.KEYWORD microloan
.FLYINGHEAD PALM IN THE REAL WORLD
.TITLE Upward mobility: Palm handhelds fight poverty with field service efficiency
.FEATURE
.SUMMARY Since 1973, ACCION International has been providing small or "micro" loans to help impoverished people around the world work their way out of poverty. The labor-intensive and expensive task has been made easier and more affordable thanks to an innovative field service Palm OS solution created by ACCION International. In this article, Christine Harland Williams will show you how this CrediPalm application is being used to aid small businesses throughout Latin America.
.AUTHOR Christine Harland Williams
Picture this: one of Mexico City’s sprawling shantytowns-shacks, dusty, unpaved streets, stray dogs, hungry children. On the corner, a worn-looking woman is selling tortillas and beans from her two-room house, miles from the city center. A neatly dressed young man walks up and takes out a Palm handheld. He is there to offer her a business loan–a microloan.
Today, this picture of opportunity is being repeated across Latin America thanks to an innovative field service solution created by ACCION International (at http://www.accion.org) that’s taking handheld technology to unexpected places in an effort to cut the time and costs associated with microlending. The ACCION solution presents helpful lessons about how handheld technology can overcome common and even uncommon business challenges.
.H1 What are Microloans?
Just like the largest public corporations, the smallest enterprises require working capital to grow. Since 1973, ACCION International has been providing small or "micro" loans to help impoverished people around the world work their way out of poverty. In the last 10 years the organization and its affiliates have loaned $3.2 billion, with an average loan size of $500 and an impressive 98% repayment rate. ACCION, which today operates in Latin America, sub-Saharan Africa, and the United States, has lent to over 2 million owners of small businesses, 65 percent of whom are women. Women like Ana Elvia.
At 61, Ana Elvia runs her own grocery store on a hill at the end of a dirt road in Cerro Norte, an outlying barrio of Bogota, Colombia. Although she cannot read or write and never went to school, Ana Elvia’s business skills are solid. "When my husband and I first came to this hill 30 years ago, we had nothing," she says. To support her five children, Ana Elvia began cooking hot meals for local workers.
In 1991, Ana Elvia received her first microloan, $70, from ACCION International affiliate Cooperativa Emprender. With this small investment, she began to expand her tiny store. Twenty-five loans later, she has enlarged her stock and added display cases and a freezer. Over the years she has diversified her inventory from basic staples like rice and beans to a full line of foodstuffs including sausage, cheese, candy, and drinks. "The loans help you a lot," she says. "Once I pay off this loan, I will see if I can add vegetables and other products."
.H1 Microlending presents massive challenges
While microlending is a very effective way to fight poverty, it’s also labor-intensive and therefore expensive. In fact, the high cost of making small loans is one of the major obstacles to bringing microcredit to all who need it.
Like traditional banks, micro finance institutions evaluate potential clients using measurements like business assets, amount of goods sold, and product costs. But unlike traditional banks, micro finance institutions don’t make loans based upon revenue or collateral alone. Because of the poverty of their clients, most live far from city financial districts, and often they can’t be reached by phone. They also lack credit histories, so loan processing is personalized, time-consuming, and costly.
Microlenders must send loan officers to meet potential borrowers in their places of work, where they weigh intangibles like references from customers and neighbors and the loan officer’s own gut feeling about the applicant’s drive to succeed. If loan officers didn’t consider these factors, the majority of their clients would never qualify for loans.
Loan officers working in poor urban barrios usually travel by local bus to the potential borrower’s home or place of work and take the application with pen and paper. They then re-enter the data into the computer when they get back to the office. Some loan officers have used laptops in the field, but they are expensive and their high value and conspicuousness pose safety concerns.
.H1 The CrediPalm application
For years, ACCION has been working to cut the time it takes to make a microloan. This is crucial for both microlenders and their clients. For clients, closing their doors to make the trip to a central lending office means lost sales–an expense they cannot afford. And loan officers lose hours traveling to client businesses, often located in outlying neighborhoods poorly served by public transportation.
In early 1999, an ACCION team, funded through a grant from USAID (U.S. Agency for International Development, set out to streamline the lending process. After evaluating laptop applications and various handheld computers, ACCION staff began developing software for the Palm handheld computer capable of managing the information needs unique to microlending. The resulting pilot application, called CrediPalm, was tailored for the loan officers working in Mexico City with ACCION’s affiliate Compartamos. Testing of the software using Palm handhelds began in Mexico City in June 1999, and shortly thereafter the company deployed CrediPalm for use by all its loan officers in the field, as shown in Figure A.
.FIGPAIR A Compartamos loan officer Miguel Ordo
