Is Microfinance an Engine of Development? Finca Says Yes
Friday, March 30, 2012
It’s probably fair to say Rupert Scofield had no idea what he was getting himself into. It was 1971, he had just graduated, and entering the world of pinstripes and percentages inhabited by his father – an assistant treasurer at a bank in his native New York – seemed no more appealing than enlisting for the Vietnam war. So he volunteered for the Peace Corps, embraced crash courses in Spanish and farming, and joined an agricultural project in San Martín Jilotepeque, a rural municipality in the Chimaltenango department of Guatemala. It was an experience that would define his life.
“These people were very capable farmers, and had been working the land for generations,” recalls Scofield. “But the soil was very depleted and the yield was getting lower and lower. I thought that, with the addition of a little chemical fertiliser, we could boost the crops so that they would get a better yield and be able to eat better. The problem was, they didn’t have any means to purchase the fertiliser. So we organised a credit scheme where we gave these people $50 loans, but in the form of fertiliser.”
With the modern form of the microfinance industry barely nascent, it was innovative thinking. The take-up was enthusiastic and, before long, Scofield found himself dealing with an 800-strong co-operative of farmers. But in such a remote community, the logistics of transporting the fertiliser presented an obvious challenge. The difficulties were compounded by a lack of urgency on the part of Scofield’s bosses. By the time the fertiliser arrived at the Peace Corp office in Guatemala City, the national capital, the seasonal rains had started.
“I couldn’t find any drivers who would take me,” says Scofield, who was desperate not to fail the people in whom he had raised such hope. “They all said: ’Are you crazy? We’ll get stuck and we’ll be there until next spring’.”
Eventually, an old man named Luis agreed to help – for double the going rate. After a hairy return journey, the pair re-entered the town in Luis’s ramshackle truck, horn blaring triumphantly. “I’ll never forget the looks of jubilation on the faces of those farmers,” says Scofield. “I realised then that it was going to make a huge difference to their lives. For many, it might even have been the difference between life and death. They used the fertiliser and got terrific yields. Many people began repaying the $50 loans before the crop even came in and by harvest time some had repaid in full. Of the 800 farmers that I worked with, 799 repaid in full.”
At a time when the microfinance industry has been overtaken by a crisis of faith, Scofield’s story is an uplifting one, an antidote to talk of poverty traps and corruption allegations. It illustrates that – on one level, and in the right circumstances – microcredit can yield tangible results for the world’s poor, whatever its critics might say.