Migration and Microloans

By Kate Bennett (KF15), Ecuador

On Monday morning, long before the sun rose on Quito, Fundación Alternativa’s Business Manager, two Loan Officers and I embarked on an all-day journey to remote Chunchi, Ecuador. After the promised “three-and-a-half hour drive, at the most,” we arrived at our final destination another five hours later: a mountaintop with an incredible view of the sun high in the sky and clouds rolling by beneath us.

We met with a group of five Fundación Alternativa borrowers who are taking out a group loan to build a tourism center above Chunchi. These borrowers have made a long voyage to this hilltop as well- these five men, like myself, are from none other than New Jersey! At least, they lived there for a time and have since immigrated back to Ecuador to build the center, which will include a hotel, restaurant, and maybe one day, a spa.

Before you say it: five guys from New Jersey building a spa? This does not sound like your typical Kiva loan, I know. But this project is part of a larger program that Fundación Alternativa runs in this region of Ecuador: projects that specifically target borrowers whom have been effected by emigration.

Ecuadorians represent the one of the largest migrant groups in the United States- indeed, the largest in metropolitan New York City- and the second largest in Spain. It’s estimated that around 550,000-600,000 Ecuadorians live in each the United States and Spain; this for a country with a population of thirteen and a half million people is no small figure. Nearly everyone I meet has a sibling or a cousin living in New York or New Jersey (as such I’ve regularly been the cause of disappointed hopes that, “no, lo siento, I don’t know your cousin personally”).

Ecuador’s net number of migrants for 2005-2010 was (-120,000); this figure indicates the difference between emigrants from Ecuador and immigrants to Ecuador. For the last ten years, Ecuadorians’ emigration from their home country has coincided with a steady stream immigration from Ecuador’s neighbors. Economic migrants like Peruvians and Cubans and refugees from Colombia compose a burgeoning segment of the population. As common joke in Quito is that nearby Santa Domingo de los Colorados is now known as Santo Domingo de los Colombianos.

Figures (and common sense) tell us that high emigration rates are the offshoot of a low rate of job creation and high levels of poverty and unemployment. High emigration levels also indicate that potential microlending clients- possible Kiva borrowers among them- are leaving the country and opting out of the banking system altogether. As of 2006, nearly 8% of Ecuador’s GDP was comprised of remittances; recipients tend to be grandparents, children, and spouses who represent the large proportion of the non-working population. What’s more, a majority of recipients of these remittances aren’t part of formal financial system either (even though most of them regularly pick up their transfers at banks).

High immigration levels compound this problem. There are simply not enough jobs, in any sector, at any level, to support Ecuadorians let alone the influx of immigrants that replace them. This leads to higher levels of crime, delinquency, and- you guessed it, Ecuadorian emigration. Emigration also has a social impact, particularly as an effect of an entire generation of children growing up without parental presence.

Last week my fellow Fellow Allie Cook discussed the issue of high migration rates in the Philippines in her post “Long Distance Relationships: Remittances in the Philippines.” Allie posed the question: for a developing country with a high remittance rate, how can micofinance institutions establish programs to help bring the population home again? And perhaps more importantly, how can these groups ensure that the root cause of emigration is addressed and remedied?

Fundación Alternativa’s program targets high-level migration areas in order to provide affordable credit to microenterprises, not only to support the Ecuadorian population in these regions with opportunities for livelihood, but to aid in job creation as well. The five brothers’ tourism center, for example, will create more than fifty much-needed jobs in the region. Furthermore, Fundación Alternativa will also conduct business trainings and consultancy with these borrowers to contribute to the success of the project, as well as build long-term human capital and organizational capacity.

The five brothers’ tourism center project is the largest of Fundación Alternativa’s migrant projects, which range from a group of women raising chicks and piglets to sell in the market; to a group of dairy farmers purchasing grass seed for grazing their cows; to a group of young men and women forming a business cooperative that will specialize in home cleaning and maintenance. Through these microloans, borrowers effected by migration are countering the factors that lead to emigration to begin with- they’re yielding job creation for themselves and building a stronger local economy for all, so that one day the population can come home again.

For more on Ecuadorian migration through the eyes of a Kiva Fellow, check out Cynthia McMurry (KF8)’s post “Please, take me home in your backpack…“

Kate Bennett (KF15) is thrilled to be working for the next four months in Quito, Ecuador with new Kiva field partner Fundación Alternativa. To support Fundación Alternativa in its pilot phase, check out its partner page, its recently created lending team, or its very first loan- which will be posted by the end of the day! For more on Kate’s experiences with Fundación Alternativa or life in Ecuador, follow her work here.