Barrier + Solution = Groups loans for Maya! + Challenges Remain.

By Kimberly Strathearn, KF 16/17, Turkey

Maya has been a Kiva Field partner for 8 months. Maya is a small program that was established under the Foundation for the Support of Women’s Work in 2002. Maya’s target clients are low-income women with a primary school education that have limited chances of finding a job in the formal economy. Turkey has a large informal economy, so most of Maya’s clients want to set up a small-scale business or enhance their existing small-scale business. Many of their clients work from home but some have small shops, or work in market stalls. Most of these businesses are in the trade sector but some are in the manufacturing and service sectors. Since most of the businesses are unregistered, the women are unable to access regular financial services.

Have you been wondering why Maya has only posted 35 entrepreneur profiles on the Kiva website? And that they all have been individuals? You may know from my first post about Maya or Maya Field Partner Page, that Maya offers group loans—so why isn’t Maya posting any?

70 percent of Maya’s loans are lent to groups and 30 percent to individuals. Maya prefers to loan to groups because they believe that they are able to reach more low-income women through the groups (group loans use social collateral meaning the individuals in the group are guaranteeing each other’s loans whereas the individual loans require two guarantors). So what gives?

Up until about three weeks ago, Maya was unable to post group loans on the Kiva website. The Kiva individual limit of $400 to individuals within a group was lower that the initial amount that Maya lends to a first time borrowers. It was indeed a challenge for Maya to be able to identify eligible Kiva entrepreneurs from within only 30 percent of its client base to meet its monthly fundraising limit. It appears Maya was not the only Field Partner with this challenge.

Kiva, in responding to some of its Field Partner needs, has increased not only its loan amounts for individuals within a group but individual loan amounts, and loan terms as well. While it is possible that not all Field Partner loan amounts or loan terms have been raised, this is a huge boost for Maya.

Although this barrier was recently resolved for Maya, the microfinance environment remains both challenging and underdeveloped in Turkey. There are currently only two microfinance programs in Turkey, despite strong potential demand. So what is standing in the way of microfinance development in Turkey?

Frist, there is very limited information on capacity building and a lack of awareness about microfinance in general. The lack of awareness and acknowledgement of the impacts of microfinance comes both from the private sector and from the government. The government, because of this lack of information, has limited capacity to supervise a microfinance sector. In parallel the private sector, because it lacks awareness about impacts of microfinance, lacks interest in engaging in developing microfinance in Turkey.

The Second constraint to the microfinance sector is the lack of legal structures and of a regulatory framework promoting implementations that at the same time limits the applicable models of microfinance implementation. For example, both microfinance institutions in Turkey are not allowed to take deposits which many in the microfinance field see as an important component of financial services. Saving products paired with micro loans are thought to promote better financial awareness, enable clients to better build cushions to lessen the impact of financial shocks, and help to lift people out of poverty.

Despite these challenges there is some good news. Dr. Muhannad Yunus was in Turkey on December 15, 2011 speaking at the ceremony for the establishment of a Microfinance and Social Entrepreneur Center at Okan University in Istanbul. This can only be a positive development for the growth of microfinance in Turkey. I anticipate that the new Center will promote policy developments relating to legal structures and regulatory framework; awareness and knowledge of microfinance and its impacts; capacity building; as well as training and expanding the local pool of qualified microfinance and social entrepreneurial talent.

Another positive development is that the Global Microfinance Forum 2012, will be held in Istanbul on April 12 &13th. The conference goals are to bring together representatives of fund managers, microfinance institutions, development agencies, the Turkish government, and social investors to discuss topics such as assessing the role of government in microfinance, exploring new product and technological innovations, managing risk, and adhering to the dual bottom line of social investment. This is a much-needed opportunity to bring more awareness to the potential of the microfinance sector in Turkey by exploring the social role of microfinance, microfinance as a tool for financial sector development, and the role of government in financial sector development. In other words, a golden opportunity to bring together government officials, policy makers, banks, and other private sector players in order to determine what future role microfinance will play in Turkey’s financial sector development.

Regardless of the overall challenging environment of microfinance in Turkey, Maya is excited about being a Kiva Field Partner and looks forward to being able to better serve and reach more clients through this partnership with Kiva. Now even more so, since Maya is able to post groups loans. Amazed at how quickly Maya entrepreneurs have funded on the Kiva’s website, Maya is working hard to sustainably increase their monthly number of profiles. See Maya’s first funded group, the Yunuslar Grubu or check to see if we have any groups currently funding.

A heartfelt THANK YOU from Maya and its branch offices to all whom have supported Maya Entrepreneurs thus far. If you want to get in on the action, your best bet is to join the Friends of Maya lending team. I send a message to the team when we are sending profiles to Kiva and again once they are posted and funding on the website.

Visit these blogs for more on Maya and Turkey:

Home to a New Adventure: Hoş Geldiniz Maya!

If It Is Thursday, It Must Be Sakarya + What is Bohça?

If it is Tuesday it must be Izmit +more of my favorite borrowers + buyurun agabey

If It is Wednesday, It Must Ne Eskişehir + Eskişehir Entrepreneurs

Perks + Ataturk + My Hero

Junk Food +1,300 chefs + Edirne-Style Liver + Maya Food Entrepreneurs

Stuff Kiva Fellows Like #10-17

60 Tips from Kiva Fellows

Kimberly Strathearn is a KF 16/17 serving in Istanbul with Maya. Kiva’s newest Field Partner in Istanbul, Turkey. To learn more about Maya and their clients, please visit their Partner Page, join our newly created Friends of Maya Lending Team, or make a loan to one of their enterprising clients. Kimberly is a fan of giving Kiva Cards for just about every gift giving occasion. What could be better that giving the gift of helping someone?