By DG Dan Hall

(Editor’s Note: Rotaray International District Northern Missouri Governor, Dan Hall, and Kansas City South Rotary Club member, John Duffey, recently traveled to the Caribbean Island of the Dominican Republic to study the possibilities of establishing a Micro-Enterprise Bank in the economically depressed southwestern region. This is a report on what they learned).

icrocredit is the extension of very small loans (microloans) to poor borrowers who typically lack collateral, steady employment and a verifiable credit history. It is designed to spur entrepreneurship, increase incomes, alleviate poverty and often to empower women. As of 2012, microcredit is widely used in developing countries and it is presented as having, "enormous potential as a tool for poverty alleviation." The United Nations declared 2005 the International Year of Microcredit . (source: Wikipedia)

Dan Hall and John Duffey, both from Lee’s Summit, from March 25/ 29, met with Dominican Rotarians and several other key leaders regarding the possibilities of establishing a Micro-Enterprise Bank in Paraiso, Dominican Republic. They met on March 28th with Instituto Dominicano de Desarrollo Intergral (IDDI) Executive Director/Founder, David Luther and the IDDI chief financial officer (CFO), Geronimo Chotin. They also had a dinner meeting with the Dominican Rotary District Governor and District Governor Elect from Rotary District 4060 (65 clubs in 4060) and with an Assistant District Governor, plus some other Rotary leaders. These were in addition to several other meetings with key persons currently involved with micro finance in the Dominican Republic. In these and other meetings, the opportunity of establishing a Micro-Enterprise/Credit Bank was strengthened.

Our meeting with IDDI Director & Founder, David Luther, and IDDI’s CFO, Geronimo Chotin, was most enlightening. We learned that IDDI had been started by David Luther over 30 years ago. David received a university degree in architectural engineering and has spent his adult life in building programs to assist in Dominican Republic development.  IDDI, in addition to managing Micro-Venture/Credit Banks, has interests in several other development projects. IDDI provides professional management services to the Paraiso Hospital where Rotary and partners have built a 25,000 sq. ft. hospital that yearly treats 40,000 emergency room patients. We visited this Paraiso Hospital where free unused finished office space has been offered should a micro-enterprise bank be established by Rotary in Paraiso.

We also met with a “central banker’ that lends Micro-Credit banks up to 50% of capital needs, OIKO Credit (moto: Investing in People) manager, Laura Martinez. (The Rotary Foundation, currently has a pilot program with her international organization). IDDI has earned a respected place among various organizations that provide development assistance and programs in the Dominican Republic.

Mr. Chotin, IDDI, said that the official national unemployment number of 16% is vastly understated as many unemployed have dropped out of the labor market and stopped seeking employment. He said that real unemployment rate in the Dominican Republic is closer to 30%.    

IDDI does two basic types of Micro-Venture/Credit banking...Urban and Agricultural. In general, they like to finance borrowers who have an existing sound business record. Rural micro enterprise financing carries much more risk and is thus more expensive to manage. IDDI has 14 offices scattered around the Dominican Republic. A key to success in Micro-Venture/Credit operations, Luther said, was to keep overhead down and not have unneeded office space. However, he added, that should they open a Paraiso office in finished but, unused hospital office space, they would place a trained bank manager on location. BUT, he added that prior to opening a bank in Paraiso, that IDDI would need to do a careful review of the potential market, not only in Paraiso, but in the region west, north and east of Paraiso (an area with approximately 40,000 people). He instructed CFO Chotin to immediately begin such a market review with a report back on his desk by June 2012.

The discussion included the great potential for economic expansion and growth in the Southwestern coastal and very mountainous area in the Paraiso region. While Paraiso has but 14,364 people, the nearby town of Eriqullo has an additional 13,000 and the Paraiso Hospital service area has over 40,000 population. Potential development mentioned by Mr. Luther was tourism along the beautiful coast in this region, development of ecological tourism based on the world environmental "hot spot" in the mountains above Paraiso. Here, many species of birds from North America winter. Even now North American and European "bird watchers" travel to this area for bird sightings. In addition, agricultural development is possible with fine coffee produced in the surrounding mountains.

Mr. Luther felt that a comprehensive approach to regional development was needed which included the possible new Paraiso Hospital offices for a Micro-Venture/Credit Bank. He noted that currently Paraiso has no commercial bank. Micro-Venture/Credit Bank Loans --- Micro-Credit can be in numerous areas, in addition to business loans, such as to finance water wells, new floors, home water filters, roofs, and so forth. When asked what the terms might be for a micro-credit loan, for start up women managed business ventures, Mr. Luther suggested that we might be looking at "line of credit" type loans for about a year term.

Rotary Leader Meeting --- Herrera Rotary Club President, Andy Jacques (also Trade Commissioner for the Government of Canada) organized a meeting the evening of March 28th for John Duffey and myself with several District 4060 Rotary Leaders. These included District Governor Emilce Medina, District Governor Elect (DGE), Dr. Alexandra Adams, Asst. District Governor, Ana Vinas, and four members of the Herreva Rotary Club. The dynamics of this meeting were typical, according to Andy Jacques. That is, during much of the meeting and dinner, many side discussions occurred, and people would talk at the same time (sort of reminded me of some TV news multi-person interviews). However, this vigorous discussion was all in friendly Rotary spirit, but difficult to follow in Spanish and English. Anyway, Andy did his best to serve as translator, but after some time it became clear that DGE Dr. Alexandra Adams was fluent in English which was of great benefit to the discussion.   

Here is what we learned: 1) This district,4060, is quite experienced with not only major grant administration with The Rotary Foundation (TRF) World Fund, but has also received a $2,000,000 grant for water purification devices in a joint Rotary Foundation 3-H Grant and USAID project (one million dollars from each). The Assist. District Governor, Ana Vinas, has two clubs who are currently involved with micro-credit banks. She was most enthusiastic about helping with a possible project in Paraiso and will be serving again as ADG for 2012/13.

2) District Governor, Emilace Jacqueline Medina, volunteered to assist with the Paraiso Micro Credit Bank project during the coming Rotary year.

3) All eight Rotary leaders and members at the meeting pledged interest in the proposal to develop a micro-credit bank in the SW part of the Dominican Republic and liked the idea of having lower overhead of locating the bank at the Paraiso hospital.

4) Revealed that Dominican Rotary District 4060 had been partners in over sixty Rotary Foundation projects. DGE Alexandra said that she has two excellent grant development people to

assist with grant compliance

5) They all agreed that the need was great for a Micro-Credit Bank in Paraiso because of the poor economic situation in the Southwestern region of the Dominican Republic.

To conclude, it seems feasible, from an organizational standpoint, to develop a Micro-Enterprise Credit Bank. This can be done with assistance from OIKO Credit (central bank), IDDI Professional Management, partnering, for start up bank capitalization, with The Rotary Foundation, Multi-National Rotary Districts, Dominican Rotary District 4060, and local Dominican Rotary Clubs. Whether to proceed, will depend on the results of the IDDI feasibility study and the commitment of the described bank partners.

(Editor’s Note:  Persons interested in Micro-Credit in the developing world may want to read The Rotarian, April, 2012 Issue featuring Nobel Peace Prize winner Muhammad Yunus. Yunus is known as the “banker for the poor”, began transforming lives while an economics professor at the University of Chittagong in Bangladesh. What began as personal microloans to poor women in nearby villages grew into Grameen Bank, which today has more than 2,500 branches throughout the country. Grameen Bank has helped launch or expand the businesses of more than 8 million borrowers – 97 percent of them women. More on this topic can also be found at Rotary International on Facebook.)