Posts Tagged ‘Chinese Education’

The End of Microfinance’s Honeymoon

January 17, 2011

ARDY's Fu Xing branch office

I’m a couple of weeks late, I know, in commenting on article in the New York Times about the recent image issues that the microfinance industry has suffered. The article describes how major microfinance lenders, in particular in South Asia and in Latin America, have begun to come under greater public scrutiny, and even resistance, from the media and from political leaders. In the most extreme example of resistance, the government of the Indian state of Andhra Pradesh has banned microloans altogether.

…as with other trumpeted development initiatives that have promised to lift hundreds of millions from poverty, microcredit has struggled to turn rhetoric into tangible success.

Done right, these loans have shown promise in allowing some borrowers to build sustainable livelihoods. But it has also become clear that the rapid growth of microcredit — in India some lending firms were growing at 60 percent to 100 percent a year — has made the loans much less effective.

Most borrowers do not appear to be climbing out of poverty, and a sizable minority is getting trapped in a spiral of debt, according to studies and analysts.

…even as the results for borrowers have been mixed, some lenders have minted profits that might make Wall Street bankers envious. For instance, investors in India’s largest microcredit firm, SKS Microfinance, sold shares last year for as much as 95 times what they paid for them a few years earlier.

The article confirms something that we probably should have known all along–that an organization isn’t necessarily doing good for a community just because it labels itself as “microfinance”–rather, effectiveness is inevitably going to vary by organization and each microfinance firm must be evaluated individually in order to determine its effectiveness. In my experience, the Association for the Rural Development of Yilong County is one of the better-run organizations, and its successes carry lessons for both implementing microfinance successfully, and for evaluating the reliability of other organizations.

In the last month of my time in Sichuan ARDY hired an outside software distributor from Nepal to help them install a new data management system–something I’ve blogged about previously here. The two men who came in from Kathmandu to oversee the installation process had been to China several times before to work with other microfinance firms in various parts of the country. When I asked them how ARDY compared to the other Chinese firms they had worked with though, they respondingly responded that ARDY was quite different. Many of the other organizations, it seemed, fell into the same pattern that the article describes as inspiring suspicion. They ran their operations strictly as a business, beholden primarily to the profit motive, and with little concern as to whether their borrowers were really being lifted out of poverty. ARDY, they said, was the only Chinese microfinance distributor they had seen which was really motivated by social goals, and which really worked to change peoples’ economic situations.

As I have discussed previously in this blog, one of ARDY’s really unique characteristics is its organic relationship with the local community. Gao Xiangjun and the other directors all grew up in this community, and have a strong sense of personal dedication to improve it. They know what local inhabitants need and are personally dedicated to providing them with the instructive and material support that they need. However, I was equally impressed by the shrewd business acuity which Gao and her colleagues display in their work. ARDY maintains an incredibly high repayment rate, and reinvests much of its profits from interest back into the organization, such that its lending pool increases each year. How can an organization combine both profit motive and social good?

I think one important element is the need to distinguish profit motive from profit as a performance indicator. ARDY seeks to help local farmers by creating sustainable local enterprises which borrowers will be able to manage and develop themselves. Traditional indicators of business performance, in particular profit, are the best way to determine if borrowers are in fact moving toward financial independence rather than simply accepting handouts. They should also inform the way in which potential microfinance entrepreneurs manage their new enterprises, and ensure that they can eventually turn a profit on their own.

However, in order for these more conventional business practices to be successfully integrated into a community which previously lacked them, they must be combined with an intimate understanding of the community and a willingness to work with borrowers to overcome the greater obstacles that inevitably arise from starting a business in a more extreme environment. When a borrower from ARDY fails to make a payment, a loan officer visits them at their home, and works with them to figure out a strategy for repaying the loan and, hopefully, salvaging their failed business endeavor. Without this sensitivity to local conditions, any organization that treats profit as its bottom line is inevitably going to leave some people behind. Instead, profit motive should inform socially motivated projects, allowing an organziation to meet its social goals within a competitive capitalist environment and with a more efficient use of resources.


A Day in the Life of a Rural Chinese School Teacher

September 26, 2010

I spent the day following around He Na, a friend of mine who works as an English teacher at a school in the nearby town of Ma An. As I expected, the sudden appearance of a foreigner was something of a momentous event at the school. Her class of 5th-graders erupted in excitement as I entered the classroom, and at least a dozen children escaped from neighboring classrooms to peer in at me through the doorway. After listening to He Na drill her class on pronunciation of various English words for most of the class, she finally indulged their curiosity and allowed them to spend the last few minutes of class asking me questions about the United States. Many of them were the same standard questions I have gotten throughout the past year that I lived

in China: “What do people eat in America?” “Can Americans use chopsticks?” “Do all Americans own guns?” Upon pulling out an American dollar bill which I happened to have in my wallet, the entire class burst from their seats and rushed to the front of the classroom, pushing both me and He Na back up against the blackboard in their effort to see. Only by repeatedly pounding on the front podium with a ruler was she able to get them to settle down and return to their seats.

The main teaching building of the school where He Na teaches

Though He Na’s parents also live in Yilong, she and most of the other teachers live in a dormitory across a courtyard from the actual classroom building. Over three hundred students also live in dormitories on campus as well, which is common for middle school and high school students from surrounding towns.

Having majored in English at the Sichuan Foreign Languages University in Chengdu, He Na is only a month into her first job out of college. “It was my father who originally wanted me to be a teacher, with this job I can easily stay close to my parents,” she explained when we first met. As a graduate of a four-year bachelor’s program, He Na is rare among a teaching staff comprised mostly of graduates of three-year “professional” programs. However, she explained to me that her options for different teaching positions were still quite limited without any previous experience.

A short way down the road from the private middle school where she teaches is a public middle school. Teachers at the private school, however, are under considerably more pressure for considerably less pay. He Na complained to me that teachers at the public school make over 1,200 RMB a month, and are not subject to any sort of regular teacher performance evaluation. “If their students do poorly on tests, it’s not their problem, but if my students do poorly on exams then they can take it out of my salary.” At 700 RMB a month, He Na’s salary is already quite low.

The students were quite eager to get their picture taken

After lunch, I sat in on another class of fourth-graders who were also practicing English pronunciation. He Na singled out a student in a corner who had not been paying attention, asking him to read the words on the board for the whole class. After he failed to repeat the words again, she scolded him, switching from Mandarin into Sichuanese in her frustration. After asking the class how many of the words he had said incorrectly—six—she came over to his desk and rapped his wrist six times with a ruler. As she walked me back to the school gate she complained how that class always consistently had lower grades than her other classes. “If their grades are low then the headmaster will take it up with me.”

Students crowded in through the doorway to get a look at me as I took a picture of He Na's class

Students crowded in through the doorway to get a look at me as I took a picture of He Na's class