Pablo Lubbert ’11Journal #1
I am spending my summer working for Peace Mexico, which is a nonprofit organization that focuses its efforts in Nayarit, Mexico. Peace works closely with Mexican communities to provide education and implement action programs that enable people to improve their quality of life and financial stability. Since 2005, Peace has been running several initiatives that touch upon environmental and animal protection, education for children and adults, social empowerment, and community development. The newest Peace initiative is a microfinance program.
My internship focuses on the design and implementation of the microfinance program. Based on conversations with potential donors, Peace’s management decided to run the microfinance program under a separate entity. That is why Sé Más is the actual company under which the microfinance program works. Currently, Sé Más is an unregulated, financial services entity with multiple objectives (SOFOM in Spanish), which allows it to grant loans and to charge an interest rate on them. The long-term goal for Sé Más is to become a self-sustainable bank, and to receive interest-generating deposits from low-income clients. The Mexican microfinance industry is well developed and highly competitive; therefore, this goal is a big challenge.
During my first three weeks, I have felt inspired by the work that Peace’s collaborators do. Although the working environment is very laid-back, everyone works hard and gives 100 percent to accomplish the challenging objectives. These three weeks were very intensive. I worked hand-in-hand with the program’s director and the loan officer to determine key actions for this first phase. The loan officer (Asesor de Credito) and I visited community leaders (mayors and school teachers mostly) in each town in order to introduce ourselves and our program. All of them received us openly and immediately offered help in promoting our microfinance program. Also, we put together a credit policy that included key elements such as product description, group lending dynamics, and requirements for first-time borrowers and returning clients. Finally, I worked on the financial model to project cash-flows and an income statement. We were able to determine the adequate interest-rate based on this model, and our objective of self-sustainability. Moreover, this model allows Sé Más management to change assumptions and evaluate future capital needs. I am looking forward to the following weeks. I will continue refining the model to include more variables and more loan cycles. Additionally, we will have a meeting with Nayarit’s local authority to explore a potential agreement that might bring a large pool of borrowers.
Journal #2
I am just finishing my sixth week of work for Peace Mexico and many things have happened since my last journal entry. We met with Nayarit’s secretary of economic development. This meeting was very productive and resulted in a change of our plans. Nayarit’s state government was running a microfinance program with funds from Mexico’s central government. However, for reasons that we don’t know, the central government stopped the funding and, in Bahía de Banderas, around 250 people lost their only source of credit. We perceived this as an opportunity for our microfinance program. With that number of clients, Sé Más would reach break-even before projected. On the other hand, since such rapid growth was not expected, Sé Más’s operating structure and financial resources were neither ready nor available yet. Therefore, much of my recent work has been focused on defining the funding needs for the next few months and helping with fundraising initiatives.
Additionally, I wrote an application for a grant from the Punta de Mita Foundation. Though, I would have liked to apply for a larger amount of money, and because of the grant rules we could only apply for funding the educational program. The educational program is an essential part of Sé Más microfinance philosophy and operations. Loans and education go hand-in-hand, and each client has to attend to two training sessions before it receives a loan. After that, clients have weekly meetings where the loan officer presents new educational materials. Based on the high interest from the communities, we re-designed the educational program to make it accessible to anyone. I really hope Sé Más gets this grant because many people would benefit from access to financial education.
Mar, the loan officer, and I, went to Guadalajara to visit Oportunidad Microfinanzas. We organized this visit with the objective of learning about Oportunidad’s processes and policies. One of the Sé Más board members helped us arrange the meetings with different executives. Oportunidad is part of the international organization Opportunity International, and has been focusing its operations in Guadalajara, Mexico since 2003. It has more than 6,000 active clients, which is the scale that Sé Más aspires to reach in the long term. We spent two days in Guadalajara, and we not only interacted with Oportunidad’s employees, but also with borrowers at their meetings. The whole trip was excellent, and we came back full of ideas for improving our processes and materials. For the following weeks, I expect to have good news from our donors about funding. Additionally, we should have the first training session for our clients and our first loan.
Journal #3
The last period of my internship at Peace was very fruitful. Based on the large number of potential clients, we realized the urgency of having a reliable management information system (MIS). Therefore, I was focused on determining our needs in terms of information management, and then finding the right system. As with any other financial institution, Sé Más needs to have control of its loan portfolio. This means managing all loan balances, group and individual information, principal and interest payments, and generating reports for collection and management purposes. Although all these capabilities could be handled in Excel files, Sé Más wanted a scalable system and to reduce the human factor in managing the information. After reviewing several software packages, I found an inexpensive one that fulfilled our requirements. The software developer and I presented the system to our director and it is up to her now if Sé Más implements the system.
Additionally, we had our first financial literacy training. It was a complete success. People really enjoyed being part of the sessions, and they were active participants, asking questions and making comments. They also asked us if they could bring their families to the next session. We noticed first-hand the impact of education and the interest the people had in financial concepts. After completing two sessions, a group of 10 borrowers received our first group-loan. They elected a president and a treasurer, who were in charge of coordinating weekly meetings and payments, and each borrower received, on average, $230. Moreover, the week I left, another group of nine people were doing the financial literacy training, and they would probably receive their loan one week after. Many more people were also waiting to join Sé Más's microfinance program.
I left Nayarit, Mexico with mixed feelings. I believe that I met all the goals that my supervisor had for my internship, and more. However, I feel that there is a lot to still do. I plan to be involved with Peace and Sé Más and find a way to contribute during my second year at Columbia Business School and after.
This internship was one of the greatest experiences I have had in my life. I definitely recommend other MBA students to do something similar during their summers. No matter what goals they have, this kind of experience will inspire them for the rest of their career, as it has done for me.
