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

Safely Arrived

I’ve been in Sierra Leone for about a week and a half now, and decided it’s time to endure the painfully slow internet connection here and try and get my first blog post up.

First, a quick intro to the country. Sierra Leone is a former British colony in West Africa with a population of 6 million. Freetown is the country’s capital and largest city, with just under a million people. Those who have seen the movie Blood Diamond have a sense for what things were like here during the civil war, which ran from 1991-2002 and left 50,000 people dead, with another 2 million displaced in neighbouring countries as refugees. An estimated 70% of Sierra Leoneans currently live in poverty.

Things have been eventful here since day one. My flight landed at 3:30am at Lungi International Airport (see the map to the left) and, due to some miscommunication between myself and the person picking me up, I wasn’t sure what ferry to get on and ended up missing the 4:00am ferry crossing to Freetown. I was told by airport staff that it would be at least a 5 hour wait until the next ferry. I was also told that I could not wait at the airport terminal until then, as they were closing. Great.

As a foreigner travelling alone in a developing country, I wasn’t sure what to do at this point, so I just started walking. I passed an abandoned parking lot / trailer park where there were a few locals hanging out at this late hour. I couldn’t tell if it was particularly safe or not, but was tired to the point of not really caring anymore. I walked over, found a place to sit and settled in for what was going to be a long wait. One of the locals wandered over and we started chatting. After about an hour, I learned that one of their friends had a car and might know someone who could get me on a boat to Freetown. Slightly hesitant, I was also exhausted and struggling to stay awake, and thus not excited about the prospect of sitting there doing nothing for the next four hours. I decided to go for it. What’s the worst that could happen?

Below deck. I hope this boat actually goes to Freetown.

I was driven to a small boat terminal about 20 minutes away from the airport, where I paid $55 for two guys to get me below deck on a small boat as soon as the captain wasn't around. I sat there nervously for a good 30 minutes, waiting for the moment when I was going to be thrown off the boat and left to find my own way across. Miraculously, the engines fired up and we were on our way! 

Pirates of the North Atlantic! The most exciting ferry crossing of my life.

Halfway across the water, the two guys came down, took me out onto the deck, a bit of an argument ensued which quickly ended, and we spent the rest of the journey watching the sun rise across the ocean. It was a completely surreal moment and I arrived at the dock having made my first of many friends in Sierra Leone.

By the time I got to the hostel in Freetown it was 9am. There was no water pressure, so the shower wasn’t working. Despite having sweat more in the last 6 hours than the rest of my life combined, I wasn’t really that fussed. I’d forgotten to pack a towel anyways.

Two days later, the trip out to Makeni went equally as smoothly. I arrived at the government bus stop at 5:30am for what was supposed to be a 3 hour bus ride that left at 6am. Things got off to a bad start right away, as the bus was nowhere to be seen. It did eventually arrive, at 7am, and by the time we were on the road it was 7:30, already an hour and a half behind schedule. We drove for about 20 minutes before the bus driver pulled over, with no explanation, got off the bus, and disappeared. After waiting about 45 minutes, he finally returned, started up the engine, and we were moving again. We travelled literally 10 meters (across the road to another parking lot) where he pulled over and disappeared for another 45 minutes, leaving us sitting on a packed bus in sweltering 35 degree heat. Unbelievable! We finally got moving again and completed the rest of the journey to Makeni with relatively few issues. Total travel time: 8 hours. Total distance travelled: 260km. Yup, that's an average speed of about 30 km/h.

"New London" in Makeni. Home for the next 6 months.

Makeni is a much more rural environment than Freetown, though it is still Sierra Leone’s third largest city. My house has no running water, though I’m fortunate in that the well is very close by, and I was pleasantly surprised to find out that electricity had been recently installed (I found this place through a friend of mine from the UK, who had no electricity when she stayed here about a year ago).

Interestingly, lack of food isn’t really a problem here. If you try hard, you can get three decent sized meals a day for 15,000 Sierra Leonean Leons (about $3.00), including the inevitable “white man” mark-up. I’d be surprised if a local who prepares their own food is paying even a quarter of that. That said, as a foreigner, if you want to avoid getting sick, you probably want to eat somewhere that’s relatively clean and charging at least double this. Throw in a few snacks and drinks, and my food bill averages out to around $10/day.

The real issue here is nutrition. The aforementioned meals consist of a loaf of white bread for breakfast, white rice and sauce (such as ground nut soup) for lunch (usually with a little bit of chicken mixed in) and white rice and a different sauce (maybe potato leaf this time) for dinner. Some fruits (such as mangos) are pretty common as well, though I haven’t actually seen a vegetable since arriving in Sierra Leone. This poor nutrition is one of the primary contributors to Sierra Leone’s extremely low life expectancy at birth of less than 50 years (insufficient health care is another major factor) and is one of the things that microfinance organizations are trying to change by raising the economic status of the average person here.

SMT's Head Office.

I’ve been working at Salone Microfinance Trust (SMT) for a couple days now, though I’m still going through the orientation process. The office is comprised of a group of about 20 Sierra Leoneans. The team here is extremely friendly and passionate about microfinance, though not terribly sophisticated compared to the calibre of people I’m used to working with back home. I’m also sharing an office with an American volunteer from Kiva. For those not familiar with Kiva, it’s an organization that runs an online platform that connects lenders (regular people like you and me) with microfinance borrowers in developing countries. You simply log on to the Kiva website, create an account, and start browsing profiles and photos of entrepreneurs and business owners in the developing world that you can loan your own money to directly. The incredible thing is it costs you nothing; you’re not making a donation at all. The loan amount is charged to your credit card, but when the borrower repays their loan (microfinance repayment rates are typically around 98%), you get all your money back, and can either then loan it out to another borrower, or withdraw the funds completely from your Kiva account. Since being founded in 2005, Kiva has facilitated over $400 million in microfinance loans though its partnerships with local microfinance institutions (of which SMT is one). I highly encourage anyone who hasn’t looked into it to visit the website and consider making a small loan or two (www.kiva.org).

Anyways, that’s all I’ve got to say for now. Hope all is well back home, and I’ll do my best to keep everyone posted in the future.

Jesse