A little less adventure. A little more microfinance.

I’ll try to touch on some of the specifics of the projects I’m working on here in my next blog post, but I thought I’d first start off with an introduction to microfinance and the microfinance institute (MFI) that I’m volunteering with here, Salone Microfinance Trust (SMT).

Dr. White manning the counter at his pharmacy, which
he finances with loans from SMT.

Most MFIs are non-profits that operate using a business model that simply covers their costs. However, because they make so many small loans, the administration and monitoring costs for these portfolios are actually quite high. As a result, interest rates can be as high as 2.5-3.0% PER MONTH. Once you factor in a developing world inflation rate of 10-15%, this still works out to a real interest rate of around 15% per year; similar to what you would pay on a credit card in Canada. At first glance, this doesn’t seem like the most effective way for a business to borrow money, but keep in mind that these borrowers typically have no credit history whatsoever, so they don’t have access to traditional sources of financing. Also, unlike a credit card, microfinance loans cannot be used for consumption. Borrowers must prove that the loan proceeds are going to be used for their business. Once the loan is paid off (typically in 6-10 months), the cash flow that was previously going to service the loan and it’s large interest rate now becomes cash that goes straight to the business owner’s pocket. This teaches SMT’s clients financial discipline, so that once the loan is repaid, they’re suddenly faced with a 30% or larger increase in cash flow that they can use to improve their living conditions, improve their diet, send their kids to school, etc. Interestingly, not a single one of the borrowers I’ve spoken with has mentioned anything about the interest rates being onerous. It’s simply a cost of doing business in the developing world.

Alpha has used several SMT loans to finance his two
shops, and a small distribution warehouse.

Since arriving, I’ve had the opportunity to meet and speak with a number of SMT clients. Many are shop owners that have used the loans to increase their inventory levels to drive increased sales. One shop owner I spoke to used his first loan from SMT to expand his existing store, then later used cash flow from that shop and a second loan to start a second store. A year later, a third loan and cash flow from his two existing stores allowed him to open a small warehouse that he now uses to sell bulk goods to his own shops, as well as to many of the other smaller stores in town. The combined businesses now provide more than enough cash flow to support his family and put his kids through school, and his expansion plans are far from complete. While obviously not every microloan is this successful, this is the exact type of person microfinance was designed to help. Someone with a good work ethic. Someone who was born into a life with limited resources, and just needs a small opportunity to build a better life for themselves and their family. And stories like this are extremely common, with upwards of 80% of microfinance clients returning for additional funds once their first loan is paid off, as they continually work to grow their businesses.

With orientation complete, I’m starting to get my first impressions of working in Sierra Leone. The staff here are all pretty motivated (though nowhere near North American standards, particularly those in Investment Banking). That said, working here can be frustrating at times. Everyone operates on “African Time”. Simple requests, such as a quick download from a database, can take hours. And I have yet to witness a meeting that starts on time. I actually had a meeting scheduled for 2pm that ended up starting at 4pm… the next day, with no explanation given. Rather than try to singlehandedly change the country’s corporate culture overnight, I’ve decided the best approach is to try and adapt myself. I’ve found the best strategy is to always have several projects on the go, so I can always switch gears and work on something else while I’m waiting for information.

With the rainy season just around the corner, thunderstorms are starting to become a part of everyday life. Makeni actually gets more than twice as much rain as Vancouver during this time of year. The only difference is it often comes in a span of 1-2 hours (often in the evening) and then the skies clear up again. This has had a few interesting consequences. The first is that our well is now completely full again (there was a time when the bucket was scraping the bottom, and I was genuinely concerned that we were going to run out of water). The second is that I’m now very hesitant to venture too far from my house in the evenings, though so far I’ve yet to be caught out in a storm. Lastly, and most annoyingly, I’ve discovered that my house leaks. Badly. During the first such storm, I stumbled blindly into my living room (the power tends to go out the second a storm starts. I haven’t been able to work out if this is intentional or not, but literally the entire city goes dark as soon as you see the first bolt of lightning) and right into a puddle of water that was nearly ankle deep. With a computer and iPhone sitting on the table, I started panicking that I was about to lose several expensive electronic devices, and grabbed a flashlight to try and find the leak. Surprisingly, the tin roof is completely water tight, but about 5 litres of dirty, muddy water somehow came through the living room floor and soaked everything in its path. Hopefully this doesn’t become a regular occurrence.

Bureh beach. Beautiful, and almost deserted.

On a personal note, one of the interesting challenges here has been to fill up time in the evenings and weekends with something other than just reading. I met a few medical students who are volunteering for 4 weeks at the local hospital who were planning a weekend trip to Bureh beach near Freetown. I had a work meeting in Freetown that Saturday, so figured I’d meet up with them Saturday night and spend Sunday relaxing at the beach. Because nothing in this country ever goes according to plan, I woke up Saturday morning feeling deathly ill. I’d gotten a couple mosquito bites a few days prior, so fearing the worst, I struggled to the city center and got in a shared taxi to Freetown (I learned my lesson to never take the bus again). At least the driver offered me the front seat. I jumped in and prepared to pass out when, literally 30 seconds before we were about to leave, the driver decided we can fit one more passenger into our 7 passenger van (we’ve already got 9 people in it). Alas, the only space left is my lap, and the final passenger weighs at least 180 lbs. I spent the next three hours with absolutely no feeling in my lower body, trying desperately not to vomit all over my new Sierra Leonean friend. Not a good start. I googled “malaria symptoms” as soon as I was in range of an internet connection in Freetown. For the record, they are abdominal pain, chills and sweats, nausea or vomiting, headache, fever, muscle aches and poor appetite. I had all of them. As soon as the meeting was over, I grabbed a coke (the only thing I’d been able to eat or drink all day) and mentally prepared for the journey to Bureh. If I’m going to die, it might as well be somewhere nice. That, and I trust British medical students a lot more than the typical doctor in Sierra Leone.

Palm wine. Will's face says is all.

Now is probably as good of a time as any to complain about Freetown’s traffic and infrastructure. This is going to be a major challenge to this country’s development plans. In addition to the ridiculous location of the airport (covered at length in my previous post), public transport here is completely nonsensical. All told, to get from the bus stop in Freetown to my meeting and then to Bureh beach involved a taxi, then a motorcycle taxi, then a poda poda (basically a 13 passenger van that carries upwards of 20 sweaty and smelly people. At least it’s cheap, though. $0.25-0.50 per ride) then another taxi (unlike in Canada taxis here drive set routes, similar to buses back home), and then another taxi, and then a motorcycle taxi. And that was just to get TO the meeting. Getting to Bureh involved another bike, then a taxi, then a poda poda, then another poda poda, then another taxi, and finally one last bike. The total trip time from my home in Makeni was 11 hours (including the 2 hour meeting) and required 14 vehicles. Fortunately, after all this and an early night’s sleep, I woke up the next day feeling about 90%, so no malaria. That was a positive development. The beach was just gorgeous, and the trip home was a lot smoother. While waiting for a taxi at the beach, we were approached by some locals who offered us a lift into town. Other than a 30 minute unplanned stop at their friend’s place to down a couple glasses of palm wine (which is poured out of an old anti-freeze container and tastes even worse than it sounds) the trip was uneventful. We then booked a car in town and were back home in three hours. Maybe I’m just unlucky when I travel alone?

The chin-up bar in my "gym".
Still very much a work in progress.

I’ve also started to get a bit stir crazy in the evenings, and so decided to try and turn the outdoor kitchen into a gym (after nearly four years of Investment Banking, I’ve pretty much forgotten how to cook anyways). So far there’s just a chin-up bar (which is extremely brittle and unlikely to last the week, which hopefully doesn’t result in a broken toe when I unexpectantly come crashing down on the cooking pots and utensils that cover my “gym” floor) and a mattress for doing sit-ups and push-ups. Maybe an eventual trip to the hardware store will yield some interesting pieces of makeshift equipment. Stay tuned!

Jesse