Student Blog: Micro-financing Peruvian Yogurt

RyanBerg copyMy project revolved around working at the CEN, a micro-finance bank in Arequipa, Peru, the country's second largest city. I have done some work with this bank in the past, but during this visit to Peru, the bank requested that I assess their level of social impact on micro-credit recipients. Specifically, they wanted to create some "success narratives" of past micro-entrepreneurs, outlining a profile of their past and current clients and their business, and to entice more applicants to their seed funding pool. I will choose to outline one recipient's successes in detail here because I found it most inspiring. It's a nice little vignette of what a well-positioned micro-finance bank can do.

Señor Enrique Pastor has apparently been working with the CEN for a year and some change. He appears to frequent the office as a visitor nearly every day, sometimes twice a day. Whilst nice and certainly gregarious, he strikes me as a bit inept and disorganized, not to mention not very well-educated (we had to explain to him, a business owner no less, how to do a cash flow chart of his profits, incoming and outgoing costs, and product inventory). This is probably a product of the fact that he grew up in a Peru much different than the one inhabited by his children today. Nevertheless, Pastor shares the same dreams as many around the world – to be able to provide for his family through a solid job and economic security, nothing more, nothing less. He owns a yogurt company – called Yogurt EDEM – and his pitch to costumers is that his product, unlike that of Gloria, the huge commercial conglomerate in South America, is completely natural and healthy. As such, he has a supplier in the rural “Amazonia selva” to give him fresh fruits, which he then converts into yogurt in his home factory of sorts.

Pastor’s problem is finding a dependable and solid market for his product, since, lacking preservatives, he cannot sell to supermarkets or other large commercial venues where the supply chain prevents products sans preservatives from hitting the shelves with enough time before expiration. Pastor’s market is “the here and now,” those who want to buy the drink and consume it in the moment – or, at the most, 1-2 days later, “no más,” as the Peruvians are fond of saying. Pastor sells his product at local universities and institutes (including ISUR). I finally tested his product after his “sustentación,” or business plan presentation. After nearly 1.5 years working with the CEN – and two different coordinators thereof – Pastor took to the podium to present his business plan to a somewhat harrowing committee which would decide his fate. The panel was there to grill Pastor about his product – everything from the potential and danger for contamination in his home factory to the marketing of his product and his cash flow chart to the fact that Peruvians haven’t demonstrated much desire to include yogurt into their breakfast regimen (at least not yet – just wait until they try Pastor’s delicious product!).

While Pastor seemed a bit inept in the CEN office, he was absolutely electric in front of this panel. Pastor fielded a variety of questions for about 1 hour – after a 30 minute presentation aided by PowerPoint, no less – showing little to no signs of mental fatigue. The man is indefatigable. He’s in the moment. He’s either much smarter than most of us realize or he’s having the presentation of his life in a clutch situation. Then the committee grants us leave and we traipse out into the hallway whilst they decide when/if/how much “capital semilla” (seed capital) they are going to give Pastor. To my knowledge, the CEN has very little money at the moment because it has made many loans before I came (we’re talking under 10,000 Peruvian Nuevo Soles at the moment, about 3,500 USD); thus, Pastor didn’t expect much from us for his business operations, despite his stated desire for around 7,000 total (from various other sources he is currently consulting, too) and his commitment to working with us for 1.5 years.

We congratulated him on a dynamic performance as he is overjoyed at the prospects. We all felt terrific about the situation – and I had hardly anything to do with his proposal, most of the work having been done before I arrived. We waited for what seemed like an eternity for the committee to render a decision – what on earth could they have been discussing in there? Wasn’t Pastor’s case air tight, sealed by the dynamic personality he had just demonstrated in the Q&A? Finally, they called us back in and we are relieved to know that the “demora” didn’t portend bad news. In fact, it would come to add to the excitement (though we didn’t know it at the time, of course). After ample discussion, the committee decided to award Pastor 5,000 Peruvian Nuevo Soles – more than half of the current total at the (already over-leveraged) CEN! This announcement made everyone very proud, happy, and simultaneously touched. Pastor welled up on his way out of the presentation room, but he made sure to muster 4 strong handshakes with the committee members and reiterate to them how “muy, muy agradecido” he is. It was a touching moment for all. When translated into USD, we’re talking about fewer than $2,000. Now, this is a nice sum of money to be sure (especially in the student's mind), but not in the context of starting a business in the developed world. In the developing world context I inhabited, however, it means the world to Pastor. He needs this money to expand his business and hire more workers (particularly, widowed mothers) for his in-home yogurt factory.

The experience with Pastor was far and away the highlight of the two weeks, prompting a lot of philosophical reflection on my part. It was yet another humbling reminder of how fortunate I’ve been throughout my life. My existence “hasta ahora” has made me think that $2,000 USD is “chump change,” for which nearly 1.5 years’ worth of work requiring daily office visits would be simply preposterous. To Pastor, “por otro lado,” this was life-changing. I’m no philosophical relativist, but in this matter, context was everything. It is much more potent to be able to put the faces of those struggling to make it (especially those trying to make it with an entrepreneurial spirit), like that of Pastor’s, into the theoretical discussions that fill Oxford University theses, classroom debates, and extracurricular activities--especially about the ubiquitous topic of social justice. I’ll remember the tears in Pastor’s eyes for a while to come…
By Ryan Berg (4th Year Politics doctoral student)

The Brasenose Annual Fund, which helped Ryan cover the costs of his trip, exists to fund student research, extracurricular activities, and educational and personal development.

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