This is the fourth installment in my “listening and learning journey” as the new CEO of Opportunity International Canada. My focus this month is on what I learned in Honduras, where I traveled in March to spend time with our local partner, and where I also had the honour of meeting several microfinance clients to see the impact of our work in that beautiful country.
Everywhere Opportunity serves, we do so in partnership with a local microfinance institution and/or NGO. This ensures that the work is driven by the local agenda and that we are always in a supportive role – a much needed posture of humility and collaboration.
In Honduras, our long-time partner is IDH Microfinanciera. IDH is short for Instituto Para el Desarrollo Hondureño, which translates as Institute for Honduran Development. From its start, IDH was formed to help the poor emerge from grinding poverty through microenterprise development. This mission focus remains central to IDH, even as they grow into a more mature regulated microfinance institution under the visionary leadership of CEO Francisco Banegas.
Over the past seven years, IDH, Opportunity International Canada and Rotary International have cooperated on a long-term, multi-phase project called Honduran Economic and Community Development (HECD). Funds are raised by Canadian Rotary Clubs that are matched by the Rotary Foundation and Global Affairs Canada, and some Opportunity donors. More than $4.5 million has been raised so far to help those in Honduras.
Approximately half of the funds were used for infrastructure to help IDH position itself to help more emerging entrepreneurs, such as client training, start-up funds for a number of local branches, and a digital overhaul in 2015 which proved to be a powerful catalyst for increased impact and efficiency.
The other half of the funds were deployed as loans to emerging entrepreneurs, which means that all that money is still at work. Given the historically high repayment rate of microenterprise clients, the initial funds can be loaned again and again in a virtuous cycle of community development.
IDH has 17 branches around the country with three more branches scheduled to open in 2019, which will provide much increased access for the urban and rural poor clients they aim to serve. As IDH has grown, so have many of the microenterprise clients, to the point where they have been able to create jobs for their neighbors. As my colleague Jannalee Anderson puts it, “not everyone is an entrepreneur, but everyone needs a job”.
These small-to-medium sized enterprises (SMEs) are still relatively poor by most standards and cannot access traditional bank financing. But the impact of this growth can be transformative for a community. I met a number of SME clients and was inspired by their stories.
Jimmy the Mechanic has a small business in Tegucigalpa, the capital city of Honduras. He has been a client of IDH for five years and says that IDH was there for him when no one else except loan sharks would provide funding. He started off with an empty lot and has grown his income by 400%. He built up the garage, added a spare parts business, and bought two taxis (old used cars). As a result, today his enterprise employs seven people — four mechanics, two taxi drivers, and himself. He used the loans for tools and equipment, the taxis, and also was able to borrow to cover health care expenses for his mom and sister. One day, he dreams of building his own house above the shop and expanding his parts store. He said his dad dreamed of being a mechanic but couldn’t, so he made sure his son got an education and inspired him to live out this dream for himself.
We drove to to the outskirts of Tegucigalpa and met with Nesquin. He had studied business but was unable to find sustainable employment. His wife suggested they open a store on a corner along a busy tourist road connecting Tegucigalpa with Valle de Angeles. His dad helped with some start-up capital in 2011, and they began in rented space with a couple of shelves and inventory they purchased by the dozen. When they sought a loan to help grow, IDH was the only organization that helped, and they have stayed with them ever since, even though other banks now call regularly. They have managed their debt carefully, with four loans over the period which they used to add shelving and refrigeration units and to buy inventory at higher volumes. In addition to their retail business, they are a wholesaler to smaller stores in their neighborhood. The income from this store, and a separate stall in the market operated by his wife, has helped them raise their family – food, housing, education, transportation. Their oldest son is studying physiotherapy in school.
Nesquin’s dream is to own his store, pay off the mortgage on his house, and open a second larger store. But Nesquin is motivated by much more than growing his income. Because of his faith, he also wants to help his neighbours. About eight years ago, he gave a part-time job to a 10-year old child from a troubled home, whose father ignored him and who was on the path to gangs and drugs. The store became a safe place to study or simply hang out, while providing an income to help his mom. That child is now 18 and he teared up (as did we all) when telling us that Nesquin has been the father he never had. Nesquin has plans for him to run this store when he opens his next store. Two months ago, he hired a 14-year-old boy with a similar story. He is mentoring these boys so that they stay away from the devastation of drugs and gangs and is giving them a future. It’s an SME with a social purpose. Nesquin wanted me to share, “It’s not about the money. You have to put God first and it’s about sharing God’s love with others, rescuing these kids from their environment.”
I met Sofia in Valle de Angeles who used loans from IDH to start and grow a tortilla factory and has created four full time jobs in the process — for her and her husband and two neighbors.
I also met Joaquin who operates a shoe factory in La Union, where they make quality leather shoes and boots. Being very careful with his loans, he has steadily grown his business over the last 10 years from a one-man operation to a staff of 11 today. Interestingly, 10 of his employees are also IDH clients, having borrowed home improvement funds and their loan payments are deducted from their pay.
Although IDH is helping their microenterprise clients grow into SMEs so they can have greater impact through job creation, they have not abandoned the poorer start up clients.
For example, I met Fanny in the neighborhood of Nuevo Horizontes (New Horizons) near Puerto Cortes, where many of the homes were built by Habitat for Humanity. Fanny has a one-year-old daughter and lives with her mother-in-law. She recently started a business selling women’s and children’s clothing out of her home, and also travels around selling to clients who give pre-paid orders. When she was young, she delivered tortillas for her aunt and always wanted to have her own business. The Loan Officer found her delivering sandals to clients of another business and encouraged her to start her own business. She travels by bus to San Pedro Sula (very long walk to the bus) once or twice a month to buy inventory at better prices. Her dream is to grow the business with more clients and to be able to complete the construction of their own house. Fanny is a small business owner making the most of this opportunity. She has a plan and is clearly very hard-working as she provides a better future for her daughter.
I met Jessica, a 24-year-old single mom, with a four-year old daughter. I learned that 56% of IDH clients are women, and half of those are single moms. In Jessica’s case, the father is not involved and provides no support. She has worked for herself since she was 15, first as a cleaning lady and then as a nanny for the owner of a beauty parlour, where she learned by watching and doing. The town gave her a plot of land and with the help of her father she built a house. When IDH offered to help her, she used the loans to buy a hair straightener, hair dryer, some nail polish and other small items, and opened a beauty salon in her living room. She hasn’t used the whole loan, preserving some against future business needs. Jessica finds clients through marketing, low prices, word of mouth, and social media. She also cuts men’s hair and plans to buy a shaver. She intends to set up a mini-shop on the beach during Holy Month to provide manicures. She says she has the lowest prices, clients leave satisfied, and don’t ask for discounts. Her next step is to expand her house and add a dedicated room for the salon. Her big dream is to operate a beauty salon in downtown Puerto Cortes. She said, “Thanks to this business, I have no desire to join the caravan,” referring to the desperate groups heading to the US border in hopes of a better life. Jessica is hopeful, determined and hard-working, and were inspired by her story.
Through our long partnership with IDH and more recently with Rotary International, we have seen our vision lived out in dramatic fashion. Hundreds of individuals have been able to operate a microenterprise to provide a better future for their families. And some of these have been helped to grow so they can hire their neighbours, expanding hope to the entire community. The mission hasn’t been accomplished, but great progress is being made.