Saturday, July 07, 2007

This blog is closed

After two years and 548 thought-provoking political/economic/sports/school/church posts, it's time to move on.
Future posting will be done at Tapps to Moldova! Please check it out, and check out the previous couple of posts here to catch the vision for what we're doing.

If you've happened across this blog via Google or some other search engine, please feel free to peruse the archives.

Thanks for reading! Keep in touch!

--The Management

Friday, July 06, 2007

What is Christian Microenterprise Development? (pt. 2)

Yesterday, I explained the microcredit side. Now, I want to talk about entrepreneurial development.

In answering the question “why should Christians care about starting businesses?” I talked about how the mass migration of people from places like Mexico and the former Soviet Union are disrupting the entire societal structure there, a structure that the Church is asked to be salt and light in.

Another way to think about it: Unemployment causes serious social problems. 30-40% unemployment, like we see in Moldova, means a lot of men sitting around without a way to earn income to feed their family. The unemployment and lack of opportunity is one reason that alcohol and drug abuse are so prevalent, and why you have the problem of street urchins (gangs of orphaned or abandoned kids on the street). This is often why young Muslims turn to their local mosques and religious schools for food and support, and how they are cultivated into radical terrorists.

If the Church has the opportunity to address the root of these problems both spiritually and economically, why shouldn’t it? The church has the calling to be salt rubbed into meat of society, preserving it from going completely rotten (Matthew 5:13).

Business Professional Network (the organization sending Joni and me to Moldova) has developed a way to let the church be on the forefront of creating jobs and opportunities in many countries.

BPN helps locals form Business Development Groups (BDGs). They start with a small group of 8-12 national believers who have proven to be faithful to their church and good business operators. These believers will pool some funds to be loaned out to aspiring entrepreneurs. The group will be responsible for evaluating the applicants’ business plan and willingness to repay, and will also be responsible for coaching and encouraging the borrower. This is how the BDG builds a relationship with the local.

The BDGs organize seminars on how to write a business plan, how to properly account for finances, all the while salting their teaching with Biblically-based principles of ethics and accountability, and using the courses as a good bridge to share the Gospel.

BPN organizes BDGs here in the U.S., small groups of Christian entrepreneurs in a diverse range of professions. These groups seek to adopt certain entrepreneurs overseas, and will give funds to the Moldovan (or other country’s) BDG for a particular entrepreneur’s project.

If possible, the people from the U.S. BDG will provide advice and coaching to the national entrepreneur, and even travel to meet with him or her.

For example, BPN recently sent a U.S. BDG to Moldova to help train some women in how to run a beauty salon (one of the BDG members owned a salon). They provided some loan funds for women wanting to start salons, and provided encouragement and coaching to them as well. Western businesspeople get to use their God-given business talents and experiences to reach out to nationals. The nationals, in turn, are greatly attracted to having Western help as a resource and are more inclined to turn to the Christian Business Development Group for loans and support.

Check out the story of Vasile (abbreviated here), who first took out a loan in order to bake and sell cakes. Vasile eventually took out another loan to get into the sausage business. Vasile was lost in a world of alcoholism before he came to CAMED for a loan. Through the BDG’s coaching and influence, he repented and dedicated his life and business to the Lord. Now, he is able to employ 10 people and support 7 households, all of which he is leading to the Lord. Vasile’s sausage success is about to go international, as he’s in the process of finding ways to export his sausage to the rest of Europe.

So, CAMED (BPN’s partner that we will be working with directly) was able to provide:

  1. Loans to an aspiring entrepreneur.
  2. A God-centered relationship that led Vasile to repent and trust Christ. He’s now free of his alcoholism and healthy.
  3. Coaching to help him grow his business internationally.
  4. Jobs for more members of the community, helping lift 7 households out of poverty.
  5. A way for Vasile to reproduce himself by witnessing to and discipling his employees.

Development economists love it when firms reproduce themselves through "knowledge spillovers" and more industries are created as employees leave a business to start their own. Maybe one of Vasile’s employees will start a cheese factory and the cycle of faith+job reproduction will begin again.

Businesses that multiply create other businesses that multiply. When the business-planting process begins with Christ, it will create other Christ-centered businesses that multiply and groups of believers who multiply along with them. Then, you begin to see a people become liberated from both economic and spiritual poverty.

Thursday, July 05, 2007

What is Christian Microenterprise Development? (pt. 1)

Since Joni and I will be working with a Christian microenterprise development agency, I’d need to explain what that is. “Microenterprise” captures 2 ideas: microcredit lending and entrepreneurial development.

First, microcredit:

The 2006 Nobel Peace Prize went to Mohammed Yunus and his Grameen Bank for their efforts in pioneering microcredit lending. It's "bottom-up" poverty relief, as opposed to the more "top-down" macroeconomic approach of Jeffery Sachs and others, which I talked about in my previous post.

What is microcredit? It’s the extension of very small loans to entrepreneurs who are not bankable; people with no collateral, credit history, or any way to get money for their business ideas without paying astronomical interest rates.

Yunus discovered he could make small loans, just a few dollars, to his students who would then use those funds to earn money and then pay him back on time. He understood that often times poor people have some good ideas and opportunities to earn income, they just lack start-up capital to get it.

If you want to start a business in the U.S., you typically go to a bank or a venture capitalist and ask for a business loan. They assess your ability to repay, evaluate your business plan, and, if they approve, extend you a loan. You use that loan as your initial start-up, and once your business gets rolling you pay if off and either get another loan to help you grow faster or begin self-financing your firm from profits or bring on investor equity by selling shares of your company.

Most people in poor countries don’t have this option. Banks only loan out very large amounts to account holders and require collateral and other things up front. Thus, entrepreneurs are left to either wait a long time to start a venture, or never start one at all.

Microcredit groups enter the picture to fill in the gap and provide small loans to poor people. These groups typically assess credit risk by talking with family members, friends, and community leaders; maybe even requiring them to co-sign on the loan so that the borrower has social pressure to repay. It may require the person putting up small collateral, like their wedding jewelry or something small in monetary value but steep in sentimental value.

It may be $10 for a person to buy some shoeshine materials. Or $20 for a single mom to buy a wheelbarrow to cart vegetables to sell around her neighborhood. Or $50 for someone to buy a cell phone and start a pay-phone service in their village. It allows them to begin earning money, which they can use to grow their business. As they spend their money (on more vegetables, for example), they help employ other members of the community. The local economy starts to grow. People begin to live outside of poverty.

Some questions that are often asked about microcredit is:

“Why loans? Why not just give the people money?”

By giving them a loan that they’re obligated to repay, the borrower has an incentive to use his/her money as efficiently as possible. They will work to make sure they can meet the requirements.

The microloan process shows the recipient that this isn’t a one-shot game. It’s about establishing a relationship. They will have the opportunity to earn greater rewards by being faithful in the first loan they receive. Otherwise, they would just take the money and run.

“Aren’t you just saddling these poor people with more debts they can’t pay?”

Micro loans help them generate revenue through business and get out of the poverty. Microcredit institutions experience near 100% repay rates in every country. That’s considered to be the “miracle” of the process. Whether through the relationship process, or by bringing in members of the community to vouch for the loan recipient, people repay and economies grow.

Think about what might happen when the loan-givers building the relationship are Christians. They now have a way to build a relationship with many people in the community and share with them about Christ. More on that tomorrow.

“Why do we care about growing businesses? Shouldn’t we just care about sharing the Gospel and planting churches?”

As mentioned before, microcredit is a way for the Church to share the Gospel, but it’s also much more. It’s about the Church being salt in its community by helping keep it together. In many former Soviet countries (and in Mexico), people are migrating to other countries as quickly as they can in order to find jobs. This breaks up families as husbands and fathers leave their homes, perhaps never to return. The entire structure of society begins to break down. Younger educated people do not want to invest time and energy into the community that they just want to get out of. Anyone with leadership ability or talent exists the community, leaving a gaping void. The resulting economic and social collapse in these countries bring about anarchy, crime, war, and usually a harsh totalitarian-style regime. This makes it hard for the Church, whose members are also looking to leave the country. Churches in these types of community face the daunting challenge of reaching out when the society is coming apart.

With Christian microenterprise development, members of the Church have the ability to give back to their community by helping create jobs and stability. It allows them to be hugely influential the community and build relationships with people who might not have ever darkened the churches’ door. It shows the community that Jesus is not just a nice story or creed, but He’s a Savior who cares about their needs. He cares about giving a them cup of cold water, or clothing, or a way to keep their families together.

BPN, the organization Joni and I are working for, is more focused in helping people beyond purely small microloans. They mostly fund people who have “graduated” to higher levels of borrowing, in the $2000 range.

Here are some of their stories in Moldova. Check them out. They’re simple, but very effective. Tomorrow I’ll talk about the “enterprise development” side of the story and how the church is deeply involved.

Tuesday, July 03, 2007

What's Wrong with Economic Development.

2 years ago I read Jeffery Sachs’ The End of Poverty, which I reviewed here, and gave it to others as a “must-read-now.” Sachs is probably the foremost development macroeconomist on the planet, and maybe the most well-known and publicized economist in the world (he's the one who Bono calls "my teacher").

However, much of my 2 years at Baylor have been in learning deeper ways to evaluate and critique Sachs’ (and others’) proposals. I have now reached a deep conclusion, which I share with you now.

Sachs proposed targeted, cooperative experiments in poor African villages. He outlined how even a simple $100,000 could save a village via mosquito nets, vaccinations, better farming techniques, a cellphone for communication of prices, etc. Sustainable development that would save the village forever.

He has now implement those projects in 11 extremely poor villages in 10 different African countries using aid money. Here’s a very interesting article evaluating the original project in Sauri, Kenya by Sam Rich, an veteran of African development projects with the World Bank.

What struck me about Rich’s article are the descriptions of the problems. It’s no longer a lack of funding, or monitoring, or interest. They’re completely human in nature, and not easily addressable.

Understand, these are perfectly designed development projects with enough funds to do whatever is necessary.

They organize locals into elected committees to make effective decisions, they provide everything the village needs to approach sustainability: mosquito nets, water wells, vaccines, meals for students attending school, the Internet, you name it. $2.75 million into one village so far and achieving the results you’d want:

Healthier people who are able to work more. Higher crop yields for more food. Children being educated and having a chance at a brighter future. This should propel the village onward and upward.

However, it’s not a utopia. Why?

The Human Factor. Even the best-designed, best-equipped society ends up developing serious cracks. Why? Because man is sinful and depraved. Development that doesn’t address this issue will only achieve limited success.

Rich provides examples, while noting that people involved in the project would only voice their criticisms “off the record”:

Sauri has achieved more than (other) such projects could ever reasonably hope to, but it’s not yet a model village. Instead, Sauri remains Africa in microcosm. All the fundamental problems that exist in Africa still exist in Sauri; in some cases, these problems are ­magnified.”

1. Tribal divisions still exist. The dominant tribe is still keeping the lesser tribes from gaining access to resources.

2. The newly-formed committees already suffer from corruption.

3. The truck donated to take goods to market and use as an ambulance now sits unused due to political in-fighting.

4. Many villagers quickly sold their mosquito nets and fertilizer then simply conspired to get more from the donors.

“The best-laid plans…”

You see, there’s only one type of people who will recognize no distinction between tribes (Gal. 3:28), will share what they have unselfishly (Acts 4:32), will put others’ needs first (Phil. 2:3), and won’t take advantage of people offering help (Luke 12:48b).

Those people are the Church. People who have had their hearts completely changed by God (Deut. 30:6).

The best-designed aid and development projects will only be able to reach peoples’ physical needs (which is a good thing), but will fall short of their goals and be unsustainable in the long-run without seeing hearts changed by Jesus. He’s the missing component of these “perfect” projects.

Monday, July 02, 2007

Finally done

Well, I just took my last final on my last Monday in Waco. This class was definitely among the toughest and most time-consuming classes I've ever taken, and I hope to have squeaked out of the class okay. I will now pack up my stuff and move out.
I can't complain much about my time at Baylor. It was a small program that gave me a lot of perks, like my own office and the opportunity to teach. I met some really cool professors and guests, as well as learned a thing or two that changed my life. Here's to the class of '07. May you all find meaningful careers.

Every day is now a "last" day for us. Our time and attention is focused on praying for visas, selling, packing, and tying up loose ends. I've got some pre-written posts about development and the work we'll be doing in Moldova before I switch off the lights here and move to another blog.

Yesterday was our last day with our church and our "Barelywed" Lifegroup. Our best friends have been made through this group, with many coming and going with their studies at Baylor. We've been blessed by knowing all of you and know that God will do great things through your lives. We hope to keep in touch and see you again, if not now then at the "finish line."

To borrow words from someone else:
We had a lot of fun. For those of you that went down the glory road with us, our eternal thanks.