By Caree Edson, KF14, Armenia
I was having lunch with a colleague who wants to practice his English when he offered to take me out into the field to witness a day in the life of a regional manager. It was here that I realized that sometimes years worth of schooling happens in a single day on the other side of the world and there is no substitute for witnessing first-hand how and why microfinance works.
Avet is a regional manager for the Syunik (Southern) region in Armenia. He is in charge of 5 branches currently and is opening his 6th this week. An avid wine enthusiast, comedian, and family man, Avet promises great company. He has a background in economics, business and agriculture which make s him an enormous asset to SEF International. He also has a heart of gold and invited me and a friend to celebrate Easter with his family. Avet was involved in the building of SEF’s newest logo and company identity. He tells me that the logo represents new beginnings for SEF’s clients. 
Overjoyed to be meeting with the first client of SEF’s newest branch in Artashat, (a city that already has been scooped up by competitors in the microfinance industry) Avet enthusiastically contacted the client to inform him of our surprise visit. These surprise visits are an integral part of the loan process by which the loan officers confirm the details of the loan and see the business, farm, client’s home for themselves to ensure that no fraud is taking place. Avet says that from experience about 2 out of every 10 clients is taking a loan for the wrong reasons and SEF wants to weed these out. It’s not fraudulent activity, per se, it is simply that sometimes clients are over-indebted and trying to pay off other loans or use the agricultural loans for consumer purchases. This is a common happening in poverty-stricken households where the income is used to pay for all expenditures, business, education, food, and other items. By verifying the purpose of the loan, SEF is protecting its clients from taking out loans that they cannot repay while protecting their investment as well. Avet is also able to offer some advice in regards to best practices on the farm to help the clients to maximize their incomes.
Endeavoring to work around a few challenges with a recent death in his family, the client agrees to meet with us and we make the 2 hour trip out to his farm through unpaved roads, doing donuts in the mud and finally bouncing over rocks in Avet’s newly washed car. Three new loan officers accompany us on the trip to be trained. One of them speaks English and pauses for some pictures with me out on our most beautiful clear and sunny day yet in Armenia. The client smiles as Avet promises to return on the one year anniversary of this momentous occasion in celebration and with gifts. He tells me that SEF has a tradition of celebrating with the first client in each area (agriculture, business and consumer loans) on the anniversary of their loan dispersal.
There are many critics in the world that are speaking out against for-profit microfinance institutions with the assumption that only non-profits can truly help the poor. I wanted to know why the two microfinance organizations that I am working with here, SEF and Nor Horizon, are both registered as for-profit companies. They were both started by large non-profits (World Vision and Oxfam) and are very socially-minded companies working to benefit the poor. Turns out, non-profits are not licensed to lend money nor collect savings in Armenia. So it follows that if we eliminated the for-profit microcredit companies, there wouldn’t be anyone to lend to the poor here. It’s simply a manner of licensing practices in Armenia.
When I ask what the loan officers do in case of late payments or defaulted loans, I am met with blank stares. Loan officers call clients monthly to check in and to remind them of their payments if they do not pay on the day that they are expected to and late payments are hardly ever an issue with these two companies. If a client is facing some sort of hardship, the officer meets with the client at their home or business and helps them to find a way to repay the loans. One borrower told me that she couldn’t even “try to forget” her loan repayment date if she wanted to. Her loan officer contacts her regularly and is so personally invested in her business he feels like family.
While I haven’t been as busy as some other Kiva Fellows upgrading computer systems and manually entering payments into archaic forms of Microsoft Excel, it has been a great experience to learn from a few companies in Armenia who have the system down like a well-oiled machine. Organized, efficient, and wise in the ways of microfinance, I have learned a ton from those that know what they are doing on this side of the world and will always be grateful for their willingness to share their expertise with a humble student.
Caree Edson is a Kiva Fellow finishing up her last week with SEF International and Nor Horizon in Armenia. She will miss the hard working people that are making a difference in the lives of Armenian clients and their families, but looks forward to starting life anew back home in just a few short weeks.