developed world would consider at first glance a seriously steep interest rate, when viewed in context the reality is that ECLOF Peru's clients are actually getting a decent bang for their buck.

When people from the impoverished parts of Peru with few assets and no home ownership walk into a Peruvian retail bank (Interbank, Scotiabank, Banco Continental, Banco de Credito) and ask for a loan, they'll politely be told that their financial situation disqualifies them. End of conversation. So the next place to turn to might be a loan shark in the street, happy to lend money to all and sundry at his attractive interest rate of 100% p.a. or higher. Step in the microfinance institutions (MFIs). Even the for-profit types charge far better rates than this. These might range up to 60%. Still high, but more manageable. ECLOF Peru's policy is to charge 2.5% per month. Annual equivalent rate 34.49%.

The story does not end there however. Even in the non-profit space, the range of services provided by the MFIs varies from the warm and cuddly to the cold and distant. A characteristic of the microfinance client base which I had failed to appreciate prior to arriving here is a lack of what in the developed world we take for granted: an understanding of the most basic financial instruments. Many of the people who want to borrow money have never encountered the fine print of a loan agreement. Overdrafts and credit cards, means by which most of us become acquainted with the pleasant minutiae of compound interest are non existent in this segment of Peruvian society, where even holding a bank account is a rare thing indeed.

Thus ECLOF Peru provides financial and business training to all of its loan clients. This takes the form of workshops run by ECLOF Peru's analysts attended by anywhere from five to twenty new clients. This service is free, or the price is included in the interest rate charged on the loan, however you want to view it. On top of this there's a significant amount of hand-holding, particularly with clients taking out their first loan. Reminders are hand delivered a week in advance of a repayment date and analysts are available on the end of a phone or in the office to resolve any problems. No six option automated phone lines here. On the other hand, some of the non-profits simply hand over the cash and say "let's have that back in six months please with 40% annualised interest" and on to the next client. The ECLOF Peru approach of hands-on service yields one very positive financial benefit: default rates across the portfolio of less than 2%. By contrast the biggest microfinance player in Peru (one of the two beasts of the market with a loan pool of $345 million at the end of 2006 versus ECLOF Peru's $2.2 million), Banco del Trabajo, has a write off ratio above 10%.

The effect a default has on a client's borrowing potential at this end of the income spectrum can be devastating. Even an organisation like ECLOF Peru which seeks to help the least enfranchised at the "base of the pyramid" (on oft-used phrase in development circles) has to keep its financial risk wits about it. Lending to individuals with no assets to use as collateral, nor much in the way of income, with a previous black mark, or several, against their name is not going to prove a solid foundation to building a sustainable lending business.

Return to Chincha

Judging by the aching in my every muscle and the sheer exhaustion that turned me into a zombie at the office on Monday, my body has atrophied after six years of sitting in front of a computer for ten hours a day. I was back in Chincha on Saturday and Sunday to assist the good citizens of that destroyed town. The trip was organised by the same lot with whom I went three weeks ago. On the one month anniversary of the earthquake there were far fewer volunteers heading south from Lima; 70 vs 650. A good deal was achieved nonetheless. Saturday was a similar exercise to the last trip, conducting a census. We, my two female charges and I, were entrusted with a map covering a square mile or so which marked the locations of the known communal kitchens in the area. Communal kitchens are being set up either by NGOs or by groups of locals. Anywhere between 5 and 40 families might congregate around one of these kitchens to get their food. It's vitally important for the local authorities to know where these kitchens are located so that when food aid does arrive, they aren't wandering around aimlessly trying to find them, or worse, overlooking the kitchens because they don't know they even exist.

This is where we came in. Armed with the map we went in search of all the kitchens already marked on the map, to ensure they were where the map indicated (which in three out of four cases they weren't so good thing we checked), and to find any new ones which had sprung up in the week or two since the last party conducted this exercise. We found seven more on top of the original four so all in all, a good afternoon's work. In addition we brought the kitchens' organisers important information on registering with the authorities and making sure they continually check in with them. In an ideal world, this wouldn't be necessary, but when resources are scarce, you have to make sure that those in charge of distribution aren't forgetting about you. The harsh realities on the ground.

My several visits down south, as well as conversations with interested parties back in Lima, have demonstrated beyond a doubt how crucial it is to have people in charge of aid and rescue efforts who know what they're doing. Who have experience. Who understand the minutiae which can disrupt the best-laid plans. Who are people managers. And perhaps most important of all, who display a grasp of common sense and good judgement. I'm reminded of the man at the helm of the US agency FEMA (Federal Emergency Management Agency) when Hurricane Katrina hit the south coast of the US in 2005. Michael Brown, lawyer. He was relieved of his duties nine days into the response effort for extreme incompetence. Prior experience: Judges and Stewards Commissioner for the International Arabian Horse Association, 1989 to 2001. Chairman of the Board of the Oklahoma Municipal Power Authority, 1982 to 1988. Clearly the man for the job.

Our task on the Sunday was of a different order. Helping some families clear rubble from their houses and into the street so that it could be taken away by the roaming loaders sent by the government. Our team of twelve was a model of productivity. Getting in and out of our chosen house with a wheelbarrow was impossible, so we formed a human chain to pass the adobe bricks out of the house, over the wall which we partly demolised to accomplish this. The volume of debris we removed in just a few hours was both impressive in terms of mass and saddening in terms of drop-in-the-ocean insignificance of outcome. We cleared half of one house. It showed both how much can be achieved through coordinated teamwork (the same process had been used several times over the weekend to load and unload trucks back at base camp with similar military efficiency) and what an immense effort lies ahead to rebuild Chincha, Pisco and Ica. That thought however hasn't prevented the pain and fatigue brought on by this sudden laborious shock to my system feeling very satisfying indeed.

More pictures at Picasa.

An introduction to microfinance

Whilst Comunion Peru's excellent work to help earthquake victims continues, I unfortunately don't have any major successes to report. At last count we had opened eight communal kitchens in the areas around Chincha, Pisco and Ica. I'll be heading back down to Chincha this weekend with Movimiento de Vida Cristiana to pack boxes of food, clothes and so on and to distribute them. This organisation has also been doing sterling work, including organising a concert on Saturday by a major international classical pianist (who I'd never heard of; more a comment on my knowledge of classical music than his level of fame I suspect) all receipts from which will go to their earthquake fund.

I'd like to say thank you to those who have either donated money to Comunion Peru's efforts or are engaging in efforts to fundraise on our behalf. It is truly appreciated and I can assure you every penny goes to relieve suffering and help people who need it.

I'm posting a video produced by Five Talents and starring the UK Director Tom Sanderson (oddly flirting with a South African accent during the radio interview) and Charles Eve, a Five Talents Trustee and Co-head of EMEA Compliance at Goldman Sachs. It was the latter of these two gentlemen who started the ball rolling towards my eventual employment with Five Talents and secondment to ECLOF Peru.

This blog is supposed to be geared towards explaining the ins and outs of microfinance, but for good reason has been diverted to discussion of the earthquake. In anticipation of my first post on microfinance, provisionally entitled Microfinance 101, this video is a good introduction to the topic and although filmed in Uganda the realities, views and ideas observable and expressed therein give a good feel for the issues I will raise later.

Give me the map

Since Peru does not yet appear on Google maps and since I'm sure most people's knowledge of Peruvian cities and towns doesn't extend much beyond Lima, Cuzco, Arequipa and Iquitos at best (mine didn't extend at all past knowing that Lima was the capital until March this year), I'm attaching a map of the region I've been talking about to give some geographical context. Pueblo Nuevo (near Chincha Alta) and San Juan Bautista (near Ica) are the two areas I've been working in, both circled.

This map was drawn up by the Instituto Geofisico del Peru and interestingly shows where the epicentre of the original earthquake and subsequent tremors were located. It's clear from the map why Pisco and surrounds were the towns worst affected by the earthquake, suffering the lion's share of the fatalities and structural damage. It was in Pisco that the church collapsed during mass, killing 148 people, more than a quarter of the total number of deaths reported so far for all of Peru following the earthquake.

Please click on the map for a larger view.

The suffering doesn't let up

Last week I was working with a third NGO called Comunion Peru (in case you missed the first two, please see blog entry of 10th August), started by the Anglican Bishop of Peru, William Godfrey. Comunion Peru has set up eight kitchens (so far) in the regions of Chincha, Pisco and Ica where the earthquake had its most devastating effect. My main goal has been to raise funds to keep these kitchens, and the additional ones we plan to open, supplied with food to keep them running and to keep the citizens of the surrounding communities fed.

The situation the people of San Juan Bautista, where I was on Friday night delivering storage sheds to three of our kitchens, and Pueblo Nuevo, where I was last weekend, find themselves in is desperate. When your house collapses, you don't just lose a place to live, a safe place to sleep, a place to congregate, a place to cook, a place to wash, a place to be. You lose most of your possessions. They get buried, crushed, smashed or just lost. The money you make which in normal times goes primarily to feed and clothe the family, to pay the lighting and water bills and in miniscule amounts, if there's any left over, to a little home improvement, suddenly is required to pay for new everythings. Plates, glasses, forks, knives, spoons, cups, beds, blankets, clothes, lights. There's no insurance policy. Even if you could afford it, who's going to provide contents insurance against an earthquake for houses built of mud brick lying near a major fault line, or if you could find that person, how could you afford the necessarily stratospheric premiums?

The kitchens which Comunion Peru (and others) have set up and are setting up provide a small amount of relief to people from the overwhelming challenges they now face, one less thing they need to worry about. All are looking to their government for help. And millions of dollars have already been earmarked for reconstruction by President Alan Garcia. When this will begin however is anyone's guess and in the interim, life must go on. The only visible contribution the government is making to this end thus far is to demolish the structurally unsafe houses and cart away the remains. In San Juan Bautista that duty falls to one man with a loader for what must be heading for 200 houses to be cleared (related article from El Comercio).

In the mean time, people are sleeping in tents or temporary straw shelters, visible in at least one of the photographs I took. On Friday night I passed the night in a tent in San Juan Bautista's main square, fully clothed all the way to my jacket in a sleeping bag and I barely slept from the intense cold. I'll admit that I couldn't wait to get home to a warm shower and my bed. One of the ladies we spoke to last week, when we were conducting the census in Pueblo Nuevo, told us that the worst part about the nights was not the dark from lack of electricity, nor the cold, nor the uncomfortable sleeping conditions, but the screaming of children. Screaming out of fear of further tremors. Screaming out of suffering from the cold.