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DisCon Presentation in Red Deer
Category: Microcredit | By Steve, 23-May-2017 | Viewed 486  Comments 0 | Source Judy Cochran

Honduras Economic and Community Development as reported at District 5360 Conference

May 6, 2017 in Red Deer, Alberta

Presenters: Bill Fitzsimmons, Ken Montgomery, Duncan Stanners



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Bill Fitzsimmons Presenting at DisCon 2017
Bill started off by acknowledging the successful work done by the forerunners of the HECD Program specifically the previous three phases of a ten-phase project, including Steve Rickard, Duncan Stanners & Wally Gardiner, among others.  Both Phase I and II have been completed and Phase III is in the second round of lending out microcredit loans. Bill, Duncan and Steve are just returning from an Insight Trip to Honduras as were others in our audience.

We are urged to "Think Big" to develop larger scale projects. Rotary International has done this with the End Polio campaign and the previous HECD phases mentioned above. Good development practices are the key to success. We have engaged the locals to move them forward. We want the project to be sustainable; not to have the businesses fall apart once we leave. 

This has, in fact, been what we see - there is capacity building techniques given to the clients to build their skills and resources which leads to empowerment. Microcredit lends out small loans for small businesses to purchase equipment or inventory. These loans are paid back at almost a 98-99% rate ensuring sustainability. Once the business is prospering and growing many come back to take out a second loan to help increase the business on a larger scale.

A solidarity group is a small group of 5-8 women that guarantee the loans for each other. Most loans are given out to women to ensure the high pay back rate. These women are the bread winners for their families. It is amazing to see the transformation from when they first start out with little self confidence to becoming successful business women either hiring other family members or recruiting neighbours. They are often illiterate and the sixteen modules of training, provided by our partner IDH, are often presented pictorially. For example, one training card shows a cat looking at himself in a mirror but sees a lion staring back to depict the strength and power of the business owner. Not only do they get training in best business practices but also life counseling. 

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Anna the Corn Grinding Entreprenure
Here is Anna's story - one of the ladies in this solidarity group. She purchased a corn grinder and has taught herself to not only use the machine but also maintain it. Maria, besides having her own small business selling cooked food and lunches to the office workers, is the treasurer. She tracks the ladies in the group, their loans, and any monies paid back. She was willing to show only her personal account to those on the Insight Trip - a display of high integrity.

We can say that although the main area of focus is community development that these successful projects touch on all the six Rotary Areas of Focus. So why Honduras? Honduras is the third poorest country in the world; second poorest in Latin America. Another alarming statistic is 65% of 8 million people live below the poverty line; unable to meet basic needs of having clean water, food, or shelter. Women are living on $1-2 per day. Working against them is that there is no access to safe and affordable loans. Banks are not interested in such small loans and Loan Sharks charge 100% interest due in six months. The penalty for missing the payback deadline is not a pretty one.

Moving onto Phase IV, we are awaiting global grant approval from TRF and hope to have the funds amounting to about $150 K USD flowing to Honduras by the end of June, 2017. Phase IV is a smaller scale project but has a big impact. The entire fund will be used for microcredit loans in the Small to Medium Enterprise (SME) sector. This is a growing sector that has been missed by loan institutions in the past. The loans are usually for larger amounts; approximately $5,000 USD and the repayment period is also longer than for smaller Trust group loans. These SME businesses usually employ 2-6 people. Education is planned for both the clients and the SME loan officers.

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IDH Main Office Staff
We are fortunate to not only partner with many other Rotary Clubs to gain club funding but also outside NGO's. The local Honduran loan institution is

Instituto Para El Desarrollo Hondureno (IDH)

with over 40 years of experience providing holistic microfinance to the people of Honduras and winning many awards for what they do. Rotary has partnered with Opportunity International Canada (OIC) for over 15 years. The reasons behind this are again good business practice - these two NGO's help us to leverage resources, tap into professional expertise and experience, increase the scope of impact and finally the guarantee of success. 
  
Let's start touting our successes. To date, in the first three phases, $1.1 million USD has been sent to Honduras. We have received funding from various clubs in our own District 5360, also Ontario and the USA.  IDH is serving 1,000 new clients every 6 months.  We helped install a new IT system to help IDH better serve their clients. New loan products are being offered and two new branches have been opened.

In Phase II, two water systems were added in two different villages - Quebrada and Las Camelias bringing water to 3,000 people. Again, we partnered with OIC and IDH plus Impact Water run by Arnoldo Alvarez. He has implemented 300 successful projects in various locations in Honduras. All are still operational except one that was destroyed by Hurricane Mitch. He is the project manager and has a degree in agricultural engineering. The people come to him seeking water projects; 12,000 villages are in need of clean drinking water.  All of Arnoldo's projects are done using the principal of Asset Based Community Development (ABCD). There are four criteria that must be first met:

1. The villagers form a water committee to help implement the project and ensure maintenance of the system.
2. Unskilled labor is supplied by the villagers to lay the pipe from the spring to the village. It can be 20-30 km of pipe.
3. A nominal monthly maintenance fee is paid by the villagers, and
4. Someone in the village is appointed to be the plumber and takes care of maintenance.

There is a ripple effect. As a result of the village now having clean water, the government built a new middle school in Las Camelias. Health is much improved as you can imagine. New homes are being built - 40 in Las Camelias and 30 in Quebrada. With water there is new income, new businesses, better nutrition. For example, using irrigation drip, the people in Las Camelias are growing luffas and passion fruit. They are growing coffee and need bees to pollenate the plants so they now have honey to sell.  The effect on the community can be seen where the people are working together; acting as one for the benefit of all.

Moving into the planning and project definition stage for Phase V. Two villages were singled out as potential candidates for a new water system. In the so called "puddle community" one in three  has an urgent need as the water and river has become contaminated with human feces and 80% of the villagers have Hepatitis A. We are hoping to move this forward as soon as possible at a cost of approximately $50K USD. We will rely on Arnoldo as much as possible and the government as little as possible. 

The second part of Phase V will encompass opening a new IDH branch in Puerto Cortes. The branch office will not be built with these funds but rather leased, and many other requirements necessary to open a new branch will be looked after, from these funds, as well. The two expansion branches previously funded by HECD require a minimal rental space because most loan officers travell to the clients. The remainder of the funds will go to seed the microfinance loans again for SME's. 

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Baker and IDH Staff
Some of the SME projects visited include Saul and his wife who are bakers. On a daily basis, they started making and selling tortillas using only a one pound bag of flour as that is all they could afford. Through the help of a loan they have expanded the business. They now work in a 500 sq ft area, employee six people, have expanded their product selection and have distributors for their products, who also have employees. 

Miriam started off using a hand-held tortilla maker. In three years, she now has automated equipment, has 25 employees and wants to brand and sell her tortillas on a national scale. 

Seapia is a seamstress who used to be employed by Macilla which closed their shop and moved away. Through the use of microcredit loans she has expanded to two employees but also employees her family members. Her husband cuts 100 shirts at a time. Her daughter who is 20 years old is at university studying for a business administration degree and wants to take over the family business on completion of her degree. What is most important to these women is their families and their well being and education of their children - to offer them a better life.  These are the future community leaders.

The leveraging of the loans provides for more employment. If the original SME loan is for $5,000 then in 30 months, the business will have approximately six new employees. A second cycle begins as the loan is paid back. Approximately 35 people will now be employed with economic spin offs for other businesses to grow and thrive. Being totally sustainable, five years from now the money is still at work.

We want to impact a Nation - Honduras; and we can and will. We are projecting a $500K USD project to include one or two water systems; an expanded IDH Branch office and microfinance SME seed funds. Our goal is to under-promise and over-deliver.

For more information, and to partner with us, contact:

Bill Fitzsimmons, Project Lead Phase V.
bilfitz@gmail.com or at 403.519.8597


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