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    Entries in proximity finance (5)


    Here's a thought: what if instead of asking people for charitable donations, we asked them for $25 loans?

    Every morning, Daw Lei Lei wakes up to the satisfying sound of her 100 ducks nestled alongside one another in the shed outside of her house in Hmaw Bi Village. After she sets them free, Daw Lei Lei follows the ducks on a small wooden boat as they roam through the nearby pond. She's careful not to lose even one.

    Making sure her ducks are well-cared for is crucial for duck farmers such as Daw Le Lei, since egg production rates can vary greatly depending on the food that her animals eat. Accessing quality feed is crucial to the success of Daw Lei Lei's business, but unfortunately, it isn't always easy. She needs the food the most in July, which is also the leanest month for thousands of duck farmers in Myanmar's Delta Region; because rice farming is in full force this month, duck farmers have to limit the movement of their flocks, meaning production can drop to as little as one or two eggs a day for every ten ducks.

    Starting 2014, Proximity Finance, our micro-finance arm, has supported over 2,200 duck farmers in Myanmar by disbursing micro-loans designed specificallyto help duck growers buy nutritious feed when they need it the most. Proximity can provide these loans thanks to a partnership with Kiva, the largest microfinance crowdsourcing platform in the world. Kiva enables individuals everywhere to support farmers and smallholders in remote villages. By entering $25 into the system, Kiva ensures that 100% of your loan goes directly to the borrower of your choice in one of 83 different countries. When the loan term is up, you can re-lend the money to a different borrower, or withdraw the funds and receive $25 back. Proximity Designs is Kiva's first field partner in Myanmar.

    Daw Lei Lei was one of the first Proximity customers whose duck micro-loan was funded through Kiva. Before the loan, Daw Lei Lei's family finances where often in the red. Her village was gravely affected by Cyclone Nargis in 2008, and the family lost a daughter as well as their seven-acre farm. Since then, the family has survived by farming ducks, but their business was precarious at best. 

    The family used the $200 micro-loan to purchase more ducks and quality duck feed, and even this small injection of cash was enough to stabilize their income. With the increased profits, Daw Lei Lei's husband purchased a boat to start his own transportation business, which in turn yields enough profit to cover their two children's school fees, allowing the family extra breathing room that they haven't had in years. 

    Already, we've raised $1,070,000 through Kiva, thanks to countless individuals who are entrusting rural Myanmar village groups with their loans. We're aiming to lend $500,000 to more than 2,500 duck farmers in Myanmar by November 2015. If you are interested in Proximity's work, you can get directly involved in what we do by lending $25 so that U Win can purchase better feed, or by supporting duck farmers in Chaung Pyar.




    In the incubator: a new financial inclusion product

    There are few things as creamy and delicious as Burmese be u hin (duck egg curry), and yet, the inhabitants of Mhaw Aine Village in Dedaye refuse to believe that duck is a delicacy in some parts of the world. “We’re sick of duck eggs!” Ma Mya Mya Htway says; “we have them every day,” she explains. For some Proximity staff members, this would be a dream come true (cough, cough), but it’s easy to understand why Ma Mya Mya Htway would rather eat pork or chicken; she belongs to a family of duck farmers that have been raising the animals for generations.

    Ma Mya Mya Htway’s mother first taught her the basics of duck farming when she was a child, and to this day she continues to follow her mother's advice. Only two things have changed. The first is the kind of feed she uses for her ducks. The second is that, for the first time ever, she’s received a formal micro-loan to help boost her livestock business.

    While Proximity Designs has been offering farmers micro-loans since 2009, Ma Mya Mya Htway owns no land and doesn’t farm, making her ineligible for a crop loan.  She’s one of countless landless villagers across Myanmar who often have to rely on daily wages from working on others’ land or in the cities to meet basic needs. Even if they start small businesses like Ma Mya Mya Htway has done with her ducks, landless households still can’t qualify for traditional micro-loans from NGO’s or the Myanmar Agriculture Development Bank.

    Because of this, Proximity Finance has started looking into financial services that are more inclusive of non-farming households. These upcoming products, including duck loans and the on-the-go loan, not only provide access to credit to people who’ve never had it before, but also strengthen our social enterprise business model. 

    When Proximity decided to test out a pilot duck loan earlier this year, the $200 loan disbursement was timed to coincide with the yearly lean period for duck farmers in July. While duck egg production rises and falls seasonally, output decreases by more than half during this month. We checked in on Ma Mya Mya Htway two months later, and she reported that business was going well; she used the initial disbursement to buy nutrient rich food that helped her ducks lay more eggs in July, which has helped her save enough money to buy a cellphone. With it, she’ll be able to call the duck vendor in the nearest town directly and secure a better price for her product.

    The duck loans have also had a secondary effect on Ma Mya Mya Htway’s reputation. She’s the group leader for the thirty families in Mhaw Aine that are participating in the duck loan pilot run. While she’s been well-trusted for years, the impeccable job she’s done keeping records has earned her additional respect, both from her fellow villagers and from the Proximity Finance team. Thanks to her work, we're looking to expand the program and make loans available to more duck farmers in the coming year. 


    Credit, Technology, and the Rural Myanmar Dream

    "There's no denying that access to credit can improve people's lives, and yet too much credit, or the wrong kind of credit, can put families in an unending cycle of debt." Renowned designer Jan Chipchase spoke these words Tuesday night during a presentation at Yangon gallery, TS1, where Proximity Designs, Studio D, and Visa unveiled the results of an 8-week project to design a culturally specific loan for rural Myanmar households. 

    We knew going into the project that the challenge we’d chosen was rich in complexity. Indeed, developing mechanisms to help families break from the burden of debt cycles is by no means straightforward.

    We started off by spending two months conducting over 200 interviews to gain an understanding of financial conditions in rural Myanmar, which has experienced five decades of near complete isolation and exclusion from formal banking services. We learned that a range of inventive, informal systems fill this void. Some, such as monastery lending groups, are convenient, culturally relevant, and help unite communities, but too often informal loans charge interests upwards of 10% a month. In the agriculture based rural economy, families often need money outside of harvest time, and the only way they can get it is by agreeing to these harsh interest rates (for the full report, download "Afford Two, Eat One").

    Proximity Designs, Studio D, and Visa presented the rural loan Proximity will begin testing early 2015

    This past Tuesday, more than 100 people packed into TS1 to engage in a conversation about rural finance in Myanmar. Jan Chipchase from Studio D and Su Mon from Proximity walked guests through our process and end product: a prototype loan that supports families where one or more members travel seasonally in search of work, because there are no jobs available locally in the villages. Helping alleviate rural debt by offering people a loan isn’t the most intuitive solution, but in contrast to high-interest informal loans, Proximity will offer affordable credit. The loan will also alleviate the stress on both the family members who stay behind and await remittances, and on the family members who must cover travel costs and living expenses while they search for work.

    The space was opened for a conversation with fellow social enterprises, financial organizations, and the broader community on the feasibility of mobile money in Myanmar, how to build trust with rural customers, along with the potential for technology to bridge the infrastructural setbacks that rural households face. It was the kind of evening that sparks innovative ideas and that inspires us to continue thinking of new ways to financially empower our rural customers. 

    If you attended the event, here is a condensed version of Tuesday night's slides.



    Where a project lives and breathes

    Pop-up studio in Kalaw. Photo courtesy of Jan Chipchase 

    It’s hard to be inspired in an uninspiring setting. Which is why, when seeking to do to top-notch research and design work with the folks at Studio D, we set up a pop-up studio to enable the creative juices to flow.

    A what? Think about it: a dynamic, varied workspace tailored exclusively for a particular project. Instead of retreating into some sterile hotel every night, imagine working in a cabin up in the hills of Kalaw or in a family home in North Dagon. Pop-up studios are set up in places that are rich in personality and that allow teams to be closer to the the people whose lives they are trying to affect.

    The aim is to tailor a space so that it lends itself to creative work, one with lots of natural light and varied work settings both indoors and outdoors.  No wall is taboo at a pop-up studio, and by using the space itself for ideation and brainstorming, teams can come up with dynamic solutions while remaining aware of what each member is working on. Because every day's data is synthesized into short insights on the walls, teams get just the right amount of exposure to promote creativity, without getting bogged down under massive amounts of notes. On a tour of our most recent pop-up studio, set up with Studio D to develop financial inclusion services for rural Myanmar, visitors are able to follow the trail of diagrams and notes throughout the two-story house and physically see the thinking processes that led the team to the final prototype service we’ll be developing in the coming months.

    Essentially, a pop-up studio is the place where a project lives and breathes. Everything in that space is about the project. Too often, inspiration can’t be confined to the hours between 9 and 5, so one of the main benefits of a pop-up studio is establishing a space where inspiration is welcomed 24/7. It naturally lends itself to informal meetings and to a casual community living atmosphere that makes work processes enjoyable and playful.

    Our team de-briefs in Kalaw. Photo courtesy of Jan Chipchase

    With the advent of open offices, we’ve seen companies gain ever more awareness of how the space in which people work affects the quality and creativity of that work. The pop-up studio brings the dynamism of the most successful open offices to any place in the world. It’s a cost-effective way to spark creativity and to help a team live and breathe a project for its duration, which might, we admit, get intense at times, unless the projects are also motivating. In the words of Studio D's Lauren Serota

    “the work we’re doing is really fun, so it’s good to be living in it.”

    We’ll readily admit we’re a little geeky at Proximity (and we think our partners at Studio D agree), because we’ve totally embraced this opportunity to live amidst the ideas we’ve been cooking up for the past 6 weeks. 

    If you want to find out what they are, join us on July 29th at TS1 in Yangon for an open studio event about our most recent service design work with Studio D.

    And to read more about pop-up studios, check out  Jan Chipchase’s booklet on the subject. 


    Studio D members brainstorming in North Dagon. Photo by Claudia Sofia Sosa



    What's next for rural credit?

    Maria Fulwiler, Proximity's economic analyst, introduces Proximity's newest financial service...

    Proximity Designs has been offering informal credit in the Delta region, as part of Cyclone Nargis relief, since the beginning of 2010. With new regulations in place however, we now have the opportunity to formalize and expand our credit services. So, in 2012, Proximity Designs launched a new venture – Proximity Finance, a unit of the organization solely dedicated to providing farmers with desperately needed credit that is tailored to their unique needs. Unlike traditional microfinance, which is best suited to urban areas where borrowers are more likely to have a regular stream of income and expenses, Proximity Finance designs products that are adapted to the major cash flow fluctuations of crop farmers in Myanmar. For a farmer, cash needs depend on the season – a huge cash outlay is required to plant and fertilize, and income is only expected once the harvest is complete. This unique cycle makes the traditional microfinance process of bi-weekly interest payments highly untenable for the typical farmer. To accommodate this, Proximity Finance has designed the “Crop Loan,” a loan of either 120,000 Kyats or 200,000 Kyats that is distributed at the start of planting season and collected along with a balloon interest payment only after the harvest is complete.

    On January 23rd, 2013 Proximity Finance distributed its first crop loan to an eager farmer in the Pyapon Township of the Ayeyarwady division. By February 1st, 4,885 farmers had received loans of either 120,000 or 200,000 Kyats. By the end of 2013, we plan to have distributed almost 28,000 loans to 18,000 unique customers in the Delta, Yangon, Nay Pyi Taw and Mandalay areas.  This is a very exciting time for us at Proximity Finance; not only are we expanding our loan book by more than 100% in one year, but we are introducing new products, new policies, new practices and reaching into areas that we have never before serviced with loans. By 2015, we hope to have reached more than 35,000 unique customers across the country and to have increased the average value of our loans by more than 150%. And that’s only the start of it. With a credit drought plaguing the Myanmar farmers who make up 80% of the total population and receive a paltry 0.4% of the credit, the demand for crop loans is seemingly infinite.