The Power of Microfinance

This article is a reposting from the Kiva Fellows blog, Stories from the Field.

By Leah Gage, Kiva Fellow Togo

As one of the lucky few allowed the opportunity to watch microfinance in action in Togo and Ukraine, I am increasingly convinced that microfinance is primarily a mechanism for social empowerment. Joseph Akogo, the director of Kiva’s field partner Microfund Togo, recently told me a story about a couple that benefited from microfinance. The wife was a client of MF Togo who received a loan for her business in the market. The husband was unemployed and frequently beat his wife when she returned home from work and took control of her income. Their children were being neglected as a result of their mother’s stress, their father’s violence, and the subsequent misuse of family funds.  Joseph realized the gravity of the situation and spoke to the client’s husband. He was a mechanic, unemployed, and embarassed by his inability to provide for his family and rely solely on his wife’s income. [Not an excuse of course for beating his wife, but this is the reality many rural Togolese families face.]  Microfund stepped in with an experimental idea – a loan to open a garage on the condition that the husband agree to respect his wife and allow equal decision-making in the household.

Today, with both parents working and earning family income, this family is now a Microfund success story and proof that microfinance can breed social change. The couple make decisions together, they share responsibility for the family’s income, the children are better fed and better schooled. He does not beat his wife anymore. While the immediate outcome of this loan was that the man could start his own business, perhaps the more important outcome was the social progress that occurred as a result. This is the power of microfinance.

Akouélé Agbo is another example of the social power of microfinance. She took a loan that helped grow her farm’s arable land. Her profits doubled and she began to be able to save a little money each month. She also sent her three oldest children to school in the nearest town. Her story illustrates the economic attractiveness of microfinance as an economic development tool – it encourages self-sustained growth – it’s not aid in the traditional sense and doesn’t encourage dependency the way that aid tends to do. It’s also relatively easy to quantify its success: she took a loan, paid it back, doubled her profits, took another loan, planted different crops to diversify her profits, and with the third loan was even able to employ some help on her farm. One can look at her balance sheet and instantly recognize a numerical success story.


But what drove Madame Agbo to take the loan was not her economic training or financial forecasting, of which she’s had neither. Her bottom line was feeding her four children. But once that was easily achievable, her next bottom line was educating them. That may appear to be a small step in her financial balance sheet and her family budget, but it’s a giant leap in her children’s future – and potentially in the development of her nation and community. And it was microfinance that gave her the power to stop thinking about merely feeding her kids and allow her the freedom to consider educating them.

A few weeks ago, Kiva Fellow Kevin Chaissan asked what it would take and how long for Africa to “catch up.” What will allow a developing country to develop? Is microfinance a part of it? Development requires planning and patience. This is true at the micro and macro level. To be successful, or to simply “catch up” takes time – maybe 250 years, maybe more. Any effort to make rapid change in the developing world inevitably fails. Yet constant worry about putting the next meal on the table or escaping your husband’s next beating do not allow for either planning or patience – those are immediate and urgent concerns. Microfinance makes those concerns less urgent. It allows planned and patient development to take place.

And the outcome of planned and patient development is the social empowerment that occurs as a result of economic development like microfinance. When I asked Joseph Akogo, Director of Microfund Togo, what the future of development in Togo is, he didn’t tell me lower interest rates or bigger loans or even enterprise development training. He said, “Family Unity”: family unity allows both the husband and wife making decisoins equally; income is shared equally; children’s future and well-being are put first; family unity breeds stronger communities and thus a stronger nation. It’s what led him to introduce the new couples-loan product introduced at the beginning of this story. 


His colleague Climat turned to me and exclaimed, “Women are the future of development in Togo!” Women, he said, will ensure first that the children are fed and educated; that decisions about income put first the health and well-being of their family and community. “Microfinance empowers women to have that equality in the family,” Climat said.  It’s true – I can’t tell you how many Togolese women I have met who tell me that their ability to contribute to the family’s income was her ticket to equal treatment by her husband and respect in her community. “Now my husband and I make decisions together,” Adjovi Neglo told me. “Now, I am respected in my community. People take notice of me [because of my loan and my success as a farmer],” Kossiwa Barakou said to me.

Whether the future is women or family unity, the message to me was clear: responsible and effective development rests on the shoulders of ensuring that the grassroots are socially empowered. And one tool by which this can be achieved is microfinance.

There is a distinction between what empowers – people and ideas, not credit – and what allows access to that empowerment. Microlending provides that access; it is a bridge between economic necessity and social empowerment. And Kiva, in turn, is to me all about social empowerment. Kiva lenders don’t ask to see their borrower’s balance sheet as proof that their loan made an impact; they want a story, or a photo, or a video. They want the picture of the borrower’s life. They’re on one side of the bridge, and they want to better understand the other side. Kiva lets them do that.


Blowing Around in the Wind

God forbid I title this “Blowin in the wind.” Does the addition of “Around” reduce this blog’s corniness and cliche? Well regardless I’m a week and a half from my Zap departure date. As I could have guessed, I’ve really loved my time in Ukraine, even in Zaporozhye, and am sad to be leaving this new found home and favorite job of my life.

While the home will change, the job will continue, when on May 16th I arrive in Lome, Togo to begin my second Kiva Fellowship. I’m heading to West Africa by way of Budapest (May 7-10) and London (May 10-15) for a short vacation in two fabulous cities, one old and one new.

I’m sticking with Kiva for now because I can and want to. I’m staying abroad because I can and have no reason not to. I feel purposeful and stimulated and can’t really imagine doing anything else for the time being.

If you ask me “when I’m coming home,” I will tell you I have no idea because I don’t even know what that means.

I’m tired, though, already running ragged after only 2.5 months, but feel driven to continue this work because not all of my questions have been sufficiently answered. I’m still left wondering about responsible international development and my presence in a place that doesn’t understand me or necessarily want me. Togo will be another kind of challenge and learning experience that I need to have before I can feel at peace.

I’m missing my people and the comforts I associate with them, like catching TDS on the couch or drawing pictures at the kitchen table or not having to order a B-label or doing crosswords for hours at the counter or harmonizing on the back porch or eating chinese food on the bed. I’m even missing the companionship from the Btown days, as evidenced by almost every dream I’ve had since I arrived in Ukraine. [It’s amazing how your mind defaults to things you don’t think about on a day to day basis when you really remove yourself from your comfort zone.]

But these things are not too painful, not yet anyway. At this point it would be more painful to cut short this quest of sorts, so I’m going to continue this journey and try to learn as much as I can while I can, and then come home and crash with you for a few months.

Until then, please bear with me and don’t forget about me. I promise I haven’t forgotten about you.

Expats in Zap

My roommate Colleen and I often feel guilty about how much fun we have here in Zaporozhye, Ukraine (lovingly referred to as Zap by Ukrainians and expats alike). To this end, we’ve created a series of videos about our life in Zaporozhye and all the fun that ensues as a result. Please enjoy!

Epidode 1:

When Borrowers become Lenders…Heroes…and possibly exploited

I had a great visit in Mikhailovka a few weeks ago and wrote this blog about Yuryi and Tatyana Syomkin, two borrowers who became lenders and heroes in the process. I posted this to the Kiva Fellows blog, and I’d like to repost it here. You can read the full entry on the fellows blog at

Tatyana and Yuryi Syomkin own an auto repair and body shop in the small village of Mikhailovka, Ukraine. They’re the only business in the area that can provide quality auto parts and vehicle repairs. Last month, the mayor of a neighboring village called Tatyana when their school bus broke down. The mayor asked if Yuryi would be willing to fix the bus on credit, the village government wouldn’t be able to pay the Syomkins for the job until later. In such a small community, Tatyana told me, it’s hard to say no when you’re asked for help. Not to mention when the mayor calls and asks you to fix the village school bus. And so Yuryi and Tatyana obliged, as they always do; they’re still waiting for the 7,000 hryvnas they’re owed for the job.

One of the hardest-hit populations hit hardest by Ukraine’s recent currency devaluation was small business owners. … In an economic crisis, the small business owner is hit twofold, both by the rising price of inventories – which are generally valued in dollars but purchased in hryvnas. In addition, they’re dealing with the shrinking disposable incomes of their customers, also caused largely by currency devaluation. These factors create a simultaneous need to both raise and lower prices in order to stay competitive and in business.

Ukraine’s small business owners have been squeezed on both sides. Providing small loans of their own is not an uncommon way for these businesses to stay afloat in such difficult circumstances. “We have lots of borrowers,” Tatyana Syomkin told me.

The Syomkins have also made loans to the village hospital. They call needing help with the ambulance and parts for the other vehicles, Tatyana says. We help, she told me, “but the money is still not in our hands… We all know each other, we have to help each other.”

Despite the strain this puts on Yuryi and Tatyana’s family business, you might say these folks are heroes. Where would the village be without a school bus and an ambulance? Sitting in their shop, looking around at well-stocked shelves run by Tatyana, Yuryi, their son, two daughters, and their son-in-law, I marveled at the Syomkin family’s strength. And the Syomkins aren’t the only ones making loans. A week later I traveled to Kherson and met Dina Avanesova, who told me that a large portion of her “sales” this season have been loans or lay-away deals to customers with dwindling disposable incomes.

I like to think of Kiva lenders as heroes in their own way, who with a small loan can change a life or even a community. It occurs to me that Kiva’s borrowers can have that same power – they are themselves experienced lenders who, like Yuryi and Tatyana, work in small communities where a loan is often more than a loan, it can be a helping hand to a friend or an act of heroism in a community.

An unfortunate side to this entry that I did not mention on the Kiva Fellows blog: it’s no accident that Yuryi and Tatyana had to “lend” to the village government and state hospital. Like many post-Soviet countries, Ukraine experiences widespread government corruption; there’s still a generally held understanding that citizens somehow owe the government whatever they have. And so Tatyana probably felt like she had no choice when the mayor called her and told her to fix the village school bus.

Tatyana also indicated that this was in part due to Yulia Tymoshenko’s cutting back on village government subsidies. As we spoke I noticed a blue flag hanging behind her and a hat hanging on her wall, both with the Yanukovich logo and slogan. She campagined for Yanukovich, she said, and she feels that now village governments like hers will get more money to improve their infrastructure and actually repay what they owe to their citizens, like Yuryi and Tatyana. I hope for their sake this is true.

New Post on the Kiva Fellows Blog!

I recently made a trip to Melitopol, a village 2.5 hours outside of Zaporozhye, where I interviewed four borrowers whose microloans were funded on Kiva. I met some wonderful people and learned a lot about why microfinance in cold weather is different than microlending in the southern hemisphere, where the practice is more commonly used as a development tool and where snow and sleet are not factored into an entrepreneur’s daily life.

Take a read if you’re interested:

Relying on the Kindness of Strangers

Following my latest post about language barriers and related difficulties, I got many a note from friends and family telling me to chin up and come home if I needed.

I guess what I considered to be dry wit was really just coming off as dull complaints… my bad, friends.

The truth is there’s nowhere in the world I’d rather be than right here. Many of you know that my journey to becoming a Kiva Fellow has lasted years, and now that I’m here I feel so ready to face the day and its ensuing challenges. And it doesn’t hurt that after one month here in Ukraine, I’ve had more than my share of rewarding kindnesses from strangers when I’ve least expected it.

At Khersones, a small city of Greek ruins, on the Black Sea

Zaporozhye is not home to the kindest strangers I’ve ever met. People are generally annoyed to come into contact with me, which I’ve blogged about more than once before.  But like I’ve said, it’s understandable. Zap is not the easiest city to inhabit, even if you do speak fluent Russian and know where each marshrutka stops and how much it costs to get on.

I visited Crimea with my roommate Colleen this past weekend. It was a lovely, sunny, green-grassed and blooming-flowers,  if not a little chilly, getaway.  I feel a new found apprecaition for the loveliness of Ukraine and recharged to undertake my work as a Kiva Fellow. Here are a few funny stories about strangers who brightened my trip with Colleen to Crimea and helped to renew our faith and love in Ukraine.

Upon arrival in Sevastopol, Colleen and I stumbled off our night train and spent a good 10 minutes looking for our bus stop that would have been easily found had we read our instructions a little more carefully. Instead, we walked through the parking lot of the Bokzal with our backpacks and winter coats, looking very American and probably very lost. “Can I give you a ride!” the Ukrainian taxi drivers yell to us as we wonder aimlessly. No thanks, we say over and over. “I’ll take you for free!” says one man with a smile. A smile? A JOKE?!?! We’re speechless.

Marina awaits at the top of these stairs

Minutes later, as we come upon our hostel, we’re met again with a surprising display of kindness from a stranger as our hostel host Marina awaits us at the top of the street about 10 minutes earlier than we said we’d arrive.  (Whoever heard of a hostel owner coming to meet her guests???) She and her husband spoke to us at length and made sure we had all the information we needed for a successful Crimean vacation, and even offered up cell phone and home numbers for further assistance, free of charge. (Marina & Yuriy’s Funny Dolphin Hostel in Sevastopol comes highly recommended!)

And then there were pickles. Ukraine’s home to lots of pickles. We came upon the stalls of pickles at Sevastopol’s nicest rynok, or outdoor market. Independent as I try to be, I order my own pickled goodies separately from my fluent-in-Russian roommate Colleen. Obviously I don’t speak Russian, and the pickle ladies promptly find out from Colleen where we’re from and why we’re here. … All of a sudden, we’re being handed hand fulls of other pickled goodies. Handfulls of pickled eggplant, cauliflower, cabbage, green beans, and carrots. Then carrots wrapped in cauliflower…eggplant wrapped in cabbage…greenbeans and pickled garlic…you name it, they pickle it. And these ladies hand them to us, refusing our money, as a “Welcome to Ukraine” treat.

Of course, we’ve been in Ukraine for over a month. We’ve had our fair share of pickles. We’ve had our fair share of rynoks. But these ladies have showed us a kindness we will never forget. (Our gassy stomachs won’t forget either, for hours…)

Our sentiments about the Rossiya Mall...

Then there were the marshrutka drivers. Note to wayward travelers: Lonely Planet Ukraine does not have the best descriptors for how to get around in Crimea. So when we got on marshrutka 112, hoping to take it to the “Rossiya” stop to then walk to Khersones, the town of Greek ruins along the Black Sea in Sevastopol, we were shocked when we realized we were the only people left in the van. “Where are you girls going?” the driver yells back as he pulls into his final stop, a deserted gravel parking lot where, it seems, all the marshrutka hang out smoking cigarettes in between shifts. We explain where we’re trying to Khersones (which, btw, is pronounced hair-son-YEZ, not hair-SONEZ…). The marshrutka drivers laugh at us as we try to hang with them and then another very nice driver takes us directly to our stop, which is the “Rossiya”  Mall, after explaining to us exactly how to get to the Greek City.

Made it!

Finally, there were the Ukrainian kids we met our last night. Although they lived in Sevastopol, they’d rented out the entire apartment (a mere $40 for the night) to chain smoke cigarettes and throw a party with their friends. Despite language barriers, it took the kids only a few hours to consider us their new best friends as they included us in their party, shots of cognac (?!?!) and all. It was a great way to end our trip as we stumbled onto our night train bearing random gifts like an Eiffel Tower keychain and a cigarette lighter with dice inside from our new Ukrainian friends. “I LOVE YOU!” they yelled as we rushed out the door to make our train.

Colleen & I with our new friends

“WE LOVE YOU TOO!” Maybe its a southern thing. But it was nice to leave Crimea having had a fun and successful vacation that relied so heavily on the kindness of strangers.

RUSHIN’ the RUSSIAN …or… How I’ve become a horrible person to get to know in only 4 weeks

Like most days, my lack of facility in either of Ukraine’s most useful languages once again inhibited my ability to do my job today. It takes a lot of preparation to arrange for borrower interviews in the field. And as of yesterday evening, I had all my ducks lined up for a trip to Yubilenyi Market this morning. Step 1: My previous interpreter recently got a job, so with the help of Max, the Kiva Coordinator, I arranged for a new interpreter and explained to her the job. Reluctantly, she agreed. Step 2: After identifying a slew of borrowers I wanted to interview, Max arranged with Volodya, a willing loan officer, to visit Yubilenyi Market the next morning. Step 3: I asked Alina, my interpreter, to arrange with Russian-speaking Volodya where and when to meet the next morning. Step 4: Receive call from interpreter Alina to about when she can meet and where we should meet Volodya.

Step 4 never happened. The interpreter never called this morning and it all fell apart.

I love you Kiva, but why the *&%# did you send me to Ukraine, when I speak no Russian or Ukrainian at all? I interviewed in French! Twice! Come on people…

It’s not Kiva’s fault. In fact, I was all scheduled to go to francophone Africa with KF9 until circumstances led me to defer until KF10, which apparently had a plethora of French speakers and a dearth of Russian speakers. Me and my big, angliski mouth happened to mention to Kiva “all my experience in eastern Europe” (*ahem* … I’ve since learned that I had no experience in Eastern Europe, I was very decidedly in Central Europe, an entirely different place altogether) … and here I am in Zaporozhye. Even in my third week here, I meet Ukrainians who simply laugh in my face when they realize I moved to Zaporozhye with no Russian skills at all. What were you thinking, sweet little American girl?!?! Welcome to Ukraine darlin. We don’t speak English. Or French or Hungarian.

And so I visit Anya, my Russian tutor, for one and a half hours twice a week. I sit and listen intently to every word of Russian spoken in radio commercials and pop songs during my half-hour long rides on the marshrutka each morning and evening. I practice sounding out in my head every single sign I see in the Cyrillic alphabet. Every day I’m faster and faster.

Me, looking particularly meek and mousey during the office Men's Day party. Please don't talk to me!

It’s such a bizarre experience to live in an environment where you don’t understand the vast majority of communication that occurs around you. Your personality starts to change in really strange ways. I’ve noticed, for example, that I avoid all human contact as much as possible. I avoid getting in elevators with people, long lines at the super market, sitting next to people on the marshrutka. In a matter of weeks I’ve become what you might call “meek and mousey.”

When the unavoidable verbal contact does occur with another Ukrainian, I panic. My mind rapidly scrolls through English, no, French, non, Hungarian, nem, Russian…eh…I have three things I can say:

“Я не знаю” = I don’t know.

“Прости” = Forgive me.

“Я не говорю по-русский.” = I don’t speak Russian.

All of these, mind you, can also be strung together to form at least four other sentences.

Forgive me, I don’t know.

I don’t know, I don’t speak Russian.

I don’t speak Russian, forgive me.

Forgive me, I don’t know, I don’t speak Russian.

Of course, this can be limiting. For example, upon entering my large Soviet-style block apartment building, a babushka who has been living there for 40 years stops and asks me, “Do you live here?” If I respond, “Forgive me. I don’t know,” I’m certain to arouse suspicion.

Me with Loan Officer Volodya in Zaporozhye McDonalds. Do I arouse mild suspicion? (I was trying to look Ukrainian!)

So to “meek” and “mousey” we can now add “clueless and “sometimes suspicious” to words that describe my new personality.

Sometimes, when I’m especially tired or disinterested in making an effort, I simply respond, “Nyet” or say nothing at all.  This is especially hilarious when I’m asked a question that warrants more than a yes or no answer.

In the grocery store, I usually do ok. I know I’ll be prompted with, Do you want a bag? “Nyet, sbasiba.” You owe this much. I pull out the biggest bill I have since I’m still learning numbers and I know this dude has change, even if he pretends he doesn’t. Do you have smaller bills? “Nyet.” A different question that I don’t understand? Panic-stricken look. … Deer in headlights. … French … Hungarian …“Nyet.” Rolled eyes. Change received. “Sbasiba bolshaya! (thank you very much!)”

And thus we add “awkward” and “rude” to “meek,” “mousey,” “clueless,” and “sometimes suspicious.”

Champion of Awkward

Closing words of encouragement: I’ve been told now on four different occasions, thrice by Ukrainians and once by a Russian, that I have a good accent and good pronunciation with my Russian. This is a huge bonus in my favor. I’ve also had a few moments of glory when some of the Canadians and Americans I’ve befriended here, who have been taking Russian for several months, were impressed with my ability to order a beer in Russian or to understand the general gist of what my Ukrainian friend said when she tried to embarrass me to a Ukrainian waiter by speaking in Russian. Hopefully, all of this will contribute to my efforts to become less meek, mousey, clueless, mildly suspicious, rude and awkward, and thus a more pleasant person to get to know, here in Ukraine.