Grameen Carso: Reviewing One Year of Operations in Mexico

Grameen Carso: Reviewing One Year of Operations in Mexico
by Matthew Borden September 2010
Table of Contents
I. II. Methodology ..................................................................................................... 8 Research Framework .................................................................................... 8 Field Methods ................................................................................................... 10 Data Sets ............................................................................................................. 12 Form No. 1s ........................................................................................ 12 Liquidations ....................................................................................... 12 Income .................................................................................................. 13 III. Process ................................................................................................................ 16 Grameen Carsos Establishment .............................................................. 16 Contract ................................................................................................ 17 Bylaws ................................................................................................... 19 Compared to Grameen Bank ....................................................... 19 A Day at the Branch Level ........................................................................... 20 New Borrower Initiation ............................................................................. 24 IV. V. The Typical Borrower ................................................................................... 29 Measuring Impact .......................................................................................... 38 Program Growth ............................................................................................. 38 Repayment Rate .............................................................................................. 39 Dropout Rate .................................................................................................... 41 Dropout Profile ............................................................................................... 42 Change in Annual Household Income ................................................... 45 Poverty Rate ...................................................................................................... 47 Introduction ...................................................................................................... 4 Context ................................................................................................................. 4 Research Plan ................................................................................................... 6 Objectives ........................................................................................................... 7
VI.
VII. 2
Conclusions and Suggestions ................................................................... 51 Review of the Study ....................................................................................... 51 Policy Suggestions .......................................................................................... 54 Research Suggestions ................................................................................... 57 References .......................................................................................................... 59
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Acronyms
Form. No. 1 Form. No. 2 Form. No. 3 Form. No. 4 Form. No. 5 Form. No. 6 Form. No. 7 Form. No. 8 Form. No. 9 Basic Loan Application and Contract Loan Applications and Proposals Loan Approvals Loan Proposal Approval Application Loan Document Collection Sheet Debit Voucher Credit Voucher Transfer Voucher
AHHI Annual Household Income AIHM Annual Income per Household Member BOM Build Operate Manage BOO Build Operate Own BOT Build Operate Transfer DIHHM Daily Income per Household Member DIP Direct Implementation Project GB Grameen Bank GC Grameen Carso GDP Gross Domestic Product GF Grameen Foundation GT Grameen Trust IMF International Monetary Fund JCP Joint Collaboration Project MF Microfinance MFI Microfinance Institution MSS Monthly Statistical Statements NGO Nongovernmental Institution PRONASOL Programa Nacional de Solidaridad (National Solidarity Program) UN United Nations
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I. Introduction
As my supervisor in Oaxaca has told me time and again: there is no magic in microfinance, only strategy appear with a puff of smoke on a random day but rather the circumstances that led to its creation can
and hard work. Appropriately, the credit lending organization we know as Grameen Carso did not simply be traced around the globe through years and even decades. This specific microfinance institution (MFI) is endowed with a double heritage reflected in its name. The Grameen Bank is known as the pioneering nongovernmental institution (NGO) dedicated to contemporary small-scale credit lending for the poor in
developing nations. The Carlos Slim Foundation is one of the many conglomerate legacies produced by the wealthiest tycoon the world has seen. Behind the two organizations lie two very powerful men, Professor to Grameen Carso. This brief introduction will highlight the most vital circumstances that combined have led to the formation of Grameen Carso (GC) as it exists today. History, politics, as well as celebrity have near equal shares in having shaped GC from a list of policies into a living operation. Mohammed Yunus and Carlos Slim Hel. These two men are but a part, albeit a critical part, of the preface
Context
to class. As the famine of 1974 continued to claim lives, beggars were a common sight on the steps of the university, this in spite of the expanses of cultivable land surrounding the university lying
Bangladesh, 1976. The man now known as the
father of microcredit, Mohammed Yunus, returned from an extended stay in the United States where he studied for his doctorate in economics at Vanderbilt University with the aid of a Fulbright Scholarship. His experience in academia, Yunus returned to Chittagong accepting a tenure offer in the economics department at Chittagong University. As the now famous tale goes, the
fallow (Yunus 1999: 34). The disparity between the starvation outside drove Yunus to action. He began experimenting with extending small loans to the
elegant theories he taught in class and the reality of
working poor in the nearby town of Jobra, using his own funds for expenses. He claims the only factor keeping generations of poor families from breaking the cycle of poverty is the lack of a formal financial
professor was disillusioned one day on his way 4
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structure that caters to the credit needs of the poor (Yunus 1999: 50). With the enlistment of other key personalities such as Professor Latifee also of the Bangladesh Krishi Bank (BKB), A. M. A.
Silva Herzog requested a 90-day moratorium in this, most commercial banks halted or severely
1982 to renegotiate payment periods. Following decreased investment in Latin America. The IMF extended to pay off existing loans. As a result of
of Chittagong University, Mr. A. M. Anisuzzaman Muhith, Finance Minister of the new Bangladesh
intervened setting strict conditions on new loans new import restrictions and the pesos falling value relative to the dollar, economic growth stagnated, unemployment rose to new highs, and inflation reduced middle-class purchasing power (Garca economy started to plummet.
government, and Mr. Syeduzzaman, the ministers Bank with a vision and growing capacity that has stretched far beyond its origin in Bangladesh.
secretary, Yunus launched the anti-bank Grameen
Mexico City, 1982. Finance Minister Jess Silva be able to pay its debts. Supported by a then
Bernal, Manuela Cristina 1991:572). The Mexican
Herzog announced that Mexico would no longer soaring national economy, Mexico, along with other growing Latin American countries like Argentina and Brazil, took out massive debts in the 1960s and 1970s to finance investment in infrastructure. Between 1975 and 1982 Latin at a cumulative annual rate of 20.4% (ILAS
Domestic immigration to Mexico City and
international immigration out of Mexico to the rates. Poverty rates surged and the Mexican
United States began increasing at extraordinary economy failed again with the 1994 crisis. By
America increased its debt to commercial banks 1986:69). By 1983 Latin America had quadrupled its collective debt from US $75 billion to over US $315 billion, roughly 50% of the regions GDP (ILAS 1986:69). Various factors contributed to
2004 Latin American and Caribbean debt reached a record US $2.94 trillion (The World Factbook, 2006). It is established that poverty levels in
Mexico were trending downward in the 1960s and 1970s but turned for a sudden increase following estimated that the poverty rate declined from the 1982 crisis. As quoted by Advameg, PRONASOL 76% in 1960 to 54% in 1977 and 45% in 1981. In
Mexicos crisis including: the world recession of the 1970s and 1980s, spiraling oil prices, and rising interest rates in the United States and Europe. Matthew Borden
1988 the poverty rate was estimated at up to 60%
(Advameg 2010). A 2009 World Bank study quotes 5
50% of the Mexican population living below the and 75% of those living in rural regions (World effective poverty reducing programs in Mexico, especially in rural regions.
poverty line with 20% living in extreme poverty Bank 2009). This emphasizes the great need for
Arriving at the city of Oaxaca in mid July, the air
was rich with the festive sights and sounds of the year, the bicentennial anniversary of Mexicos
annual Guelaguetza festival. 2010 being an election independence, and the centennial anniversary of the Mexican Revolution made for an especially significant social and political atmosphere. For
City of Oaxaca, July 3, 2009. Grameen Carso
disbursed its first set of loans, initiating the five The locally based microlending NGO is a joint
the first time in over 80 years the governor-elect, Gabino Cu Monteagudo, was a liberal candidate opposite the unpopular sitting governor, Ulises
year implementation period of the Mexico program. venture between Grameen Trust (GT) and the
Ruiz Ortiz, of the Institutional Revolutionary Party. Daily political protests resulting in the partial or complete obstruction of central traffic arteries were a regular part of daily life. Many Oaxacans poised reform at the announcement of Cus win. in anticipation of sweeping political and economic
Carlos Slim Foundation. With the Slim Foundation
providing the financial backing, GT is managing GC deliver the same Grameen-style credit GB delivers in Bangladesh. According to the Carlos Slim
as one of its many replication programs designed to
Foundation web site, GC counts the following as its access in Mexico, (2) to focus on the poorest of
objectives: (1) to significantly increase microcredit Mexicans, (3) to increase quality of life and income, (4) to use the GB model including collateral-free loans, (5) to reach 100,000 loans by the end of five years. Grameen Carso has now completed its first year of operations in Mexico.
My three months with Grameen Carso coincided with the organizations largest expansion effort thus far. I had the good fortune of arriving at the various parts of Oaxaca state and Mexico City. course together with the new employees, I
same time newly contracted trainees arrived from Offered to take a two week managerial training jumped at the chance to build rapport and glance at the insiders perspective. The first two weeks of research were used absorbing in detail the
Research Plan
presented and performed definitions (Baumann 6 Grameen Carso: Reviewing One Year of Operations in Mexico Matthew Borden
and Briggs 1990) of proper managerial behavior. I used the third week to organize, design, and plan the remainder of my research. Each of weeks four
in the context of social science, time spent in the field observing and participating is never time wasted. For reasons that will be elaborated in
through six were used to collect data at the Oaxaca, Huajuapan, and Miahuatlan branches, respectively. of the data while week eight was designated as the week of writing. As research plans rarely endure untouched, this
following sections, the time allotted to collecting certain data was insufficient. Though the project necessary data was eventually collected.
Week seven was reserved for analysis and synthesis trailed past the original two month plan, all
Objectives
The study counts the following as its three primary objectives:
study is no exception. Official intern duties such as interpreting, translating texts, and photographing events nudged a few self-set deadlines back, though
Objectives
1.
Process: To understand how the Grameen model has been translated into Grameen Carso in Mexico Effects of The Invisible Forces: Logistics, Social Factors, Causality, Hierarchy and Power Grameen Carsos Establishment Daily Activity at the Branch Level New Borrower Initiation Typical Borrower: To understand which groups of Oaxacas poor GC reaches What types of borrowers GC serves Impact: To understand if and how GCs financial services improve borrowers capacity to achieve financial stability and maintain economic growth. Program Growth Repayment Rate Dropout Rate Dropout Profile AHHI Poverty Rate Grameen Carso: Reviewing One Year of Operations in Mexico 7
2. 3.
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II. Methodology
Research Framework
This paper emerged as something of a cartographic exploration into the emerging financialized, rural world that Grameen Carso is swiftly giving form to. This preliminary research is not meant to be understood as an exhaustive impact assessment but rather as a step toward understanding how ideas and plans have been made manifest into a particular and unique poverty fighting campaign complete with its scholars and the latest analyses within the development, microfinance, and anthropology fields. This study seeks to both describe and analyze some of the many ways GC has impacted its own proposals, problems, and outcomes. That saidclose attention has been paid to some of the leading use to measure only the effect of actually taking a
borrowers in Oaxaca within the framework of the household economic portfolio (Chen and Dun social change on real households. Some studies These studies include measures of participants who were offered, but for whatever reason 1996) referring to financial, physical, human, and report the Intention to Treat Effect of a program.
loan (Odell 2010:16). Because only real borrowers data are analyzed, such studies measure the actual effect of the treatment on borrowers. Lastly, some studies investigate the effect of a program on
income after a designated period of time using the Difference in Difference methodology. This works by including counterfactual data by identifying a the difference in change of income that each
declined, a loan (Odell 2010:16). Such studies are best understood to describe the effect a program has on a whole community rather than just borrowers. The Treatment on the Treated Effect
treatment group, a control group, and comparing group has experienced over the same period of
time (Odell 2010:16). The idea is that a successful program will produce a treatment group with a comparatively greater increase (or at least a lesser
is a more precise methodology that researchers 8
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decrease) in income than that of the control group. This study uses both the Treatment on the Treated Effect and Difference in Difference methodologies for measuring quantitative change.
participants, and all too often impact assessments can resemble the heavily layered, overly drafted, anonymous documents that fail to address objectives meaningfully. David Hulme, Professor of Development Studies at the University of Manchester, states in his paper, Impact Assessment Methodologies for Microfinance: A Review, that assessed with more care: the use of quantitative methodologies should be the scientific method fails as: it ignores the complexity, diversity and contingency of winning a livelihood; it reduces causality to simple unidirectional chains, rather than complex webs; it measures the irrelevant or pretends to measure the immeasurable; and it empowers professionals, policy makers and elites, thus reinforcing the status quo and directly retarding the achievement of program goals. Theorists do not agree that ultimately there is one objective reality that must be understood. Rather, there are multiple realities and before any analysis or action is taken the individuals concerned must ask themselves, whose reality counts?. The answer must be that the perceived reality of the poor must take pride of place. (Hulme 1997:16) Although Hulme writes from a highly theoretical perspective to advocate against the use of
While development researchers often use
quantitative methodologies to precisely quantify
the degree to which certain phenomenon may exist quantitative methodologies alone are not enough to grasp the complexities of social forces such as: logistics, social factors, causality, and the play of
(e.g. poverty, consumption, programmatic success),
hierarchy and power. Ethnography and qualitative methods, to some extent, should be employed in immeasurable social forces hold in influencing the quantified data collected to scientifically represent the program. As the anthropologist impact assessment to better comprehend the effect
Annelise Riles states in her article, Infinity Within the Brackets, context and social history crucial in the way UN professionals draft resolutions. The heavily layered, many times drafted, for understanding social phenomena are erased
quantitative methods, his observations hold value even for the applied researcher. Firstly, causality is rarely addressed in quantitative research. Secondly, quantitative research empowers a
anonymous groupthink produced documents
lose themselves in prioritizing form over meaning (Riles 1998:382). Context and social history are crucial for understanding the realities of poverty
certain group of people (the elite) and privileges a certain reality (that of the elite). Lastly, such empowerment reinforces the status quo, risking 9
and the GC experience from the perspective of the Matthew Borden
the achievement of program goals. In order to
more fully comprehend the phenomena analyzed GCs establishment, daily activities at the branch in Section III.
GC participants ideas, thoughts, and actions.
in Section V, I give a brief ethnographic account of level, and the initiation process for new borrowers
Hegemony ascribes the dominance of powerful groups in society as predominance obtained by consensus rather than force of one class or
group over the other classes (Femia 1975:31). understands cultural change, the core of the cultural lies in publicly developed symbolic
As the post-Marxist approach in anthropology
This study makes use of Pierre Bourdieus Practice Theory. The esteemed sociologist explains that social structure is comprised of habitus, field, and capital. (Bourdieu 1996:148). When the
productions (Keesing 1994:308). Thusly, the
group that creates and maintains relevant and
field presents a problem, an individual, being a
dominant cultural meaning, maintains hierarchical power. Since GC establishes the rules, regulations, and procedures for operating the microcredit
rational actor, chooses their actions, or reactions, to maintain their habitus using whatever capital (financial, social, cultural) is available to them. By doing so, an actor rationalizes their actions Situation. This Practical Intelligibility governs
program, its investors, officers, and employees are understood to represent the dominant group.
on the grounds of the Forthcoming Reality of the how the individual makes decisions when faced with a difficult situation. Practical intelligibility is essentially, what it makes sense to someone to do. It governs actions because people more to do (Schatzki 1987:120). Section III uses or less always do what it makes sense to them practice theory to explain why some borrowers use of Gramscis concept of Hegemony to argue
Field Methods
The research for this study was conducted
throughout the state of Oaxaca including the
following six branch sites: Oaxaca, Huajuapan, of the state of Puebla, see Figure No. 1. While varying in population size, all of these cities
Miahuatlan, Etla, Tlacolula, as well as Tehuacan
do not pay installments as expected. I also make that there is a hierarchy of power used to shape 10
include densely populated regions, many slums,
small-scale industry and some rural or semi-urban settlements. The research was designed to include both quantitative and qualitative methods. The
Matthew Borden
quantitative data were collected exclusively from the Oaxaca, Huajuapan, and Miahuatlan branch areas. Origin of the ethnographic data extends into the remaining branch sites. The research used Observation, Observation-Participation,
two principal strategies employed for gaining
acceptance as a GC affiliate with both GC workers and borrowers. Undergoing manager training, in extra-official social events, and memorizing the: 10 Decisions, Members Responsibilities, Chairpersons Responsibilities, Secretarys reciting the motto at official meetings, participating
Statistical Analysis, Focus Group Discussions, and In-Depth Interviews to discern trends, patterns, and recurring themes and issues.
Responsibilities, and Conditions to Form a Group marked me as a person at least significantly borrowers fully accepted me as an official initiated as an insider with GC workers. Generally, representative of GC. Such acts of acceptance sources, especially the ethnographic data.
As previously stated, diverse methods were
employed in collecting data for this study. Here I will specify how I used each method to attain certain data and how that data is used in later
sections for description and analysis. Observation and Observation-Participation are perhaps the Figure No. 1:
proved vital to this study in gaining access to key
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11
Data Sets
Perhaps the most time consuming research activity, Statistical Analysis also provided some of the most valuable data. I have organized the data used for Statistical Analysis into three sets that I call: First Time Borrowers (FTB), Liquidations, and
about indices (i.e. what percentage of borrowers graduated high school) missing data is taken into account and denominators are adjusted
accordingly. It should also be noted that since GC is a growing phenomenon, the cumulative number of documented borrowers was just 3,387 at the time calculations for this study will consider all project activity through the end of August 2010 it should be noted that GC reached 3,842 active borrowers by the end of August. It is important to note that number of dependant children in household is
Income. For FTB I randomly sampled and compiled demographic data GC had already collected and archived prior to my arrival. Center managers elicit loan applicants these data on form No. 1. The six page form includes the following data:
of sampling (through the end of July 2010). Because
assigned credit number, center number, group number, given names and family names, gender, address, application date and date of approval, quantity solicited and quantity authorized, civil status, age, highest grade of education achieved, presence of a life partner, number of dependant children and adults in household, land ownership, home ownership, home construction, number of rooms, livestock owned, annual net household income, number of income earners in household (total, male, and female), number of family members currently borrowing from GC, other outstanding debts, and current occupation. In total I sampled 404 borrowers form No. 1s,
not a measure of fertility as many borrowers have autonomous adult children or children that have died. This metric is solely a measure of the number of dependant children (minors or adults) currently living in the same household as the borrower.
The second data set, Liquidations, is a sample of data also already collected and archived by GC workers, this time into the Branch Books. As defined by GC, a liquidated loan is any loan that has been paid off in whole. Through August 2010, all liquidated loans have been paid off either on data at all three branches at 100% in July for a time or early, never late. I sampled the liquidation database of 200 entries. This sample includes the following information: borrower name and client
transcribing the data from paper into an electronic time. It should be noted that not all of the 404
database, an unforeseen use of nearly three weeks Form No. 1s sampled were completed in their
entirety. For calculations specifying proportions 12
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number, date of disbursement, amount disbursed, transferred from interest upon liquidation. Again, since sampling was executed in July, it should be
date of liquidation, amount liquidated, and amount
effort to minimize selection bias, Form No. 1s used for building data sets were sampled at random. In conforming to the Difference in Difference
stated that the total number of liquidations reached 397 by the end of August. For reasons elaborated off their loans before the due date to drop out of in Section V, 40 cases of the 397 liquidations paid the program. Of these 40 dropout cases, 37 were included in the Liquidations sample. Of these 37 electronic database. This is to say demographic data describing dropout members is limited at only 7 coincided with collected FTB profiles in the
methodology, a control group had to be identified. I used family members of borrowers who liquidated their loans as the control group. Family members
made excellent candidates for comparison because, according to their Form No. 1s, they were eligible did not participate is because of a GC rule against groups. for the same loan. The only reason family members the inclusion of immediate family members in loan
this time. Section V will discuss in detail the ways of calculating the dropout rate, their significance for describing growth, as well as describing the dropout profile.
As Nathanael Goldberg describes in Measuring
the Impact of Microfinance (Goldberg 2005:15),
calculating change in income can be problematic. replying that AHHI simply either increases or
Applicants have been known to show a bias when decreases. Applicants believe such efforts increase in AHHI for this study, AHHI was calculated prethe initial AHHI figures sampled during the
The third data set, Income, is an extension of the (AHHI), which is pre-treatment, is the primary index of the data set, which also includes post-
first data set, FTB. Initial Annual Household Income
eligibility for future loans. To determine the change and post-treatment. Center managers calculated application process, see Section III. To calculate AHHI, center managers ask the applicant how much income each household earner grosses in figures and multiplies for 52 weeks in the year,
treatment AHHI measures of the same borrowers households. Because GC was already a running program before this research was designed, quasiexperimental methods were the only quantitative research options available, compare to Randomized
Controlled Trial methodology (Odell 2010:13). In an Matthew Borden
an average week. The manager then sums these
13
personally recording the sum onto the form. To quantify post-treatment AHHI, I interviewed borrowers who had completed their first loans,
were otherwise typical center meetings. I thank
the hosting center managers for accommodating
asking how much the household currently grosses calculation.
me during their rounds. After a brief introduction as a GC researcher I would ask the members for anything to do with GC. In-Depth Interviews with borrowers were rare, also given time constraints, opinions, questions, doubts, or complaints having
in an average week and using the same method for
In Income, AHHI, measured in Mexican pesos,
is spread across thirty M $5,000 brackets giving
but In-Depth Interviews with the project director, common.
shape to an income pyramid. Additionally, AHHI is
branch managers, and center managers were rather
divided by the number of household members for a measure of Annual Income per Household Member (AIHHM). This index, divided by 365, gives the Daily Income per Household Member (DIHHM) in 13.10 per 1 US dollar during the time of research. As such, DIHHM is divided by a factor of 13.10 for results in US dollars in order to compute the goes into greater detail on the quantification of poverty.
Other data used in the study include GC-produced Monthly Statistical Statements (MSS) that include the number of loans and amounts disbursed, data on the numbers of borrowers, groups, centers, repayment rates, and dropout rates. These MSSs are discussed in detail in Section V. I also make within the GC branch offices in the following sections. reference to the variety of forms and books used
Mexican Pesos. The Mexican Peso hovered around
poverty rate by the US dollar standard. Section V
In all, 284 clients spanning the three branch levels were interviewed in eleven group sessions lasting approximately one hour each. I reflect upon the
The true value of this study resides in when it
was conducted. Many experts agree that timemy well be necessary only in more significant increments of time. As Goldberg describes in
consuming and expensive impact assessments
data from these interviews in various segments of Focus Group Discussions took place during what 14
the following sections. These eleven unannounced
Measuring the Impact of Microfinance (Goldberg 2005:13), monitoring alone has its own value
Matthew Borden
though this should raise a red flag for conflict of interest. Potential conflicts of interest are mentioned regarding the calculation of the
its practical operation to GB. The section continues with an ethnographic account of the typical day at the branch level from the perspective of a center manager. It ends with a detailed account of how new borrowers are initiated into the program.
repayment rate and the dropout rate in Section in Women and Microcredit in Rural Bangladesh (Rahman 1999:3,81,136), bank workers in Bangladesh encounter intense institutional
V. As the anthropologist Aminur Rahman states
Section IV describes which groups of Oaxacas poor GC reaches, specifically what types of borrowers GC serves, in rich demographic detail. Section V
pressure simply to maintain growth. This pressure is made observable in Mexico as demand of workers time and attention to daily, weekly, and monthly tasks for regular upkeep at the center, branch, and program levels. Thusly, neither in-
describes and analyzes program growth with the
introduction of Monthly Statistical Statements. The rate, the dropout rate, and giving a brief account why some borrowers choose to drop out. Next with experimental and control groups used to
section continues by problematizing the repayment of the dropout borrower profile while addressing comes the essential measure of change in AHHI test household income pre-treatment and post-
depth program monitoring nor research on any until my arrival.
level had been an option or even a consideration
This aside, this study has its own merit in that it documents the earliest stages of adaptation and growth. The following sections will describe and the dynamic program that it is today. Section
treatment. The last segment addresses the issue of poverty by defining it and measuring it within the GC program.
analyze a few of the myriad ways GC has become III explains how the Grameen model has been certain social forces that greatly influence the
translated into GC in Mexico while addressing measured quantitative data reviewed in following
sections. Section III chronicles the establishment of
GC by reviewing its contract, bylaws and comparing Matthew Borden Grameen Carso: Reviewing One Year of Operations in Mexico 15
III. Process
The Grameen model is an ever-growing phenomenon that can be studied at a variety of levels from the macro to the micro. Conveniently enough for the researcher, Grameens activities are organized in such a way that gives scale to its geographic and hierarchical organization. Most of the data presented in this section is ethnographic in nature. This section will consider the effects that social forces such as: logistics, social factors, causality, and hierarchy and power have on shaping GC into a real, dynamic program. The level, and (3) the initiation of a new borrower. following segments will address the processes of: (1) GCs establishment, (2) daily activity at the branch two models for replicating programs in foreign
Grameen Carsos Establishment

Grameen Trust (GT) and Grameen Foundation (GF) are the two branches of the Grameen Family of as well as management and ownership (when Organizations charged with the implementation applicable) of replication microfinance programs states in Replication of Grameen Bank Financial System, is to help the poor capitalize on the
countries: Direct Implementation Projects (DIP) GT alone had started DIPs in 10 countries and
and Joint Collaboration Projects (JCP). As of 2008, formed partnerships with 143 other NGOs in 38 countries under its JCP model (Grameen Trust 2008).
outside of Bangladesh. The idea, as David Gibbons
From conception, Grameen Carso was designed specific models: Build Operate Manage (BOM), Own (BOO). BOM programs are essentially
as a DIP. Under the heading of DIP there are three Build Operate Transfer (BOT), and Build Operate replications of the GB model which remain under Bangladeshi management at the branch and
survival knowledge (Chambers 1983:82-1010) and skills (Yunus 1987) they already posses by bringing Grameen-style credit delivery to the poor (Gibbons 1994:5). Between GT and GF there exist 16
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project level indefinitely. Using the BOT model,
GT aims to deliver a more sustainable program by
Form No. 1 is a legally binding contract between Grameen Carso and its borrowers. In addition to the demographic data mentioned in previous sections, the six-page original source document and without tax), credit amount, credit term, details the following indices: interest rate (with installment amount, and identifying numbers. In the interest of brevity I will summarize the key themes of the 15 clauses as follows:
transferring management at the branch and project level to local actors once the program is sufficiently developed and operating stably under Bangladeshi implementation (Latifee 1999). Much like BOT programs, BOO programs transfer management to as well.
local actors. Whats more, they transfer ownership
GC was designed as a BOM project meaning that,
save any major changes in policy, foreign nationals will always manage GC. Because GC was started as a DIP there was no Dialogue Program in place and little research to draw from in making informed Mexico (Latifee 1997:2). With four experienced GB employees (including a project director with experience in implementing DIPs) and a decisions about starting a replication program in
Grameen Carso Form. No. 1, Contract Summary:
professional consultant arriving in the summer
of 2009, assessment began at a rapid pace. One of
the most burdensome issues has been negotiating While talks are still underway to accommodate GC and its unique approach to MF, federal law such example is the contract.
through Mexicos credit consumer protection laws.
significantly stifles some policy in practice. One
(1) Objective: that GC shall loan the borrower the amount stated. (2) Payments: that the borrower shall pay each installment on time, without variation. (3) Interest: that the borrower shall pay 30% interest annually. (4) Place of Payment and Account Status: that the borrower shall pay each installment at the location agreed upon with GC, that the borrower shall not be expected to make any payment until the loan has been disbursed. (5) Term: that the term shall be 12 months. (6) Endorsement Option: that should the borrower fail to repay principle installments, but pays interest, expenses, and other fees, the borrower may be eligible to extend this loan an additional 12 months beginning the day following the last day of this current loan. (7) Anticipated Expiration: GC may, for late payments, demand immediate payment of the remaining credit balance. Should for any reason the borrower fail to comply with obligations or should the borrower give false information in this contract, GC may demand immediate repayment in a single payment. (8) Insurance: GC shall contract a life insurance policy that will cover the remaining balance in case of death. (9) Concessions: GC may totally or partially cede the rights pronounced in this contract to anyone deemed appropriate. The borrower may not cede any right or obligation without express written consent. 17
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(10) Payment Realization, Methods, and Accreditation Dates: All payments realized under this contract shall be applied in the following order: first, default interest; second, regular interest; third, any other fee. Cash and check are acceptable methods of payment with stipulations. (11) Jurisdiction: For the interpretation of this contract, these paragraphs are subject to the law and courts of Mexico City, Federal District. The borrower renounces any other jurisdiction he or she is otherwise entitled to by his or her address. (12) Fees: Any fees incurred for modifying or cancelling this contract shall be paid by the borrower. (13) Address: For all legal matters concerning this contract, the address stipulated in this application is the borrowers true address. (14) Modification: Any modification to this contract shall only be recognized if authored and signed by GC and the borrower. No term or condition may be modified or renounced without express written consent. (15) Clarifications: To request a clarification or present a complaint, the borrower has 90 days to submit a written statement. GC shall respond within 45 days. To validate the contract the borrower is required to sign four times. The borrowers husband, father, or to sign in the center managers presence. Though regularly explain that the male family member other family member (preferably male) is required his role is never defined in the contract, managers serves as a guarantor in the case that a borrower cannot pay back her loan. The borrowers group chairperson and center chairperson must each sign the contract once. The center manager and branch manager each sign once. The project director is required to sign twice. All together, Form No. 1
total of 23 signatures are required before a single loan can be disbursed.
In his book, Banker to the Poor, Professor Yunus associates them with usurious rates (Yunus 1999:48). In his critique of contracts he goes on further to state that GB works on trust,
calls contracts oppressive (Yunus 1999:49) and
contrasting against commercial banks use of
meaningless paper contracts to tie their clients up in legal knots (Yunus 1999:70). Regarding guarantors, Yunus writes, he could end up a tyrant, he could end up treating that borrower as a slave Form No. 1 is a temporary solution until Mexican (Yunus 1999:55). It is noted officials maintain that legislators accommodate GC, but the questions is, continue? It is worth noting that in effect the
until when will the use of contracts and guarantors term, per the Mexican banking year, is 46 weeks Nowhere in the contract is there mention of
rather than the 52 weeks described in the contract. guarantors, loan groups, Social Business, or Joint
Liability regulations as practiced in the field due to provisions in Mexicos credit consumer protection laws. The absence of any mention of these themes creates a dichotomy of regulations: those which may result in legal repercussions and those which may not. In the context of Mexicos credit Matthew Borden
requires 11 signatures. Counting Forms No. 2-5, a 18
consumer protection laws, these themes absence securing payment.
call into question the suitability of GCs methods for
microcredit. Following the list I will compare GC on these fact and figures. Grameen Bank, Key Facts and Figures:
(1) Owned by the Poor (2) No Collateral, No Legal Instrument, No GroupGuarantee, No Joint Liability the bylaws. I summarize the ten page document as (3) 97% Women (4) 2,544 branches, 84,237 villages, 23,689 staff follows: (5) Over Tk 445 billion (US $7.97 million) disbursed (6) Recovery Rate is 97.94% Grameen Carso Bylaws Summary: (7) No Donor Money, No Loans (8) Earns Profit (1) Objectives: to provide credit facilities and loans (9) Low Interest Rates to landless, poor women in urban and rural areas to (10) Beggars as Members support income generating activities (11) Housing for the Poor (2) Rules for Group Formation (12) Micro-Enterprise Loans (3) Duties and Responsibilities of the Members (13) Scholarships (4) Loan Disbursement and Repayment Procedure (14) Education Loans (5) Joining an Incomplete Group (6) Leaving a Group (7) Expulsion (8) Compulsory Resignation GB is owned by the poor, specifically by each of its (9) Center Meetings (10) Interpreting the Rules member clients upon beginning their second loan. A second influential original source document is The bylaws appear to be a rather standard this sense, GCs clients are not dividends-earning owned by private investors, GT, another NGO, or co-operatives (Yunus 2004) GC borrowers hold
Like all other DIPs, GC is not owned by the poor. In members but mere clients, or borrowers. Whether
interpretation of those in place at GB in Bangladesh as described in Rahman 1999. That is to say that on paper, GCs operational procedures greatly resemble those of GB.
no stake in ownership. Addressing collateral, GC though the contract requires the signature of
To gain an idea of how GC stands in comparison using facts and figures pulled from Yunus 2009 publication, Grameen Bank at a Glance. Here I
does not require a material security to be pledged a borrowers husband or father as a guarantor. Rahman calls this form of guarantee Social
to GB in operation I will make a brief comparison
Without this signature, no loan may be disbursed. Collateral (Rahman 1999:73). I will discuss the
list some of the key facts and figures Yunus uses
to introduce GB; its concept and methodology for Matthew Borden
related issues of Joint Liability and Peer Pressure in 19
the following segments. Thus far, GC has recruited 100% women borrowers. As of the end of August 2010, GC has opened six branches in six cities which include nearly 100 neighborhoods. GC Recovery Rate is 100%. While Yunus claims
A Day at the Branch Level

At the branch level, GC has a daily, weekly, and monthly schedule with routine tasks fulfilled by all levels of workers. I will here describe the of the social forces that, while they cannot be
has disbursed M $12,692,000 (US $976,307.69). that GB is financially self-reliant, some studies stating that up to 25% of funding comes from
(Chowdhury et al. 2002:17) dispute this claim, international donors. Unlike GB, and like many
typical day at the branch level to illustrate some easily quantified, should accompany any scientific study claiming to explain how policy is translated into practice. I chose the perspective of a center manager because he or she interacts with the
other replication programs, start up capital for GC and US $40 million in loans at 10% interest, both by his own Inbursa Bank (Microcapital Team 2009). GC is not earning a profit yet, though
is wholly subsidized with a US $5 million donation guaranteed by Carlos Slim, the loan administered
broadest range of actors from the project director down to individual borrowers. Close attention factors, causality, and hierarchy and power. was paid to phenomena related to: logistics, social
losses are expected during the initial five years of implementation in any replication program. Annual interest rate is 30% compared to 20%
Here is a typical center manager, a composite of branches. The circumstances I detail are typical than 50 trips to the field at the center level. Name: Francisco. Age: 27.
in Bangladesh; this increase corresponds to the replication programs, there will be no Beggars Education Loans, or Housing Loans. Micro-
the 15 currently employed in GCs six operational occurrences that I have witnessed during in more
higher cost of operations in Mexico. Also, like all Program, nor will there be a Scholarship Program, Enterprise Loans, however, typically generate a greater profit, and more quickly, than the Basic Enterprise Loan within 2010. 20 Loans. Plans are in place to implement the Micro-
Monthly salary: M $5,000 (US $384.62), including state administered health care. 6:30 a.m. breakfast.
Francisco wakes up, washes, and eats
Matthew Borden
7:15 a.m. He collects his documents and takes the bus to the project office where he starts the motorcycle that GC has lent him for work.
7:50 a.m. Francisco arrives 10 minutes early to the first of three loan centers which he will visit today to collect monthly installments.
for a deposit. He then reviews his collection sheets, entering the days data first into Forms No. 7 and 8 then into the General Ledger and the Bank Book. He eats his lunch while he works.
8:10 a.m. About 20 borrowers have sauntered in chatting as they sign the attendance book. Francisco asks the center chairperson to initiate the meeting, 10 minutes behind schedule, by reciting the motto: discipline, unity, courage, and hard work in all walks of our lives. The center manager then asks for payment books with installments. The borrowers send them up, one group at a time. 8:50 a.m. Francisco asks the chairperson to close the meeting. In all, four of the thirty borrowers did not show up, only two had called ahead for permission. Group members pay the missing borrowers installments without complication. Francisco drives five kilometers on his loaned motorcycle to the second loan center.
2:00 p.m. Tending to the new manager trainees, Francisco gives a lecture about the GC system, its forms, policies, and procedures. 4:30 p.m. Francisco is running late for the new group training though there is still more paperwork about other new loan centers (Forms No. 2-4) to complete. 5:00 p.m. Francisco arrives 30 minutes late for the first new loan centers second day of training. He arrived two days ago to give a general introductory talk in the neighborhood, 15 women agreed to apply. Today, two would-be applicants are missing and one is ineligible to join the center because she is directly related to someone in all three groups. Francisco solicits loan applicants for information as he hurriedly records their answers on Form No. 1. One by one he finishes recording information by hand, he spent over 30 minutes longer than anticipated completing this task. He receives a call from the second new loan center on his cell phone asking when he will arrive.
9:10 a.m. Francisco arrives at his second loan center ten minutes late. A total of 18 borrowers out of 30 materialize by 9:30, only 4 of the 12 missing borrowers had permission to miss the meeting though all sent their installments with the attending borrowers. Francisco finishes collections by 9:45.
10:30 a.m. A political protest results in a blockade in downtown Oaxaca. City buses taken hostage by striking union teachers obstruct all traffic arteries. Francisco arrives at his third center 30 minutes late to find 29 borrowers waiting impatiently. The meeting is initiated and collections begin. The last group, missing a single borrower, refuses to pay the missing borrowers installment protesting that they are responsible borrowers with no association to the missing borrowers repeated absences. 11:15 a.m. Francisco pleads that the group pay the missing borrowers installment telling them that they should have been wiser in choosing partners. He will not allow anyone in the center to leave until the installment is paid. He finally leaves once all 29 present borrowers contribute US $0.33 each to complete the missing installment.
7:00 p.m. Francisco arrives an hour late to the second new loan center. He spends an hour reviewing the: 10 Decisions, Members Responsibilities, Chairpersons Responsibilities, Secretarys Responsibilities, and Conditions to Form a Group. He spends some time addressing the reasoning behind the rules and helping the applicants commit all the rules to memory. Tomorrow the project director and branch manager will be arriving to test the applicants knowledge before approving them for loans. 8:15 p.m. Francisco arrives at the project office to leave the motorcycle. He takes a bus home, eats dinner, and rests for tomorrow. Franciscos entire day is strictly scheduled to allow for maximum productivity. His day may even be overscheduled; he regularly works on Saturdays
12:30 p.m. Francisco returns to the branch office to count and organize the cash collected, preparing Matthew Borden
and often stays late to finish work that for whatever 21
reason was not completed during the day (the
work day officially ends at 5:00 p.m. and he is not compensated for extra hours). Franciscos time and attention are under constant demand to fulfill and growth at the branch and center levels Figure No. 2:
manager training, and new borrower training. Here I include Figure No. 2, an adaptation of Rahmans diagram from Women and Microcredit in Rural Bangladesh (Rahman 1999:5).
regular daily tasks related to program maintenance including: installment collection, data entry, new
The project director pressures each branch
manager for signs of growth: new borrowers, new
22
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groups, and new loan centers. He compares growth patterns at different branches and describes the fastest growing branch as the most successful.
four times in one term. However, when a borrower goes missing without leaving her installment, she Francisco, her entire loan center with the liability of her installment. leaves her group, and, as seen in the example with
Successful branch managers are considered first for promotion and raises. Each branch manager, within their branch, applies pressure on each first and foremost interested in measurable growth center manager to open between two to three
The project director and branch managers instruct the center managers to never leave a center meeting, under any circumstances, until every
new loan centers of 15 to 20 borrowers each per first for promotion and raises. With the priority
week. Successful center managers are considered on efficiency and speed, an inadequate amount of
peso is accounted for. The center manager relays this policy to his borrowers, claiming protocol. He is essentially the middleman, transferring the hierarchical institutional pressure off of him and onto his groups. In turn this pressure is relayed
time is spent selecting appropriate applicants and attendance at Franciscos second center meeting and the protest during his third center meeting.
forming effective groups as illustrated by the poor
onto each borrower within a group. When a single borrower goes missing, per protocol, the manager informs the present group members that they are required to pay the installment even though in the previous segment. While there may be no legal repercussions, borrowers know that if a single group member should default, the whole group becomes ineligible to receive additional loans. As Chowdhury et al. claim in The Impact
When a borrower has missed at least four meetings without permission, the center manager will ask the borrower to liquidate her loan immediately, per Clause No. 7 of the contract, in a preemptive move to avoid the possibility of default. Dropout rate is discussed in further detail in Section V.
they are not obliged to do so by law as mentioned
Attendance is a very real issue. More often than not, at least one borrower out of the 25 to 30 in a center will be missing from any given weekly loan center meeting, though, the missing borrower will more
of Micro-Credit on Poverty, each member of the repayment of loans (Chowdhury et al. 2002:7).
group is responsible and liable for other members Thusly, the design of Social Business requires the 23
likely be absent with permission, permissible up to Matthew Borden
center manager to enforce Joint Liability policies at any cost to secure the missing installment. In effect, this is the practice of Joint Liability lending (Chowdhury et al. 2002:7), (Rahman 1999:148). Pressure to conform travels not only from
conflict amongst borrowers in a group, between the branch manager and center manager, and if severe enough, between the project director and branch manager. At the loan center, such conflicts result
in degrading attendance. At the branch level, poor
superordinate to subordinate but also laterally. Given the example of the missing borrower in missing installment does not end on that day Franciscos third center meeting, the issue of the because the five borrowers in a group will continue to make payments until the end of their terms. In subsequent contact between well performing and The well performing cite a lack of discipline for poor attendance and the irregulars cite a lack of unity. To avoid paying the added burden of
attendance results in higher dropout rates. Dropout rates inform promotion decisions made to advance program growth and success.
New Borrower Initiation

The last segment was a glimpse at the daily activity at the branch level from the perspective of a center manager. In this segment I will describe the loan initiation process from the first talk to the second loan. This time I will consider the various
irregular borrowers, conflict arises over principles.
the irregular borrowers installment again, the well performing borrowers use Peer Pressure in an attempt to force the irregular borrower
perspectives of all actors involved. My objective is,
again, to consider the effects that social forces such as: logistics, social factors, causality, and hierarchy and power have on this process. Following the description, I will describe how GCs initiation policies shape the typical borrower profile. effected growth patterns at GC thus far.
to conform to regulations (Rahman 1999:118).
Irregulars miss meetings out of necessity, doing
so to resolve the Forthcoming Reality (Bourdieu 1996, 1990) of their current situation. Common non-emergency reasons for missing meetings aid program meetings, insufficient funds, and
Additionally, I will explain how these policies have
include: paid employment, home duties, conflicting kin pressure. Such provocations often result in 24
For the most part, the initiation process does
not resemble the instructions in the document:
Training Schedule of 7 Days Continuous Training Matthew Borden
For a New Group. See summary below.
Training Schedule of 7 Days Continuous Training For a New Group Summary:
First Day: Introduction What is microcredit? Why microcredit? Origins Potential benefits for local women Rules and regulations of group formation Responsibilities of members, group chairpersons, and secretaries
Seventh Day: Review and pre-test knowledge of 10 Decisions Call branch manager when satisfied with applicants performance to begin final examination In practice, the center manager arrives at a new neighborhood on the first day to give a general informational talk describing the concept, benefits, process, and rules and regulations of starting a Basic Loan with GC. For the following five days
Second Day: Exchange opinion about yesterdays training Discuss procedures of loan proposal Approval and disbursement system of loan Repayment system, service charge, and other accounting Third Day: Exchange opinion about yesterdays training Discuss procedures of loan proposal Approval and disbursement system of loan Repayment system, service charge, and other accounting Fourth Day: Exchange opinion about yesterdays training Take care of loan, savings, service charge, and motto Selection of group chairperson and secretary Fill out Form No. 1 Fifth Day: Exchange opinion about yesterdays training Discuss procedures for leaving groups Test knowledge of 10 Decisions, Discuss functions of loan center and responsibilities of center chief Sixth Day: Review Training Fill out Form No. 1 at every household Center managers will personally solicit and record information onto Form No. 1
the center manager will return at the end of his 10 Decisions, Members Responsibilities,
or her work day to help the applicants memorize: Chairpersons Responsibilities, Secretarys
Responsibilities, and Conditions to Form a Group. The philosophy behind the rules is likely lost on the applicants as the center manager hurriedly struggles to help the applicants commit the
rules to memory. At some point within the first personally filling out Form No. 1 at a meeting
three days, the manager supports applicants by (as opposed to at each applicants house per the applicants house by appointment on the sixth
document). The manager does, however, visit each day to verify address and socioeconomic status. the relevant data (demographic data, proposed new centers Form No. 1s onto Forms No. 2-4.
During the week of training the manager copies loan amount, proposed business plan) from the
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25
Figure No. 3:
26
Matthew Borden
These forms are passed upward to the branch
manager and project director for consideration.
liquidates, her group members are expected to fill her vacancy within three months. At week 46 the loan is considered matured, borrowers often apply second-time applicants are approved while others are declined for a second loan. Some groups face vacancies when first-time borrowers choose not to take out new loans. The remaining borrowers vacancies.
Some applicants are approved for their first loan
while others are declined. See Figure No. 3. Many
times, those approved are not approved for the full amount requested. As the document describes, the application period ends with the final examination is present to witness and sign off at each new centers approval.
for a second loan though some choose not to. Some
of all applicants offered a loan. The project director
in these groups are given three months to fill these
Following the approval, loans are disbursed at the branch office. Generally disbursements are held sitting in rows according to group membership. on Fridays. The new centers arrive at 12:00 p.m., The project director addresses the center with an inspirational speech while reminding the group that they are committing to a moral obligation. One group at a time, the borrowers are called into the branch managers office for the disbursement of the loans. Borrowers are advised to invest their loans immediately. Borrowers begin paying installments
The initiation process is a precise and intentional mechanism designed to extend admittance only to the most desirable loan applicants, those who interest. My supervisor once told me that GC is
will most likely succeed in paying installments and not targeting the poorest of the poor because the point by holding an informal poll at a loan center
poorest cannot make the payments. He proved his following their final examination. He asked the 30
women to raise their hands if they had eaten meat
in two weeks. The one year term matures 48 weeks after disbursement. Between weeks 0 and 46 most borrowers make regular weekly payments. Some liquidate their loans at the request of the center manager before week 46. When a borrower Matthew Borden 9.31%, however, become irregular and eventually
at least once in the past week. All 30 women raised their hands. He asked the women to continue with their hands raised if they had eaten meat more than once in the last week. Nearly all 30 womens
hands remained raised. Three times, and about half of the crowd dropped their hands. Four times, and only two remained. He then asked what meat each 27
woman ate. Nearly all 30 had eaten chicken in the last week. Fewer than half had also eaten either pork, lamb, or beef. I have replicated this poll test
with strikingly similar results at over 15 different measure of poverty rate, many of GCs borrowers thresholds, even if by only marginal measures. for are civil status and housing status. In the
center locations. As is verified in Section V with the (and their households) are living outside of poverty Other factors that branch managers actively look eyes of GC managers, boyfriends are dangerously to retain their single status until they repay their loans in full. Married women are given some preference because stability and a guarantor are desirable. Managers aim to fill centers with a majority of homeowners because renters are seen as potential flight risks. As illustrated by Figure No. 3, GC leaves no room to chance. The initiation process is an almost airtight system of policy and procedure that ensures a continuously growing branch even in the face of dropouts.
influential actors. Single applicants are requested
28
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IV. The Typical Borrower

This section is primarily concerned with describing which groups of Oaxacas poor GC reaches. It is because this study is based in the household economic portfolio that the groups, and categories of groups, that I describe are formed based on data available, primarily from the data set FTB. Here I will consider the typical GC borrower across 11 different indices including the following: Amount Disbursed, Civil Status, Average Age, Highest Level of Education Achieved, Household Composition, Land and Household Income Contributors. It is unfortunate that no counterfactual data was available for comparison though ethnographic observation compliments these data well. As a composite of all statistics gathered, the average borrower is about forty years old. The highest grade of studies she has completed is between a Ownership, Housing Status, Livestock Ownership, Primary Economic Activity, Annual Household Income,
between two and three rooms. She owns no land if she did, she would own about seven chickens.
and though it is doubtful she would own livestock, Her annual household income is between about M $45,000 and M $50,000. In the most basic sense, day, or roughly US $1.93 per day. There are 1.59 each person in her household lives on M $25.27 per contributors to her households income, about one debts with other MFIs and few if any of her family members are also involved with GC. She was
primary and middle school education. Whether she domestic partner. 2.23 dependant children and
is married or in a civil union, she likely has a (male) 1.23 dependant adults live with her for a household total of 5.15 people. More likely than not, she lives in a home that either she or her partner owns.
With a strong level of confidence I can say she lives in a brick and mortar house with a tin roof with
of which is female. She has little, if any, outstanding
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29
granted a loan of about M $3,197.23 to prepare and sell food on the street such as tamales and tortillas. While speaking in averages and rough
the end of August. Thusly, these samples represent the totals at: 12.296% for Oaxaca, 11.09% for all branches. Huajuapan, 8.98% for Miahuatlan, and 10.89% for
approximations lends a human image to the
anonymous mass of statistical data, it can all too easily lead to faulty assumptions. For a more precise perspective I have included the branchin the following paragraphs. I begin with a No. 1.
As illustrated in Table No. 2, Oaxaca borrowers
benefit from the largest average loan followed by Miahuatlan and Huajuapan. Huajuapan has the highest concentration of any particular loan size,
wide break downs for the aforementioned indices statement of the essential survey figures in Table
just over 93% of borrowers hold a M $3,000 loan. As seen in Table No. 3, at all branch levels,
While the FTB database was assembled in July when the total numbers of borrowers at each Table No. 1: branch was lesser, the totals have grown through
married is the most common status followed by civil union at both Oaxaca and Miahuatlan, and single in Huajuapan. Divorced is also more common at Huajuapan compared to married.
30
Matthew Borden
Table No. 2:
Table No. 3:
Most GC borrowers are between about 25 and 45 of age groups, the most highly concentrated age groups include the 30-34 and 35-39 brackets.
years old. With a greater spread among the range
Huajuapan leads the three branches in graduates of high school and higher education at 12% and just over 10%, respectively. Many of the women noted a technical major course of study. Miahuatlan is the lowest achieving in education with nearly 25% of Oaxacas 8.72% and Huajuapans just over 4%. Huajuapan women appear to be the most
Despite the seemingly smooth age pyramid in Table 54 bracket is larger than that of 45-49. Miahuatlan shows a similar anomaly though with 55-59 compared to 50-54. Matthew Borden
No. 4, in the cases of Oaxaca and Huajuapan, the 50-
its borrowers selecting no education compared to
independent of the three branch sites in all indices 31
Table No. 4:
Table No. 5:
measured under household composition. 64% of partner. Nearly 70% of the borrowers of Oaxaca of borrowers from Miahuatlan. The borrowers from Huajuapan also have the lowest average 32
Huajuapan surveys state the presence of a domestic also claim a partner compared to the nearly 72%
number of dependents in their homes at 1.84
dependent children and .085 dependent adults.
Oaxaca again follows with 2.38 and 1.70 dependent children and adults respectively. Miahuatlan has the greatest numbers at 2.48 dependent children
and 1.92 dependent adults per household. In terms
Matthew Borden
of number of dependent children per household, predictably, Huajuapans data concentrate at the lower end of the spectrum with 70% of households only reaching two dependent children. In contrast, concentration at up to two dependent children. both of the other two branch sites only reach a 60% Land ownership was rare with only six documented cases in the 404 Form No. 1s pulled for sampling. It happened that all cases came from Oaxaca. Most land is shared, then rented, and finally mortgaged. Table No. 6:
Most women sampled live in homes owned either level average is set at 66.93%. Miahuatlan leads
by herself or by her domestic partner. The projectat 94.12%, Oaxaca at 60.60%, then Huajuapan at brick and mortar. Both Oaxaca and Miahuatlan average around 65% of household made from brick and mortar, Huajuapan is at nearly 91%. building method. The average home has 2.52
51.35%. The vast majority of homes are built from
Aluminum sheeting is the second most common
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33
rooms, Huajuapan leads with 2.65, then Miahuatlan at 2.56, and Oaxaca at 2.36.
if a borrower owns any livestock, she likely owns just one of each kind.
more than just one kind of animal and more than
Most borrowers own no livestock. When asked answers came from Miahuatlan with 40.57% at 15.38%. Chickens are the most common
if borrowers owned livestock, most affirmative followed by Oaxaca at 18.78% then Huajuapan livestock borrowers listed. It is worth noting how concentrated livestock ownership is. This means Table No. 7:
The majority of borrowers, at 51.3%, make a
living by selling retail products such as: clothing, footwear, make up, jewelry, and accessories on the street. The next most common activity, at 27.75%, is selling food such as: corn, tamales,
tacos, and candy on the street. Common services
Table No. 9:
34
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Table No. 8:
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35
include: house cleaning, laundering, and cooking. Retail establishments are mostly comprised of home-based convenience stores. Most food
AHHI mostly averages out between the M $45,000 to M $50,000 bracket. Oaxaca has the smoothest comparative spread. Oaxaca households earn households earn comparatively less. At all
establishments refer to converted living rooms are operating without a business permit and without inspections. Table No. 11:
used as restaurants. In nearly all cases, businesses
comparatively more than average and Miahuatlan branches, most households reach only about M
$90,000. Oaxaca has the most exceptions with 11
households earning M $100,000 or more including
36
Matthew Borden
one household earning over M $150,000. Huajuapan has comparatively fewer male
measures, Oaxaca and Miahuatlan are relatively similar.
contributors to household income, a fact that
correlates with the higher rate of single women at that branch site. The same branch also has fewer female contributors leading to Huajuapan having Table No. 10:
the lowest total contributors per household. In all
Table No. 12:
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37
V. Measuring Impact
This section defines what impact GCs financial services have had on borrowers capacity to achieve financial stability and maintain economic growth. Designed to be more analytical than descriptive, and more quantitative in its analysis, the section begins with a segment reviewing Program Growth as measured by the following indices: No. of New Borrowers, No. of New Groups, No. of New Centers, No. of Drop Outs, No. of New Neighborhoods reached, Amount Disbursed, Average Loan Size, and Repayment sketch an initial shape of program growth patterns. For a more nuanced understanding of growth, this section also contends to problematize other phenomena such as the repayment rate and dropout rate. While GC has their specified methods for calculating these rates, this section considers other methods Rate. Most data collected for this review were sampled from Monthly Statistical Statements. These indices
for calculation. I also incorporate relevant context in considering the significance of the rates measured
for the continued growth of GC. Following, I briefly describe the Dropout Profile, a composite of available and the poverty rate of liquidated members.
demographic data sampled from drop out borrowers. Lastly, I review the change in AHHI after liquidation
Program Growth
MSS includes the following indices: number of
Every month each branch manager compiles
new loan groups, loan centers, borrowers, loans repaid, loans outstanding, amount outstanding,
what is called a Monthly Statistical Statement
disbursed, amount disbursed, loans repaid, amount repayment rate, balance in savings, percentage of women borrowers, neighborhoods reached, and municipalities reached.
(MSS) from data that his or her center managers most integral data source for this segment. The 38
collect on a daily basis. These statements form the
Matthew Borden
Using these MSSs along with other documents
including: the Branch Book and Form No. 6, this activity GC has achieved thus far in operations.
December 2009 and again in July 2010. The months in between are defined by declining numbers that reach a low in May 2010 (March 2010 for to Julys peak. An inconsistency in the growth pattern is the Average Loan Size, with August
segment contends to describe the major growth One of the limitations involved in using MSSs for this report is the timeline afforded. Even though the first loan was disbursed in early July 2009, the earliest available MSS is from August 2009. the production of this study is August 2010, a
Average Loan Size), followed by steady increases
figures shooting up some 20% to 30%. This is
Considering the most recent MSS available during discrete timeline of 12 months is available for
explained by the introduction of the new second
loans. The program-wide mean first time loan size is M $3,197.23 (with a mode of M $3,000) and the While all three branches were established within the same month, the Oaxaca branch regularly achieves higher numbers across all indices. average second time loan size is around M $5,000.
longitudinal observations of dynamic trends like program growth. For such dynamic trends, 12 months is certainly a reasonable indicator of what growth patterns GC is choosing to implement. For the comparative analysis of AHHI pre- and posttreatment, the timeline is more limited because for comparison. At 397, the pool of liquidated
Repayment Rate
In different Grameen publications the phrases
only loans that have reached term may be reviewed loans is smaller than optimal for representing
Loan Recovery Rate and Loan Repayment Rate are used interchangeably to describe one thing: the rate at which individual borrowers loans are global notoriety based on the high rates that it
the 3,842 total active borrowers. But considering the rate at which GC is growing, there may never be a significantly proportionally larger pool of liquidated borrowers from which to draw.
paid back in full. Grameen has gained much of its publishes and the close association this rate has with success, versus failure, in the industry. While many publications are clear to mention that GBs rates are near 98% (Yunus 2009:3), (Latifee 2006:6), (Gibbons 1990:4), and GCs rates are at
Program growth has been irregular in the past 12 months. As seen in Table No. 13, growth across most indices comes in waves, having peaked in Matthew Borden
39
Table No. 13:
100%, nowhere is there a definitive explanation of the calculation of these rates. Here I will make an attempt based on my observations at the branch loans, meaning loans that have been paid back
a loan can be repaid to still qualify for inclusion
in the calculation. Next, nowhere is it mentioned
level. Firstly, these rates refer simply to liquidated in full. Secondly, there is no explanation of when 40
how a loan must be paid back for inclusion in the calculation. While the signing borrower typically pays most of her own installments, the complexity of payment-making actors involved in liquidating
Matthew Borden
a single loan is erased when these rates are quantified and not defined.
different calculation, one beyond the scope of this study.
A few issues arise when these rates are represented without nuance. In the first point, this rate considers only liquidated or defaulted loans
Dropout Rate
Like the repayment rate, Grameen never defines the dropout rate. Additionally, the dropout rate that including the dropout rate is essential to success, GC has achieved in providing credit is not widely available in publications. I contend understanding what impact, and indeed what services to the poor. Using this rate along with
meaning each loan is measured only at the end of descriptive history of the 46-week term. In the
its term. This method of calculation erases the rich, second point, loans liquidated early, on time, or late effect, Grameen incorporates irregular borrowers repayment practice. That is to say irregular and used to calculate the 100% repayment figure.
all contribute towards the 100% repayment rate. In loan repayment in its depiction of highly successful dropout borrowers, recognized failures, are still In the last point, a significant portion of loans
demographic information about dropout borrowers can help managers monitor their own progress. According to GC, the dropout rate is calculated by dividing number of dropout borrowers by branch manager claims, a dropout borrower
is liquidated with the financial support of other people. Even though a missing borrowers fivethe case of the missing borrower in Section III person group is more likely to pay her installment, illustrates the fact that as many as over 30 people sometimes contribute to paying off a single loan. Indeed, the guarantor can be called upon to liquidate a borrowers loan if a borrower cannot
the current net number of borrowers. As a GC is any borrower who has liquidated a loan and
not obtained a second loan for any reason. This who were forced to liquidate early, borrowers
class of borrowers includes: irregular borrowers who paid their first loans on time and chose not to apply for a second loan, and borrowers who paid their first loans on time and were declined a second loan upon application. GC defines net number of borrowers as active borrowers and dropout borrowers. Active borrowers include
pay it herself, even if the guarantor is not required average loan is paid by the signing borrower is a Matthew Borden
to do so by law. To calculate what proportion of the
41
those who hold an active loan, be it a first loan or second loan at any stage of maturity. According to GCs calculations, the project-wide dropout rate is 1.834% with the following branch-level breakdowns: Oaxaca at 3.057%, Huajuapan at 1.232%, and Miahuatlan at 0.847%.
Dropout Profile
It is unfortunate that there are only seven instances in which documented cases of early-liquidation matched with recorded demographic data about
I question this quantification of dropout rate on a number of grounds. The first issue I raise is that only matured loan profiles should be used for calculation. All other factors being equal, a loan
the borrowers. The available data was used to build a dropout borrower profile as seen in Table No. 14 The average age of a borrower who liquidates is borrower profile. She has completed a primary school education compared to the average
is more likely to be liquidated toward the end of
44 years, just a few years older than the average
its 46-week term. Giving equal weight to loans at Secondly, only early-liquidated loans should be divided by the total liquidated loans. Since the drop out borrower is never publicly defined,
different levels of maturity skews the calculation.
borrower who has reached some middle school
education. Only about 28.57% of early-liquidators the average borrower. The dropout borrower has to the M $44643.6 of the average borrower. At
have domestic partners compared to the 68.56% of a 20.56% higher AHHI at M $56228.57 compared 83.33%, the dropout borrower is more likely to be living in a home owned by the household than is the average borrower, compared at 66.93%. The dropout borrower is also more likely to live in a
I volunteer this definition because tracking the is more useful to GC than tracking what is now called the dropout rate. According to this studys calculations, the project-wide dropout rate is 9.31% with the following branch-level breakdowns: Oaxaca at 8.13%, Huajuapan at 16.67%, and Miahuatlan at 9.09%.
rate at which irregular borrowers are discharged
better constructed home compared to the average borrower, comparing 85.71% to 72.14%, homes constructed of brick and mortar. The dropouts
home is likely to be larger with 3 rooms compared
to 2.52 rooms in the average borrowers house. The 42
Matthew Borden
Table No. 14:
average dropout also has fewer dependent children per household than the average borrower at 1.86 compared to 2.23 as well as fewer dependent
same age and about equally educated compared to the average borrower. The number of income contributors in her household is also about equal borrower is more independent because of the
adults per household at .71 compared to 1.23. The average dropout also has about equal number of contributors to AHHI with 1.71 per household break down by gender is also similar. compared to 1.79 for the average borrower. The
but here end the similarities. The average dropout absence of domestic partners. She also has fewer total of 4.88 people compared to the 5.15 in the average borrowers household. Her household earns about 20% more in a year. She is more
dependents (children and adults) for a household
In observing all of these factors, the data suggests that the average dropout borrower is about the Matthew Borden
likely to be a homeowner, living in a larger, better 43
constructed home. The picture this data paints is of a more successful woman of greater financial and why do more successful woman fail more? The average dropout profile compiled is the physical assets, and fewer costs. So the question is:
proven scientifically. The question is then: what meetings on a regular basis?
makes early-liquidators more likely to miss weekly
By chance I met with one borrower at a weekly
opposite of what the data was expected to show. At GC, any dropout case is regarded a failure considering one of GCs principle goals is extending access to credit to a great number of Mexicos poorest. As is inevitable with any large-scale profile of a dropout borrower was that of a
meeting in Huajuapan who announced she would be liquidating early. She was a married woman in a M $3,000 loan to invest in a small convenience store that she and her husband started running out of their house previous to GCs arrival. The experience for those investing in home-based store was not making enough profit, a common convenience stores. She had already been working a regular job in addition to managing the store with GC. She had secured a second job after part time with her husband before participating realizing that the M $3,000 loan was not generating enough additional income. This required her to work during center meetings. She chose to her forties with two children. GC approved her for
program, some failure is foreseen but the expected woman too unskilled, too disenfranchised, and too It is assumed that a lack of profit is the reason
distanced from necessary assets to earn an income. why irregular borrowers fail to maintain their
installments ultimately leading to early liquidation but such is not the case. As center managers tell their borrowers routinely, there are two things
required of borrowers: payment and attendance. From my observations, a lack of attendance is much more common than a lack of payment because even when absent, borrowers reliably send their
remain with her two salaried jobs and to liquidate her outstanding debt. Considering the average dropouts levels of independence, income, costs, and housing status, the borrower drops out not because of an inability to earn an income. They
installments with attending group members. Thus a lack of attendance is likely a more common reason for liquidating a loan early though this cannot be 44
drop out because their time, combined with their earning a larger income outside of GC. It appears
greater skills, is more valuable and better invested
Matthew Borden
GC is targeting women too skilled or too wealthy, in relative terms.
176 total active second time loans, only 17 could Only two women eligible for the control group
be reached, 11 from Oaxaca and 6 from Huajuapan. could be reached, both from the Oaxaca area. As and control groups is listed pre- and postproportional change.
Change in Annual Household Income

One of GCs primary goals is to increase income.
seen in Table No. 15, AHHI for both the treatment treatment. Difference in AHHI is recorded alongside
This segment will focus on what change in income GCs first time borrowers households have been was asked to submit a list of borrowers who able to achieve. Each of the three branch managers have started their second loans. Using this list I
Judging from the available data, the effect that basic loans have on first time borrowers who liquidate on time is very positive for change in AHHI. Between the Oaxaca and Huajuapan
contacted each borrower to solicit their current
(post-treatment) weekly household income. These borrowers incomes form the experimental group. Additionally, I asked if the borrowers had any
branches, borrowers household incomes are
likely to nearly double. The recorded increase is 196.39%. The data available for the control not receive a loan, her household income will group suggests that if an eligible woman does remain relatively unchanged, dropping by 2.85% in one year. What stands out in Table No. 15 is the difference in proportional increase of AHHI at the branch level, Oaxaca increasing by 346.76%, and Huajuapan increasing by only 40.01%. If we Oaxaca at 8.13% and Huajuapan at 16.67%, we
family members (from distinct households) who were not extended a loan for the specific reason that too many family members were already participating in the loan center. These women
form the control group. Working from the project household to solicit the desired data, a less than
office in Oaxaca meant calling each borrower at her effective method because available phone numbers were often wrong numbers, disconnected, or left unattended. Considering the limited time frame for this study, calling was the only option. Of the Matthew Borden
compare these data to the branches dropout rates, find a correlation. It appears the Oaxaca branch is more successful in both measures. In the change in income index, Oaxaca eclipses Huajuapan by
45
Table No. 14:
over 300%. In the dropout rate index, Huajuapan If it is true that most dropouts leave the program because they can increase their income more quickly seeking income-generating activities
records almost double the proportion of dropouts.
compared to Huajuapans borrowers. Simply, as
the GC program has been practiced to this point,
lending to comparatively poorer applicants results and for GC.
in more measurable success both for the borrowers
elsewhere, as is suggested in the previous segment, then this would explain why Oaxacas borrowers experienced over three times the growth in income 46
Matthew Borden
Poverty Rate
Most people would agree that poverty should be
eliminated, that no one should suffer because one
is poor. So commonplace is the word poverty that a we rarely give a second thought to its definition. In its simplest, the word evokes a state of being or identity; that one lives in poverty, a neighborhood is impoverished, a population lives below the poverty line. In these common references to
Poverty is... lack of what is necessary for material well-being lack of multiple resources leading to physical deprivation lack of voice, power, and independence, which subject them to exploitation inability to maintain cultural identity through participating in traditions, festivals, and rituals inability to fully participate in community life leads to a breakdown of social relations schooling receives mixed reviews people focus on assets rather than income (Deepa Narayan et al. 1999:1). This definition appears to be a list of the social
phenomena that makes us human. To compliment it, I include the World Banks official definition, one that offers a decidedly more quantitative
poverty, people often not only make an unconscious and social status as defined by income and assets, unchecked, and uncontested truth. Poverty as
quantification of poverty based mainly on economic understanding. Although its authors recognize but people reify these existing concepts as singular, numbers, percentages and ratios, as employed the idea that poverty is essentially a financial realities on the ground.
that the poverty line changes through time and Mexicos specific poverty line is today:
societies, the World Bank does not mention what A person is considered poor if his or her consumption or income level falls below some minimum level necessary to meet basic needs [which] varies across time and societies. Therefore, poverty lines vary in time and place, and each country uses lines which are appropriate to its level of development, societal norms and values When estimating poverty worldwide, the same reference poverty line has to be used, and expressed in a common unit across countries The new international poverty line of $1.50 a day at 2005 prices is the mean of the national poverty lines for the 10-20 poorest countries of the world (World Bank 2009). The World Bank continues its description of
by economists and politicians further validates problemone removed from the particular social
There exists a wide selection of definitions for
poverty. Deepa Narayan et al. have written one spanning 47 countries defines poverty from the perspective of the poor:
that caught my attention. Their ethnographic work
poverty, framing it as multidimensional, though
the poverty line is the centerpiece. They include 47
Matthew Borden
measurement indicators for the following indices: vulnerability, social exclusion, and access to social capital (World Bank 2009).
education, health, services and infrastructure, risk,
For a more concrete understanding I have
converted the quantity per capita/trimester to per capita/day assuming there are 91.25 days in one trimester. To compare the richness Lustig presents to the World Banks poverty line, I arrived at two averaged calculations using the data Lustig cites. I calculated the two threshold averages (poverty and extreme poverty) and I later modified them
Nora Lustig, a senior member of the Brookings Institutes Foreign Policy Research Program, has published various works about the Mexican economy for the United Nations. In one of her she presents the idea of using not solely one poverty line but three: for urban and rural works, Poverty in Mexico: An Empirical Analysis,
accounting for the dollars inflation from 1993 to now, 2010 (USBLS). In comparison to the World Banks 2009 international poverty line, US $1.50
societies, and weighted for population. Lustig by Levy, Hernndez-Laos, and CEPAL1. Levy
per capita/day (World Bank), Lustigs data suggest that Mexicos poverty threshold is at US $3.36 per capita/day and at US $3.05 per capita/day for extreme poverty. Now that we have a few fixed signify the minimum spent for survival.
references three empirical parameters developed utilizes a per capita method, Hernndez-Laos
one of normalized poverty gap, and CEPAL one of simple distribution. With attention to specificity, dollars) per capita/trimester determined for they offer a capital quantity in pesos (and American necessary expenses for basic needs and survival during an economic trimester (Lustig 1993:6). 1. Mexican economist and academic, Santiago Levy, is Vice President of Sectors and Knowledge at the Inter-American Development Bank. Hernndez-Laos is a professor of economics at the Autonomous Metropolitan University, Mexico. The Economic Commission on Latin America (CEPAL) functions as a foundation for organization and application of economic policies in Latin America under the United Nations. 48
numbers, one must remember that they simply
For the purposes of this study, poverty will be quantified as a measure of financial income, specifically based on per capita daily earning
because daily spending was not recorded. Earning versus spending is likely an accurate substitute earned is used almost entirely for subsistence. The following, Tables No. 16 and 17, describe because most borrowers have no savings. Money
how GCs borrowers measure as people living in poverty according to the five different poverty
Matthew Borden
thresholds provided in Lustigs 1993 study. As is seen in Table No. 16, the thresholds span a great range of quantities for Daily Income per project-wide average DIHHM is US $2.98, this
brackets. Huajuapan has the highest concentration of relatively higher earning households while Miahuatlan has the highest concentration of relatively lower earning households.
Household Member (DIHHM). Considering the places most borrowers within Lustigs countryspecific threshold for extreme poverty. Looking at the diversity of thresholds provided, though,
half of the borrowers lie outside of the thresholds do using the CEPAL threshold. Looking at the
for the Levy and Hernndez-Laos and nearly 95% breakdowns at the branch-level, Oaxaca appears to
have the smoothest gradations of wealth by US $.25 Table No. 15:
Matthew Borden
49
Table No. 16:
50
Matthew Borden
VI. Conclusions and Suggestions

In this research I have studied women borrowers involvement with the microcredit program of Grameen Carso. I have examined the grassroots lending structure of the organization, the implications of this lending for borrowers and workers, and the success of GC as a program. The study focuses on was also dedicated to describing who it is that GC targets for its microcredit services. This work also makes use of qualitative methodologies to analyze causality and power dynamics. In this concluding section, I present a brief review of the study including its theoretical implications, several policy recommendations, and recommendations for further research. describing how policies have become practice as village-level microcredit operations. Much of the study
Review of the Study
Carsos financial services improve borrowers
This study counts the following as its objectives: (1) economic growth. This segment will review the to understand how the Grameen model has been translated into an operational program known which groups of Oaxacas poor Grameen Carso as Grameen Carso in Mexico, (2) to understand reaches, (3) to understand if and how Grameen appropriate.
capacity to achieve financial stability and maintain studys results and will include suggestions when
Grameen Carso was established as a replication
project based on the Grameen Bank of Bangladesh. 51
Matthew Borden
Observations and research (Rahman 1999),
(Chowdhury et al. 2002), suggest that there is
who speak only indigenous languages, and
room for improvement regarding two of GCs five of Mexicans and to use GB model including collateral-free loans. It is observed, indeed documented, that GC is producing vigorous,
pregnant applicants. These are Mexicos poorest to dropout, and thus adversely affect program
major objectives, namely to focus on the poorest
and whats ironic is that the borrower more likely growth, are relatively more independent borrowers with more assets, fewer dependents, and higher applicants resulting in higher dropout rates and fewer spaces available for the poorer Mexicans. income. GC managers pursue these real higher risk
positive results towards its other three objectives namely: to significantly increase microcredit access in Mexico, to increase quality of life and the first five years.
income, and to reach 100,000 loans by the end of
It is assumed that poorer borrowers are more likely to dropout because they may have less success in achieving a profit. But branch managers prioritize attendance when considering whom to drop from the less impoverished and more empowered the program. As explained in Section V, it is actually women who drop because they are busy exploring more profitable income-generating activities outside of GC. From the project director down
Regarding focusing on the poorest Mexicans, data from Sections III through V suggest that this is not in reality one of GCs objectives. The ethnographic account from the segment New Borrower Initiation documents the project
director specifically addressing why GC cannot serve the poorest in Mexico. The poorest are ineligible for GCs services because they are viewed as too unskilled, lacking too many assets (financial, cultural, and social), and they are therefore too great a risk to the institution. In a similar vein,
to the center manager, all GC workers carefully
examine the risk involved before extending a loan performance, factors considered for promotion
because risk effects program success and individual and bonuses. While more impoverished women
other potential risks include the following: single applicants, older applicants, renting applicants, applicants with too many children (too many to
are assumed to be more risky, this study proves the opposite. Both GC and its borrowers gain when GC chooses to lend to poorer borrowers.
maintain properly per GC managers), applicants 52 Grameen Carso: Reviewing One Year of Operations in Mexico Matthew Borden
Grameen Carso also lists to use GB model
including collateral-free loans as one of its
figure. Since it is well established that all on-time liquidated loans are repaid in full, I recommend reserving the definition of repayment rate for
objectives. As has been proven in previous research (Rahman 1999), (Chowdhury et al. 2002), GB does use social collateral as well as Joint Liability, and Peer Pressure to effectively maintain program growth. In addition to these methods, GC uses contracts to maintain growth of members,
something more useful. I suggest measuring what borrower to see what sort of repayment rate each borrower can attain as an individual.
proportion of individual loans is paid by the signing
branches, centers, and loans disbursed. Though
GC is currently operating at a loss, it is expected to achieve a profitable year within its first five years of establishment.
Dropout rate would benefit from revision. I also
recommend including this figure in measures of
program success. The current de facto calculation
of dropout rate, offered by a GC branch manager,
Two other GC operational practices this study
is defined in the Dropout Rate segment of Section V. I argue that this definition is not useful, perhaps even misleading, because it is such a small ratio
finds problematic include the quantification of the current methods for calculating both rates
repayment rate and dropout rate. I contend that are not useful, perhaps even misleading. I have proposed new methods for quantification that give useful meaning to the statistics. Firstly, GCs
fails to describe early-liquidators. The calculation I what number of total liquidated loans were
volunteer in the same section proposes to measure forced to liquidate early. This measure describes a problem, managers need to know there is a
quantification of repayment rate only at the end of loan terms allows only for a qualitative distinction the useful, descriptive payment history of the involved in repayment. GC qualifies irregular (that a loan is either paid or not paid) thus erasing 46-week term as well as the complexity of actors and dropout borrowers, recognized failures, for
cases where something went wrong, and, to solve problem. As this study suggests, the dropout rate is Huajuapan area where more loans are extended to borrowers with relatively higher assets.
somewhat higher than anticipated, especially in the
use in calculating a 100% successful repayment Matthew Borden
The success of increasing borrowers household
income is proven in the segment Change in Annual 53
Household Income listed under Section V. Though the data is sparse for this measure, the average household has been able to double its income
from both its objectives and the GB model. In
Replication of Grameen Bank Financial System, principles of the Grameen Bank financial system
within one year of using GCs credit service. Whats more the control group has stayed about the same, confirming the positive impact GC style credit has had on household income.
David Gibbons says that deviating from the basic [results in] undermining or precluding its impact on the very poor (Gibbons 1994:5). This should serve as a cautionary suggestion that while general impact is very promising, impact on the very poor is likely far from what Grameen Carso can achieve.
Lastly, the level of poverty GCs borrowers inhabit
is examined in Section Vs segment Poverty Rate. Economic poverty is accepted as a useful measure giving raw results and an array of thresholds for
Policy Suggestions
In addition to the aforementioned conclusions, this segment will list a few policy suggestions beginning at the branch level. Reviewing the typical day at the branch level, this study shows room for improvement in a number of policies. Firstly, center managers are overworked. To provide a of better group formation, higher quality loan important paperwork, more center managers should be hired to help current managers higher quality of service to borrowers in terms center training, and more time spent addressing
calculating what proportions of GCs borrowers live in poverty and extreme poverty. Most thresholds presented qualify about half of GCs borrowers as living above the poverty line while only one
threshold of the five qualifies a majority living in poverty. This, in addition to the direct admission in Section III, may motivate GC to reconsider its stance on reaching Mexicos poorest.
Considering what is required for a successful results finding major discrepancies in two of
replication, I have concluded reviewing the study Grameen Carsos stated objectives, to focus on the poorest Mexicans, and to use GB model including collateral-free loans. I have listed and explained the various ways GCs operational practices differ 54
maintain daily, weekly, and monthly tasks. The
imposing number of signatures required for loan disbursement is worth repeating. No fewer than 23 signatures are required on 6 documents (11 on Form No. 1 alone) to disburse a loan. This appears
Matthew Borden
to be a reparable bureaucratic obstacle. Now
that the software, Gramex, is in use, some laborintensive paperwork has been cut back though Form No. 1 remains the same. I suggest finding a described in the last segment of Section III. One of GBs lauded achievements is the
loan centers I visited to gauge how many women possessed more advanced skills such as: baking, sewing, handicrafts, and traditional arts. Each center averaged roughly 10%. The majority possessed basic skills such as tamale making,
way to streamline the borrower initiation process
tortilla making, or no marketable skills other than retail. Women who posses more advanced skills have more options. It is my suggestion that GC
great social development they provide their
borrowers in addition to economic development.
consider organizing workshops where the women in each loan center. If successful, not only would
Replication programs do not carry the same social dividends, scholarships, education loans, beggars loans, or even savings. It is well understood that a program must first become profitable before it should not be forgotten.
disburse the knowledge and skills already present the women increase their profitability, but also, the groups may actually form stronger social bonds.
development-oriented programs GB offers such as:
can afford such measures but social development
I suggest GC consider the following monitoring and research suggestions for better program service and success in achieving objectives. Firstly, many households benefit from government sponsored development programs in addition to GC basic loans. One such program is OPORTUNIDADES, which awards scholarships to children and subsistence grants to heads of households.
The following suggestions are offered in the
interest of improving program quality. First, it is assumed survival knowledge (Chambers 1983:82-101) and skills (Yunus 1987) are
enough for rapid and substantial increases in
household incomes (Gibbons 1994:5). I do not
Conflict arises when program beneficiaries are
argue that women borrowers do no posses such knowledge and skills but I do content that skillshares or workshops could be largely beneficial
required to attend meetings for receiving the aid; one case in Oaxaca led a center manager to ask a OPORTUNIDADES meetings happened to occur qualifying borrower to liquidate her loan because at the same time as her weekly center meetings. 55
to the borrowers. I took an informal poll at most Matthew Borden
Before disbursing a loan, center managers should investigate other commitments, especially coordinate appropriately. participation in other development programs to
Lastly, observations warn that women may not be reaping their fair share of the benefit from loans disbursed. It is customary in Mexico that men manage money. Breaking this custom will take more conscious and targeted efforts. In more than a few loan center visits, borrowers
I recommend that center managers survey
borrowers at the beginning of every loan made. As GC currently operates, the demographic information and contractual agreement in Form No. 1 is filled out and signed at the beginning of each first loan. For second time loans, Form No. 1
domestic partners accompanied the women to
their meetings. I once witnessed a borrower ask her husband for cash at the time of installment payment. She paid her installment with the cash he handed her and she then returned the change to her husband. She confirmed it was his money, not her own. If this happens in the presence of center occur out of sight. Additionally, the practice of managers, I fear much graver transfers of resources verifying a borrowers actual business operation is a rare occurrence. Because of the demand for workers time and attention, some tasks are not systematic verifications of each business are
is used only as a contract leaving the demographic data once every year would provide invaluable the active impact the program is producing on center managers take the time to thoroughly of every loan. In addition to recording this
sections blank. Measuring borrowers demographic demographic data for program research to track borrowers households. It is my suggestion that complete Form No. 1 in its entirety at the start information I recommend entering the data in an
met with the care that should be allotted. Regular, standard policy though they are rarely enforced
electronic format. If managers would maintain the infrastructure of an electronic database, sampling for research would not even be necessary. With an electronic database in place before arrival,
in practice. These verifications are imperative to confirming that loans disbursed are used for the approved business plans borrowers propose in that GC has significantly increased household Form No.1. At this point, while it is documented income, It cannot be proven that this income was
researchers would be able to calculate programfor more demanding tasks than data entry. 56
wide statistics with ease, freeing up valuable time
earned by approved uses of loans. It cannot even be Matthew Borden
said with certainty what role borrowers have had in doubling household income.
New Borrower Initiation. The dropout rate is the only rate recorded while there are various other are the acceptance and retention rates. Not all rates in the initiation process left to measure. First applicants are granted loans, and not all admitted rates would help illustrate what proportion of
Research Suggestions
I make the following recommendations
for the benefit of research that may follow this time to produce the most sophisticated or
applicants choose to initiate loans. Measuring these applicants GC managers see as fit for loans. Using the demographic data provided on Form No. 1s, profiles could be constructed detailing accepted
study. Two months in the field was not enough exhaustive of impact assessments though the
time was sufficient to see how GCs managers are
building an operational practice. Hopefully future
applicants versus rejected applicants. This would Another interesting rate to quantify would be
researchers will benefit from the aid of a completed electronic database. Firstly, I recommend analyzing attendance patterns for borrowers at the loan center. As discussed in Section V, such history can reveal much about: (1) how irregular borrowers resolve the issue of Forthcoming Reality when presented with conflict and (2) how managers
also help define who managers select as borrowers. the number of regular FTBs who choose not to
apply for a second loan. Finding this statistic and comparing income data could explain something about the desirability of GCs loans, at least for this class of borrowers. Certainly some second time applicants are declined loans. Calculating could reveal more about managers strategies the second time acceptance and retentions rates for selection. As previously stated, the initiation process is a precise and intentional mechanism designed to extend loans to the most desirable of
decide to initiate early liquidations. The benefits explanations of the repayment rate and dropout dynamics at play at the loan center level.
of tracking attendance can result in more precise rate as well as a more precise explanation of power
Building on the last recommendation about
applicants. These statistics could better nuance our understanding of whom GC is targeting if it is not their objectives more effectively. the poorest. This information could help GC meet
attendance patterns, I would like to, again, refer to Figure No. 3 within Section IIIs last segment, Matthew Borden
57
I recommend collecting more information about dropout borrowers in order to built a more comprehensive Dropout Borrower Profile. Much of the ethnographic data used was collected at the center level for greatest efficiency. This means Dropout borrowers are just as much part of the
specifically impacting women borrowers, research trends.
should reflect this by addressing individual income
dropout borrowers experiences were not recorded. that can support a subtler analysis to the rapidly experimental group as borrowers who remain in for a more robust study interested in identifying causality. expanding organization. It is recommended that during the organizations formative years.
Collective reports give a broader reaching context
the program. Measuring both groups would make
GC continues with more research, especially now
I recommend additional surveys for measuring
specific indices of interest to the researcher for
quantifying impact. Firstly I recommend measuring real consumption per household member versus calculating DIHHM for use in measuring poverty. to be labor-intensive, the statistics could bolster poverty quantifications significantly. This study
While a real daily consumption measure is bound
necessarily uses the framework of the household information describing income on Form. No. 1
economic portfolio (Chen and Dun 1996) because is presented as household income. Because of as impact to the household and not specifically accurately gauge that the loans disbursed are 58
this, research can only describe change in income to the woman borrower. If it is GCs intention to
Matthew Borden
VII. References
Advameg. 2010. Mexico, Social Indicators. Encyclopedia of the Nations. <www.nationencyclopedia.com> Bauman, Richard and Briggs, Charles L. 1990. Poetics and performance as critical perspectives on language and social life. Annual Review of Anthropology 19:59-88. Bourdieu, Pierre. 1996. Passport to Duke. International Journal of Contemporary Sociology 33(2):145-150. Bourdieu, Pierre. 1990. The Logic of Practice. Stanford: Stanford University Press.
Chakma, Senti. 2008. Country Reports, Mexico: Grameen Carso in Mexico. Grameen Dialogue 69. Dhaka: Grameen Trust. Chambers, Robert 1983. Rural Development. Essex, England: Loagman Scientific and Technical. Chen, Martha A. and Dunn, Elizabeth. 1996. Household Economic Portfolio. Washington D.C.: AIMS.
Chowdhury, M. Jahngir Alam and Dipak Ghosh and Robert E. Wright. 2002. The Impact of Micro-credit on Poverty: Evidence from Bangladesh. London, England/ Bonn, Germany: Center for Economic Policy Research/ Institute for the Study of Labour. Femia, Joseph. 1975. Hegemony Consciousness in the Thought of Antonio Gramsci. Political Studies 23:29-48. Garca Bernal, Manuela Cristina. 1991. Iberoamrica: Evolucin de una Economa Dependiente. In Lus Navarro Garca (Coord.) Historia de las Amricas IV:565-619. Madrid/Seville: Alhambra Longman/University of Seville. Gibbons, David S. 1994. Replication of Grameen Bank Financial System. Dhaka: Grameen Bank. Grameen Trust. 2008. Grameen Trust at a Glance. Dhaka: Grameen Trust.
Goldberg, Nathaneal. 2005. Measuring the Impact Microfinance: Taking Stock of What We Know. Washington D.C.: Grameen Foundation. Matthew Borden Grameen Carso: Reviewing One Year of Operations in Mexico 59
Hulme, David. 1997. Impact Assessment Methodologies For Microfinance: A Review. Mimeo prepared for the CGAP Working Group on Impact Assessment, Institute For Development Policy And Management, University of Manchester Institute of Latin American Studies (ILAS). 1986. The Debt Crisis in Latin America. Stockholm: Institute of Latin American Studies. Keesing, Roger. 1994. Theories of Culture Revisited. In Assessing Cultural Anthropology, Robert Borofsky, ed. New York: McGraw-Hill. Latifee, H.I. 2009. Grameen Trust Build-Operate-Transfer (BOT) Projects. Scribd.com. < http://www.scribd.com/doc/22993191/Grameen-Trust-Build-Operate-Transfer-BOT-Projects> Latifee, H.I. 2006. The Future of Microfinance. Dhaka: Grameen Trust. Latifee, H.I. 1997. Introduction to Grameen Trust. Dhaka: Grameen Bank.
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United States Bureau of Labor Statistics (USBLS). 2010. CPI Inflation Calculator. Databases, Tables & Calculators, <http://www.bls.gov/data/inflation_calculator.htm>
World Bank. 2009. What is Poverty? Poverty Topics Overview. <http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/0,,contentMDK:2 0153855~menuPK:373757~pagePK:148956~piPK:216618~theSitePK:336992,00.html> Yunus, Muhammad. 2004. What Needs to be Done. Grameen Dialogue 59. Dhaka: Grameen Trust. Yunus, Muhammad. 1999. Banker to the Poor Micro-Lending and the Battle Against World Poverty. New York, NY: Public Affairs (Perseus Book Group). Yunus, Muhammad. 1987. Credit for Self-Employment: A Fundamental Human Right. Dhaka: Grameen Bank.
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The Grameen Bank is known globally as the pioneering leader in contemporary microlending for social and economic development. Beyond its origins in Bangladesh, the bank has been expanding into foreign countries since 1997, reaching Latin America in 1999. With financial support from the Carlos Slim Foundation, Grameen arrived in Mexico to establish the country program Grameen Carso.
Grameen Carso disbursed their first loan on July 3, 2009. The research for this study was completed between July and September of 2010. The study itself seeks to describe and analyze how Grameen Carso has been established, how it is currently operating, and what results the program has achieved in its first year of operations with close attention to program objectives announced in 2009. Specifically, the study uses quantitative and qualitative methods as well as discourse analysis to determine whom Grameen Carso seeks out as borrowers and why. Indices of program impact and growth are measured and contextualized. Repayment rate and dropout rate are problematized. The study concludes with policy suggestions and suggestions for further research.
Matthew Borden studied at the University of California at Santa Cruz. He graduated in 2010 with a B.A. with honors from the department of anthropology. Matthew Borden 81 Buena Vista Benicia, CA 94510 +1 (707) 745-6249 mbordennunez@gmail.com

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Grameen Carso: Reviewing One Year of Operations in Mexico

by Matthew Borden September 2010