Peruvian villages sell chiles and other products in town markets, where microfinance loans can help local women sustain and build their homegrown businesses.
It takes a trip high into the Andes to discover where the future of microfinance technology may have its biggest impact.
It’s there, in towns that straddle the relatively indistinguishable border between Peru and Bolivia, where a team of five Lehigh students went to work creating wireless technology for Pro Mujer Peru, one of the world’s most highly regarded microfinance institutions.
It was an experience that the four computer science and business (CSB
) majors and one finance student soon hope to repeat this August, when the upstart undergrads will put their technology to the test during a return visit to the South American nation.
“It is an ideal way for students to learn something about the world,” says Jim Hall, the Peter E. Bennett Chair in Business and Economics and co-director of the CSB program. “They can apply their technical experience while adding value for their client company—Pro Mujer Peru—and the people that it serves. Here we have a real opportunity to give something back.”
An international laboratory
Peru, like many of its South and Central American neighbors, has been a successful proving ground for microfinance. The practice of lending small loans, usually between $50 and $300, are granted to help poor people, most often women, to start or expand their small businesses.
To make matters better, Peruvian citizens also have national identification numbers and there is a national credit rating system—rare in developing nations—which means microfinance loan officers can run credit checks on potential clients with relative ease.
But challenges remain. Peru presents some difficult logistical issues, according to Todd Watkins, associate professor of economics and faculty director of the Martindale Center's microfinance program
who accompanied Hall on the trip as a faculty advisor. Loan officers often have to travel hours over difficult terrain to reach their clients’ villages, and they don’t have the ability to remotely enter information into bank networks—or run credit checks on the loan applicants.
“They assume that if you are not in the system, you are credit worthy,” says Watkins. “But if one of the five women in the lending group has bad credit, then the loan officer has to drive back out to the marketplace and start all over again. You can wind up spending more money in time than the loan is worth.”
Peru was a captivating—and surprising—laboratory of sorts for the team of students, who were caught off-guard by the relatively high number of cell phone users in the Peruvian countryside.
That rural villagers depended on cellular technology was of particular interest to Lehigh’s students.
“We initially assumed that cell phone technology in Peru would pale in comparison to that in the United States, but we uncovered an array of similarities that will hopefully make the successful completion of this project possible,” says CSB major Samara Resnick ’09.
“Walking the streets of Puno, Peru, we found it surprising that one cell phone carrier had multiple stores on one block. There is an abundance of cell phone users in Peru, just not as much cell signal
as we had hoped,” she says.
As a result, she and her peers began developing a software data system that would allow Pro Mujer Peru loan officers to perform credit checks remotely using their cell phones. The technology would help officers approve the group loans on the spot, eliminating the need to make multiple trips to the remote mountain villages before collecting applicant information by hand.
“From a technical standpoint, I have learned a great deal about cellular technologies and am currently researching ways of manipulating existing systems to accommodate our requirements for the project,” Resnick added.
The hands-on experience—and the technology that may result from it—got its start from a similar Honduras microfinance
trip in 2006. CSB students involved in that trip developed a Pocket PC-based beta technology to be used by loan officers in venues throughout the impoverished nation.
At that time, Watkins, who teaches a course on regional economic development and was interested in offering students an experiential opportunity to engage microfinance in person, sought and received a grant from the National Collegiate Inventors and Innovators Alliance (NCIIA) to pursue the trip.
The Bennett Factor
That learning opportunity caught the attention of Lehigh alumnus Peter E. Bennett ’63, a long-time champion of the CSB program at Lehigh. His financial support has made the two visits to Peru possible for the team of CSB students.
“Peter Bennett is a real supporter of underprivileged people,” Hall says. “He has funded the CSB program and this trip. He is fully behind it. We wouldn’t be able to do this—and make a return trip to Peru—without his generosity.”
Bennett is the chief executive officer of Liberty Partners, a private equity firm headquartered in New York City. Along with his substantial interest in Lehigh’s computer science and business program, Bennett has also recently provided financial support to help launch the College of Education’s Center for Developing Urban Educational Leaders
Giving women credit
Founded in 1999 and this year named to Forbes magazine’s first-ever list of the world’s top 50 microfinance institutions, Pro Mujer Peru
serves mainly districts in southern Peru.
Recently, the organization introduced a new loan product, directed at women-run businesses selling their wares at the local open-air market fairs in small villages throughout Peru.
Ideally, Pro Mujer Peru would like to offer collective loans to small lending groups of five or six women whose market stands sit near to each other. The Lehigh project could help them accomplish that goal, says Watkins, adding that a working prototype of their software could then be made available to any microfinance institution that asked for it.
It’s specifically that blending of business and technology—and its impact on humanitarianism and global awareness—that drives the microfinance field experience.
“I hope that this project will open the door for many similar projects and trips to take place,” says Mario Paredes, a microfinance club member and first-year finance student who also served as a translator during the trip. “It is a great opportunity to be able to travel abroad and help those in need. This trip inspired me not only to choose a career that I enjoy, but one that can also be used to help others around the globe.”
Photo by Todd Watkins
Posted on Friday, April 18, 2008