Interview with Tom Kane, Member of FODEMI's Board
On September 28, 2005, we talked to Tom Kane, member of FODEMI's board for over 6 years, about his view on FODEMI's work, progress, and challenges to come. Here are some of the excerpts... LM: What does FODEMI do, what is its main purpose? TK: The main purpose of course is to help small business men and especially women, especially in indigenous communities in the mountains of Ecuador, and to use FODEMI as a support to World Vision’s Area Development Plans (ADPs). They provide credit, not charity; we are not giving anything away. Our greatest success is when that small entrepreneur graduates from FODEMI into the formal market and needs larger funds to run their business. LM: Why is the focus on women so important for FODEMI? TK: I think it makes sense. If you look at the structure of the communities in which we want to operate, women are very conscious that they have to feed children and keep roofs over their heads, it’s the women who keep the households together and the men often drink their money away. So, from a purely sociological viewpoint, it makes sense to focus on women. They are more honest, they have to feed the kids, and they can’t get fired. Women pay back loans because they don’t want to damage the prospects of the home. LM: How have you seen FODEMI grow since you have been on the board? TK: The growth has been steep; even in the last year FODEMI’s portfolio has grown by 25%. We may be reaching the limits of market penetration in some of the places where we are established, which is why FODEMI has looked at places like San Gabriel and Machachi. Our success story is how many people we can graduate out of the system into the formal banking market simply because their business has grown to the point where instead of $500 or $1,000 they need $5,000 or $10,000 to run it. More power to them. LM: Has FODEMI been able to achieve that goal? TK: There is considerable competition in the market from other NGOs and even banks, we are continually discussing that, where our weak and strong points are. But we hear many stories about the growth of our clients that reach that level of success. LM: How does FODEMI stand out from other microfinance institutions? TK: I like to think that the Christian vocation has something to do with it; we are willing to go the extra mile to work with people. Part of that is education in the culture of credit, that this is not money that you can run away with. Our organization integrates part of the 30% of the Ecuadorian population that is indigenous, and not integrated into the money economy. This is one of the many steps that can take place to integrate them into that kind of life and economic system that prevails. LM: What have been FODEMI’s main successes? TK: We have seen growth in our portfolio and a very low default rate. FODEMI has been able to attract a very loyal following and penetrate its chosen markets as well as new ones. It has been able to make clear that we are not here to give away money; we are here to run a business just like we hope our clients want to run a business. A real tribute to the team is that we have been able to generate surpluses over the past 2 or 3 years. That money is put back into the business, and into loans. This is an organization that went from $300,000 6 years ago to $2,500,000. That is a real achievement. LM: What’s your impression of the people who work for FODEMI? TK: I will start by saying that I think there is a strong Christian vocation, they are people that want to help their communities and that find the kind of business we do in microfinance a rewarding challenge, when they can bring someone along from a $200 loan to a $400 loan to a $600 loan. LM: What have been FODEMI’s main challenges, and how have they been able to overcome them? TK: There have been two main challenges. One is the limitations of the market, which has been addressed by opening offices in San Gabriel (in the province of Carchi) and Machachi (in the province of Pichincha). We have not been in a rush to expand, but gradually are trying to open new offices. There are limits to how far we can penetrate the market, and how many people there are in an area. The other constraint is funding; certainly the Fairfield County Microenterprise Council donors are major players. I would say external funding continues to be a challenge for the future. I would like to see involvement by more groups like the Fairfield County Council who have interest in supporting successful microcredit initiatives. LM: How has the Fairfield Council helped FODEMI along? TK: I think a lot had to do with David Mace (president of the Council), who had lived and worked in Ecuador with the Noboa family, and the Council’s Christian interest. The wanted to focus on FODEMI to see if they could help develop a successful microcredit organization in Ecuador. Most of the members have enormous business experience. Very wisely they said that we wanted to contribute is not just money, but time and effort in order to make sure that their money was being used wisely. I admire their ability to link donations and involvement, the ideas they had was “we want to be involved and well informed, and we have something to contribute”. LM: What has FODEMI been able to offer the Council in return? TK: FODEMI has been able to offer them a first hand view of the success FODEMI is having, of the real poverty in which FODEMI operates, and the real contribution which FODEMI can make. My hope is that Fairfield can interest other similar groups. LM: How can someone who wants to be part of this microcredit project help? TK: By establishing a program similar to what the Fairfield County Council has done, a program of contributions, and in return they will be receive updates on the growth FODEMI and their clients, and receive monthly reports. LM: Where is FODEMI going? TK: There are plenty of other areas in which we can expand, which needs to be done very carefully. Due to the microclimates in Ecuador, people living on opposite sides of the same mountain are so different, and have different needs, so we really have to undertake this slowly and carefully. There are many more indigenous communities still to explore, such as areas in the south towards Chimborazo. If we want to grow, and I think we do, then we are going to have to expand.
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