The following is an interview conducted with the CEO of a financial institution in Suriname regarding microfinance within the country. The interview took place 9/12/07.
SB: Sarah Bergin
CEO: Chief Executive Officer
SB: What is the current state of Microfinance in Suriname?
CEO: In my opinion microfinance is at the starting block. Many people are talking about microfinance even very influential people but it has not really begun yet.
SB: So there is no real program yet? They are talking about it and working towards it but nothing has started?
CEO: It depends on how you look at it. If you look at it from an international perspective then nothing has been done yet. They will find that larger credit unions for decades have been providing what is now called microentrepreneurs under another name. At least in my organization we have been providing loans for small businesses.
SB: Do those loans have more leniencies with collateral requirements? I know that a lot of microfinance companies today don’t focus on collateral.
CEO: That is one difference that is why I wanted to distinguish between looking at from an international perspective because if you look at microfinance the way the Grameen Bank is doing it then it differs 100% from what we are doing here. Of all loans provided and I can only talk about my organization there was some sort of collateral. Sometimes very, very hard, sometimes an easier kind of collateral. What we are trying to do now in Suriname is to implement a microfinance program which will be closer to the well known Grameen Bank system where the focus will not be on collateral but on helping the people freely get loans.
SB: How long has this credit union been open?
CEO: Thirty five years.
SB: Do you recall when you stated hearing about the word microfinance and microentrepreneurs?
CEO: I don’t remember exactly but it has been about at least three years now.
SB: Who in Suriname would you say are the key players in microfinance?
CEO: I don’t know. What I know is that I have noticed a shifting of the private industry providing financial services to small businesses.
SB: When you say in the private industry do you mean private lenders? At high interest rates?
CEO: Well high interest rate that is another topic. Coming back to the question, at this moment I do not know who is playing an important role in microfinance. What I do know is that the government is busy working on projects one of them is the establishment of a microlending institution that will work with agriculture, cattle, and fishery. In two weeks from now they will be tendering a meeting and this credit union is also invited to be a part in order to find a financial institution to manage a 2.3 million € grant to make loans to people with cattle. That’s one thing. What must happen now is that the tendering must take place and then they will decide who is going to manage it. This is not a pure microfinance program. On the other hand there is a new project in development and it is a sole microfinance institution that the government wants to develop. They are calling it MIFIS, Microfinance Institution. MIFIS will start with capital of 6 million €.
SB: Where are they getting that money from?
CEO: The money is coming from the government cooperation between Suriname and Holland. The program will give up to 6,000 SRD on loan to microentrepreneurs and they will do this like the Grameen Bank system. So this microfinance institution will provide microfinance to microentrepreneurs to a maximum of 6,000 SRD. That’s the first time and there will be a possibility to get additional loans for expansion.
SB: Are there requirements for the borrowers such as they have to attend classes?
CEO: They will be trained. Yes, they will be trained. The institution will make sure first that one understands what he or she wants to do.
SB: So they will have to propose what their project is going to be that they are using the money for?
CEO: Correct and they will be screened at the beginning by a review so the fact is that the collateral is there but the collateral will be more social-like.
SB: Do you know the timeframe that they are proposing for this institution to be developed?
CEO: What I have seen is a draft of the project proposal. It has been presented to the Dutch Embassy and recommendations have been made and now the consultant is implementing those recommendations with the Minister who is responsible for this and I think that there is a resolution by the government to approve to assist. I mean politics is involved in this.
SB: That was going to be my next question actually. Is the government going to be very involved in this project?
CEO: They are involved because they have to set up the program. They have to make sure that the project is transparent and everyone who is eligible can have access to the loans and once the institution is founded then the government will pull back.
SB: Will it be based here in Paramaribo and will they have field workers go out to the interior or will everyone have to come into the city?
CEO: They are going to have people to go across the country. What is very important is their partnership with NGO’s across the country.
SB: What obstacles do you see for the success of microfinance in this country?
CEO: It is difficult. I have my own opinions but some of them I will not share with other people. My experience is that when my people get things like money granted I’m not sure that they are sensitive to paying those things back. But in the case of microfinance they have to pay it back but if they can’t…the only consequence is they don’t get more money. I don’t want to be pessimistic. I think based on the way the project proposal is set out, there are some requirements. One needs to meet the criteria in order to get the loan so there will be no collateral but I think the chance of losing money will be managed according to the plans set out in the project proposal.
SB: Will it be a locally run organization or will it be run by someone from Holland?
CEO: It will be locally run.
SB: The interest rates that your credit union charges for small business loans, are they similar to other loans that you are giving? So there is no real benefit like in the traditional microfinance sense where people are given lower interest rates and they don’t have collateral?
CEO: No, not really. We had a project for which we had a special grant issued by a Dutch female organization. But with that type of microfinance loans we did have a special interest rate because the money was guaranteed by the grant.
SB: Was that a successful project?
CEO: The project was not, well, it depends on how you look at it. It was a success if I look at the experience we gained. If I look at the productivity then it was not a success. Too many of the entrepreneurs who received the loans did not develop their, they did not meet the goals that they had. Two of them did not even repay the loans. So looking at that we can say yes it was a success because we gained some experience. Some of the entrepreneurs gained some experience and the local female organization that was involved also learned some lessons. I think we did not earn a lot of money on it. In fact we lost some money and we were supposed to get more members from it but that goal we also did not meet.
SB: Does this credit union have any plans for banking in the interior of Suriname?
CEO: We do not see that happening right now.
SB: Do you plan on any kind of mobile banking system?
CEO: I don’t know. We are planning a workshop to plan what we will do over the next three years. There is a new board and so we have to plan what they want to do over the next three years and who knows maybe there could be some new ideas.
SB: We have discussed the idea of village banking a little bit, do you think it is possible here in Suriname? Do you foresee using village banking as a complementary service to microfinance whereas villages would secure loans from this credit union using collective funds as collateral?
CEO: I believe that it is a possibility. In fact I have already had some talks with people who are busy doing village banking in some villages and I want to assist in that field.
SB: Sarah Bergin
CEO: Chief Executive Officer
SB: What is the current state of Microfinance in Suriname?
CEO: In my opinion microfinance is at the starting block. Many people are talking about microfinance even very influential people but it has not really begun yet.
SB: So there is no real program yet? They are talking about it and working towards it but nothing has started?
CEO: It depends on how you look at it. If you look at it from an international perspective then nothing has been done yet. They will find that larger credit unions for decades have been providing what is now called microentrepreneurs under another name. At least in my organization we have been providing loans for small businesses.
SB: Do those loans have more leniencies with collateral requirements? I know that a lot of microfinance companies today don’t focus on collateral.
CEO: That is one difference that is why I wanted to distinguish between looking at from an international perspective because if you look at microfinance the way the Grameen Bank is doing it then it differs 100% from what we are doing here. Of all loans provided and I can only talk about my organization there was some sort of collateral. Sometimes very, very hard, sometimes an easier kind of collateral. What we are trying to do now in Suriname is to implement a microfinance program which will be closer to the well known Grameen Bank system where the focus will not be on collateral but on helping the people freely get loans.
SB: How long has this credit union been open?
CEO: Thirty five years.
SB: Do you recall when you stated hearing about the word microfinance and microentrepreneurs?
CEO: I don’t remember exactly but it has been about at least three years now.
SB: Who in Suriname would you say are the key players in microfinance?
CEO: I don’t know. What I know is that I have noticed a shifting of the private industry providing financial services to small businesses.
SB: When you say in the private industry do you mean private lenders? At high interest rates?
CEO: Well high interest rate that is another topic. Coming back to the question, at this moment I do not know who is playing an important role in microfinance. What I do know is that the government is busy working on projects one of them is the establishment of a microlending institution that will work with agriculture, cattle, and fishery. In two weeks from now they will be tendering a meeting and this credit union is also invited to be a part in order to find a financial institution to manage a 2.3 million € grant to make loans to people with cattle. That’s one thing. What must happen now is that the tendering must take place and then they will decide who is going to manage it. This is not a pure microfinance program. On the other hand there is a new project in development and it is a sole microfinance institution that the government wants to develop. They are calling it MIFIS, Microfinance Institution. MIFIS will start with capital of 6 million €.
SB: Where are they getting that money from?
CEO: The money is coming from the government cooperation between Suriname and Holland. The program will give up to 6,000 SRD on loan to microentrepreneurs and they will do this like the Grameen Bank system. So this microfinance institution will provide microfinance to microentrepreneurs to a maximum of 6,000 SRD. That’s the first time and there will be a possibility to get additional loans for expansion.
SB: Are there requirements for the borrowers such as they have to attend classes?
CEO: They will be trained. Yes, they will be trained. The institution will make sure first that one understands what he or she wants to do.
SB: So they will have to propose what their project is going to be that they are using the money for?
CEO: Correct and they will be screened at the beginning by a review so the fact is that the collateral is there but the collateral will be more social-like.
SB: Do you know the timeframe that they are proposing for this institution to be developed?
CEO: What I have seen is a draft of the project proposal. It has been presented to the Dutch Embassy and recommendations have been made and now the consultant is implementing those recommendations with the Minister who is responsible for this and I think that there is a resolution by the government to approve to assist. I mean politics is involved in this.
SB: That was going to be my next question actually. Is the government going to be very involved in this project?
CEO: They are involved because they have to set up the program. They have to make sure that the project is transparent and everyone who is eligible can have access to the loans and once the institution is founded then the government will pull back.
SB: Will it be based here in Paramaribo and will they have field workers go out to the interior or will everyone have to come into the city?
CEO: They are going to have people to go across the country. What is very important is their partnership with NGO’s across the country.
SB: What obstacles do you see for the success of microfinance in this country?
CEO: It is difficult. I have my own opinions but some of them I will not share with other people. My experience is that when my people get things like money granted I’m not sure that they are sensitive to paying those things back. But in the case of microfinance they have to pay it back but if they can’t…the only consequence is they don’t get more money. I don’t want to be pessimistic. I think based on the way the project proposal is set out, there are some requirements. One needs to meet the criteria in order to get the loan so there will be no collateral but I think the chance of losing money will be managed according to the plans set out in the project proposal.
SB: Will it be a locally run organization or will it be run by someone from Holland?
CEO: It will be locally run.
SB: The interest rates that your credit union charges for small business loans, are they similar to other loans that you are giving? So there is no real benefit like in the traditional microfinance sense where people are given lower interest rates and they don’t have collateral?
CEO: No, not really. We had a project for which we had a special grant issued by a Dutch female organization. But with that type of microfinance loans we did have a special interest rate because the money was guaranteed by the grant.
SB: Was that a successful project?
CEO: The project was not, well, it depends on how you look at it. It was a success if I look at the experience we gained. If I look at the productivity then it was not a success. Too many of the entrepreneurs who received the loans did not develop their, they did not meet the goals that they had. Two of them did not even repay the loans. So looking at that we can say yes it was a success because we gained some experience. Some of the entrepreneurs gained some experience and the local female organization that was involved also learned some lessons. I think we did not earn a lot of money on it. In fact we lost some money and we were supposed to get more members from it but that goal we also did not meet.
SB: Does this credit union have any plans for banking in the interior of Suriname?
CEO: We do not see that happening right now.
SB: Do you plan on any kind of mobile banking system?
CEO: I don’t know. We are planning a workshop to plan what we will do over the next three years. There is a new board and so we have to plan what they want to do over the next three years and who knows maybe there could be some new ideas.
SB: We have discussed the idea of village banking a little bit, do you think it is possible here in Suriname? Do you foresee using village banking as a complementary service to microfinance whereas villages would secure loans from this credit union using collective funds as collateral?
CEO: I believe that it is a possibility. In fact I have already had some talks with people who are busy doing village banking in some villages and I want to assist in that field.
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