Advice and Observations for the Future of La Ceiba

The latest class readings provide valuable insight into the future success and sustainability of La Ceiba. The “Real Good, Not Feel Good” article, reiterates the point made by the Illich article that successful non-profit and microfinance organizations must have a real, measurable, positive,  impact on the clients they serve, not only a “feel-good” feeling for the enterprise. The article focuses on four major questions, 1) Does the project have measurable and proven impacts? 2) Are the impacts cost-effective? 3) Will the impacts be sustained? and 4) Can the model be scaled and replicated? From the few meetings we’ve had together as a group, I cannot honestly say that I feel that the La Ceiba team can answer these questions quite yet. However, I can say that I feel the team has, this semester, structured itself in a way that can accomplish these goals. For example, the newly developed impact team will play an increasingly important role in La Ceiba, a point I will reiterate later in this post. Also, Brian’s ‘Organization Team’ will play a valuable role in answering questions 3-4. For Illich, the inability to answer these questions may be reason enough to halt this endeavor, but for La Ceiba, I feel that we are on the right track to success.

“In Microfinance, Clients Must Come First” had a larger impact on my vision for the future of La Ceiba. Not only does the article review the common mistakes of most MFI’s, but also provides a model for solving these issues. The article cites that “the ultimate goal of most MFI’s is to alleviate poverty”, and if I am not mistaken, this too is the goal of La Ceiba. However, our inability thus far to measure the impact of our loans is definitely, for me, a cause of concern. At our last meeting, many of the new team members were surprised to hear that there has thus far been no way to measure our impact in La Ceiba. We do not know how the women are spending the loan money, whether it is going to business practices, or whether or not these loans are actually reducing their level of poverty. The article challenges this as an “egregious oversight (40)” and I would have to agree. While it is important to maintain the privacy of our clients, we must begin to measure the impact we are making in Honduras. This means that the newly developed ‘Impact Team’ has an increasingly important role to play in the future success of La Ceiba. The team must craft a way to both measure our progress as an institution and also the impact our loans have made on the individual lives of each client.

Furthermore, the measurement of our impact should not be restricted to income and wealth only. As we know, poverty encompasses a number of issues outside this niche, including but not limited to “health, nutrition, housing, and education (40).” A well developed survey from the impact team may help us gauge positive changes in these areas as well as the overall happiness of our clients.

Again, the many points of this article are being addressed this semester by the various teams. The article stresses the importance of business entrepreneurship among clients, a task that has been taken on by Ben’s ‘Business Plan Competition Team.” In addition, La Ceiba has begun to offer computer classes in the Learning Center, a training tool that will help our clients be more successful in their business practice. I am not aware of any other training classes given to our client’s by La Ceiba, but feel that it is an area that should definitely be considered by the team. Revamping the personal loan program will hopefully prevent default payments, and the article made many suggestions that I will definitely consider in the future as a part of the loan team. While La Ceiba already makes individual loans [unlike some MFI’s, according to the article (40)], the program may consider restricting the repayment schedule for first-time lenders, and become increasingly more flexible for clients who have proven they can repay their loans on time.

A point I found especially interesting was the section dealing with the role of the ‘loan officer.’ Our loan officer in Honduras, Ana, plays an integral role in the loan process and ultimately, the success of La Ceiba. Now, the Loan Team is trying to restructure the way we choose our clients, as before we have relied on the word and judgment of Ana in Honduras. While other MFI’s may provide a good basis, we must continue to incorporate the opinion and good judgment of Ana. The article says, “loan officers need not only financial expertise, but also the knowledge and skills that will help them identify target clients, encourage them to learn about the MFI’s financial services, evaluate their needs, assess their character and capacity for repayment and interact with them with the appropriate language and cultural nuance (45).” As a team, we must be as supportive of Ana as possibly can, and perhaps be more up-front about our willingness to assist her. In the same passage, the article talks about the transaction costs our clients incur when taking on a La Ceiba loan. One thing we have observed is that because the bank is far from the town (about a twenty minute drive), some clients choose to repay on a broader schedule—allowing them to travel to the bank less. This adversely affects repayment, because the longer the repayment time, the less likely a client is to repay at all. Again, I feel that my time should consider restricting payment schedules for new clients, and be increasingly flexible for trusted customers.

In the end, La Ceiba must incorporate the old model of ‘institutional-centered’ microfinance with the ‘client-centered’ microfinance model introduced by the reading. The ultimate goal of La Ceiba must be to alleviate poverty. To accomplish this goal, we must be diligent in our endeavors to have a measurable impact in Honduras.

2 Responses to “Advice and Observations for the Future of La Ceiba

  • russellscott
    14 years ago

    The Business plan thing seems to be the major concern with most people. We have the basic concept down, but we aren’t quite doing it in a way that will make the authors of these articles happy. The Personal loans are only half the story, its the business loans that will get the gears turning and allow us to maximize our effect.

    But thats another point you raise which is Ana, the loan officer on the ground at Honduras. I agree she needs to be kept in the loop and we need to rely on her, but I think we need to diversify as well so that we can reach a larger market to help ourselves grow to do what we want to do.

  • Time and time again I think of our “business” model and see the inherent value in what makes us different. As students we are less prone to the paternalistic relationship most banks have with their clients and we are more likely to take their personal circumstances into consideration than a profit-driven enterprise would be. Keeping LC client-centered has less obstacles for us than for a traditional MFI, because we are lean and open to any change that could benefit our clients.

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