The Q&A sessions of last week continue. I have to really have my ears open to get the “A’s”, because the best responses to the ever-growing list of “Q’s” usually come unsolicited from platicas, or casual conversations.

The best reply yet to last week’s ambitious question of “What were the immediate and latent effects of last year’s disastrous economic and political situation in Honduras?” came in a platica I had with loan officers about Journals …

If you have made a loan through Kiva, you know how exciting it is to receive an update on the borrower you loaned to. In Kiva-speak, these updates are called Journals. For any loan made, a Kiva lender should, in theory, receive at least one update on the borrower throughout the life of the loan. Kiva Fellows devote a great deal of time and energy to Journals – collecting the information, writing the updates, and training staff (usually loan officers) at their MFIs on how to do the Journals themselves. During my time at Prisma Honduras, one of my biggest goals is to improve the journaling rate. Please forgive if you have lent through Prisma (or any Kiva partner) and not received updates – Kiva Fellows are hard at work on this!

As I see it, Journals represent one of three fundamental cornerstones of the Kiva-Microfinance Institution (MFI) partner relationship. The two others being: the interest-free capital that Kiva lends to the MFI (in this case, Prisma), and expects Prisma to repay; and the database of Prisma clients (in the form of borrower pictures and profiles) on Kiva’s website. As Manuel the loan officer put it “borrower profiles and journals are the ‘interest’ that Kiva charges its partners, in exchange for funds”. Kiva values Journals because they maintain the connection between lenders and borrowers; Prisma also values the journals for this connection, and because, through journal interviews, loan officers make sure that clients spend loan money honestly.

Every loan officer (at least in Prisma’s central office, I have not yet met with representatives of the other branches) agrees with the conceptual value of Journals. They also willingly strategize with me about when and how to collect information for Journal entries. So I had to ask, delicately of course, “¿WHY, then, is Prisma missing so many Journal updates?”

José looked pained as he explained. With the double-whammy of the worldwide economic crisis and the local political crisis, most of Honduras was in survival lock-down mode for a large part of 2009. Apart from literal lock-downs, like country-wide curfews, imposed by the de-facto government; fear, tension, and uncertainty tied the hands of Honduran commerce. Prisma and its clients and the rest of the “little guys”, or the MIPYMEs (micro, small, and medium-sized enterprises) took the hardest hit. Withdrawals of international grant and charity money dried up resources for MFIs in Honduras who depended on those sources for funding. Fortunately for Prisma, most of its investors remained faithful, but in a frozen financial climate Prisma could do very little with its capital. Marches and demonstrations prohibited Prisma loan officers from visiting clients; fear of conducting business in volatile conditions prohibited Prisma clients from earning the money necessary to repay their loans. The delinquency rate went up, and with uncertain cash flows nobody wanted to apply for new loans. When loan officers like José did get in touch with clients, the stories and frustrations were too overwhelming, and he certainly didn’t have the heart to write them down – who would want to get an email about that?

Kiva lenders would. Lenders who made loans through Prisma last year filled up the email inbox with emails inquiring about the well-being of and sending hopes and prayers to the borrowers. Many emails also ask about what’s happening now, and whether conditions are improving. “Well,” said José, “I’m a realist. I haven’t seen enough yet to convince me that anything is improving. Do investors want to hear that?”.

ABSOLUTELY. Because Kiva lenders are a resolute, resilient bunch who loan through Kiva because they want to understand what their idealism has to do with reality.

For up-to-date news and resources on the political situation on Honduras, check out the “Complete Coverage of the Honduras Crisis” page, by the Center for Democracy in the Americas.