Kasese & Kabale

Hi everyone,

I spent a couple weeks with our branch offices in Kasese (western Uganda) and Kabale (southwestern Uganda by the borders with DRC and Rwanda).  That area of the country is beautiful.  Both towns are situated along the Rwenzori Mountains and near two big tourist destinations – Kasese is right by Queen Elizabeth national park and Kabale is right by Lake Bunyonyi and Bwindi Impenetrable Rain Forest. 

My time in Kasese was a good learning experience about the local microfinance environment.  I was kind of surprised to see how much competition there was especially in the urban areas.  This makes sense though, as it allows the MFIs to lower costs as they serve a much more concentrated population.  Microfinance, in general is a low margin business.  The cost difference between making a $100 loan and a $10,000 loan or a $50,000 loan for that matter is not significant. So with much lower interest income from a $100 loan, the profitability of the institution depends on its scale and the volume of clients it can serve.  This is another reason why interest rates in microfinance are pretty high (in addition to the risk-level of the loans). 

However, there are downsides to focusing on urban areas.  In most urban areas, there have been several microfinance institutions making loans for the last 5-6 years.  The individuals in town have learned the ins and outs of the microfinance industry.  For instance, they know that the MFIs have no real way to verify that they have not taken a loan out with another institution.  This leads to people running effectively a Ponzi scheme whereby they take a loan out from one institution, consume it instead of putting it to working capital, and pay the loan back with a loan from another MFI.  The client base also knows which MFI will crack down hard on them if they default and which ones will not (or how long they can wait until they have to repay the loan). 

However, there are some benefits.  First, the increased competition has caused a drop in interest rates which benefits customers.  Also, in order to lower the risk profile of Five Talents’ portfolio in Kasese,  our loan officers have started to go further out into the rural areas where other MFIs do not currently operate.  For the most part, these individuals have never had access to capital from MFIs and are now able to benefit from borrowing at reasonable rates from an MFI as opposed to the extremely high rates charged by local moneylenders. 

It was great to be able meet some of our clients in the area.  I went hiking in the Rwenzori Mountains with one of our loan officers to reach our clients that live in mud huts up in the hills.  The area was unbelievably beautiful.  Looking around at the top of one peak, I could see the extent of the mountain range and out in front of me was Queen Elizabeth national park.  Unfortunately, I forgot my camera so I don’t have any pictures but I do have some pictures of Kabale.  Kabale was pretty as well but not as mountainous as Kasese.  Here are some pictures of Kabale:

Between travelling from Kasese to Kabale, I spent the weekend at Lake Bunyonyi.  Lake Bunyonyi is a popular resort lake that has 29 islands.  It is the deepest lake in Uganda at approximately 6,500 feet deep.  Although its uninhabitable to fish, the lake has tons of crawfish (probably the only place in Africa you can find crawfish).  It was a nice surprise to be able to eat crawfish after spending all week eating local food for lunch and dinner.  Here are some pictures of Lake Bunyonyi:

I have a couple funny stories from the last few weeks.  Since I’ve been here I’ve grown my beard out which is a foreign look to most Ugandan children.  As was the case when I went to Zambia the kids (and even some adults) will approach me to let me know that I look like Jesus or Chuck Norris.  A couple weeks ago, I went to church with Rosie Bryan and Kate Kingman who were in Kampala with an organization called Empower African Children.  There was a little Ugandan girl sitting in her mom’s lap behind Rosie that pointed to me and asked her mom, “Why isn’t Jesus preaching?”

Empower African Children is a pretty neat organization.  They provide scholarships for orphaned and disadvantaged children in Uganda to go to one of the best secondary schools in the country.  I was pretty impressed when one of the kids, a 16-year old boy, gave me a lecture on the importance of saving and investing my money. 

The other story had to do with two kids that I always see playing on the dirt road that leads from my house to town.  They are always coming up with creative games and there was one that reminded me of something my friends and I did in high school.  A couple times when it iced over and school was cancelled, we took a water ski rope tied it to the trailer hitch on Robby’s old Yukon and used either a trash can top or the Myers’ old sled to ride behind the car.  These kids had a similar idea but obviously had to use different means.  So they took a rope, tied one end to a cow and used a yellow, plastic water jug as a sled.  One boy would sit down on the water jug and hold on to the rope while the other boy ran alongside the bull, slapping it until it started running.  It was hilarious and I was able to take a couple pictures:

Work Life and a Trip to Jinja

Hey everyone!  Life in Uganda has been great.  I’m going to start off this post by telling you more about Five Talents. 

We offer three loan products to the active poor in and around three cities/villages in Uganda: Kampala, Kasese and Kabale.  The three loan products are group loans, individual business loans and individual salary loans.  Group loans are the traditional microfinance loans you think of where borrowers form groups of five and all take out a loan together (around $50-$200 each) guaranteeing each other’s loans.  We then organize these groups of five into larger clusters that elect a chairperson, treasurer and secretary.  The clusters meet regularly to remind each other of payments due, discuss any difficulties people are having and ways to improve their business.  Repayments are made to the cluster’s treasurer who then gives the money to Five Talents.  These types of loans make up more than 80% of our portfolio. 

Individual business loans are set up for persons who ‘graduate’ from the group loan model.  So these are individuals that have grown their business to a point that they need a loan of $1,000 - $2,000 (typically too large for group members to guarantee).  These borrowers will put up collateral and take an individual loan for working capital or purchasing large assets.  Individual salary loans are typically used for home improvement or paying school fees.  These loans are set up with the individual’s employer and part of the person’s monthly salary is sent directly to us as repayment.

I spent a couple days last week in the field with our loan officers in Kampala following up with current clients and training prospective clients.  These people do all sorts or micro-businesses.  Examples would be selling vegetables at local markets, selling second-hand clothes, transporting or selling charcoal, making clay bricks, running a local hair salon or running a general store.  Sometimes our clients will be in several different parts of the value chain.  For example, some of our clients sell bed frames, doors, chest of drawers, caskets and other finished wood products.  Other clients will do the carpentry work for the bed posts, door designs, etc., while others store and resale timber that is shipped in from the forests in western Uganda, and used by the carpenters.  Below are some pictures of our clients:

I am really enjoying work but there have been a few adjustments.  Certain things you take for granted really slow down your ability to get things done here.  For instance, internet has become a bit of a luxury.  When it starts raining (which is every day) the internet and power typically go off.  We have a generator but it’s not strong enough to run our wireless router so we typically have small windows of time with internet access. 

Another example is simply getting around.   The other day we had a 15 minute meeting that was roughly five miles from our office in a neighborhood called Namuwongo.  We spent about thirty minutes grabbing a taxi (a van that operates like a bus) to the new taxi park in town.  Most taxis go from a suburb area to one of the taxi parks (‘new’ or ‘old’) and then back out.  Once we got to the new taxi park, we had to fight our way through hundreds of people to get to the sign for Namuwongo.  From there we had to wait for the taxi to fill up (the taxis don't go until the van is completely full).  After waiting about twenty minutes and there being only two other people, we decided to try the old taxi park.  So we fought through a bunch of people to get to the old taxi park and waited another 15 minutes for the taxi at the old taxi park to fill up.  Then because the traffic was so bad, the taxi driver tried to take another route.  Except he got lost and ended up back tracking a couple times.  We finally got to Namuwongo and decided to grab lunch which took about 45 minutes to an hour.  Then we finally got to our destination but the guy we were supposed to meet was out of the country.  However, we were able to meet with the director of the organization once he got back from lunch.  So we waited for him, had our 15 minute conversation and then headed back to the office.  On the way back it started raining pretty hard and then hailing so we had to pull over and wait it out.  We finally got back to the office about five hours after leaving for the meeting.

In other news, I found a safe boda boda driver to take me to and from work (and anywhere else I need to go).  His name is Sylvester, he kind of looks like Wesley Snipes and is a recreational kickboxer (a pretty good person to have around if I ever get into a tight spot).  He spent an hour yesterday teaching me how to ride his boda boda:

Also, here are a couple more pictures of things that were crammed on the back of a boda.  The first one, although tough to see, is of two guys and two goats:

Also, here is a picture of Kampala from the porch at my place and some of Lake Victoria:

I’ll post some more pictures of the city next time.

A couple weekends ago I went to Jinja (northeast of Kampala) with a few friends to go whitewater rafting on the Nile River.  It was incredible.  The rapids are grade 5 which are the largest rapids you can commercially raft.  The water is much deeper in the Nile than you would find in Colorado so rocks don’t come into play when the raft flips, which happened about four or five times.  Here are a few pictures of last rapid we went on:

After rafting, I went to Mbale (eastern Uganda near the border with Kenya) to see the CURE hospital that Sam Baguma works for.  It was amazing to see the work they were doing at CURE.  The hospital specializes in neurosurgery and mostly treats children that suffer from hydrocephalus (swelling of the brain caused by excess spinal fluid).  Hydrocephalus is very prevalent in developing countries and is mostly caused by an infection within a month or two after the child is born (cases in developed countries are much more rare and are typically hereditary).  Spinal fluid builds up in the brain after the infection causes a ventricle tube that acts as a drain to close up.  The child’s head will swell to an enormous size (probably double the size of a normal head) and will cause brain damage and death if not treated relatively soon.  The standard operation used worldwide to treat hydrocephalus involves the use of a shunt that stays in the patient their entire life (having to be replaced several times).  CURE, however, pioneered the use of arthroscopic surgery to punch a hole in the closed ventricle tube, providing the patient with a permanent, shunt-less fix.  Because CURE is able to treat close to 1,000 children a year, surgeons fly in from all over the world to learn the innovative surgery.

Below is picture of the hospital:

For the next two weeks, I am travelling out to Kasese and Kabale (southwestern Uganda) to visit our branch offices.  I will try to get another post up once I get back.

Take care,

Tyler

Fort Portal & Moving In

Hi everyone. I created this blog to share my experience in Uganda with whoever is interested.  I arrived in Kampala, Uganda about two weeks ago and will be volunteering for Five Talents, a Christian-based microfinance institution, until next March.  I will periodically update the blog with stories about life in Kampala/Uganda and the impact Five Talents has on the local communities.

When I first got here, I traveled out to Fort Portal, with Sam Baguma, a director on the board of Five Talents Uganda, and Nate Ungarean.  Fort Portal is a rural village due west of Kampala, near the mountainous border with the Democratic Republic of Congo.   Most of the villagers in Fort Portal live in houses similar to the one pictured below, without electricity or running water. 

Sam grew up in Fort Portal and received a college education in the U.K.  He is an example of the impact someone from a poor community can have if given an opportunity.  After working for an accounting firm for several years, Sam moved back to Uganda to work full-time for a non-profit children’s hospital.  He has since sponsored a local student’s college education and built a clean water pump that has provided many people in Fort Portal their first safe source of drinking water.  He has plans to replace the water pump with a water tower that will provide clean running water to the entire village.  Sam has also built a hostel in Kampala that provides a much needed safe-haven for girls from rural towns that are going to school in the city.  I'm excited to meet our clients from villages like this one because I believe microfinance gives individuals a chance to pull themselves out of poverty and make an impact on their community like Sam has in Fort Portal. 

A few pictures of Fort Portal are below:

The kids in Fort Portal were hilarious.  They all love to see a ‘muzungu’ or white person (the literal translation is ‘fast-walker’) and they would come running out of their houses yelling “muzungu! muzungu! muzungu!” whenever we passed by.  They love to talk to you but their English is slightly limited. Nate captured the typical conversation pretty well on his blog so I’ve copied it over here:

This is how the interaction went EVERY single time we passed some kids.
One Kid: Muzungu!
Every Kid in the entire village running to the road: Muzungu, Muzungu, Muzungu!!!
Me: How are you?
Kids: I'm fine, how are you?
Me: I'm fine
Kids: I'm fine, how are you?
Me: ? ?
Kids: How are you, I'm fine?
Me: What is your name?
Kids:  I'm fine.

After visiting Fort Portal, I moved into my place in Kampala. Kampala is a very crowded and somewhat chaotic third-world city with a population of roughly three million people.  There are people, cars, boda boda’s (motorcycles) and market stands everywhere.  The roads are a work in progress with massive pot holes/sink holes and many aren’t paved at all.  Nice buildings and houses are interspersed with shanty towns and market stands.

There are three modes of transportation – matatu’s or taxis which are vans that operate like a bus system; special hires which are traditional cab drivers; and boda boda’s that you can hire like cabs.  Boda boda’s are everywhere and people use them also for hauling everything from numerous banana stalks to furniture and appliances.  It’s kind of crazy what they can fit on the back of a boda boda.  Below are a couple of examples:

The day starts pretty early in Kampala, and I soon found out why.  Kampala is made up of seven different hills and sound carries very well up the hills.  Everyday starting around 5:30 a.m. as the sun starts to rise I wake up to the Morning Prayer from a mosque down the hill.  The man who leads the prayer has a voice that sounds like an out-of-tune trombone (not that mine would be any better).  This lasts about an hour.  Around 6:00 a.m. the roosters start crowing and about 10 minutes after that another type of bird starts to make an awful noise that sounds like it’s dying.  By then I'm wide awake and ready to start the day!

The house I'm living at is nice but at times it feels like camp – there are flies and ants everywhere.  A good example was my first night at the house. I was picking a couple termites out of a glass I grabbed out of the cupboard when one of my housemates said “it’s a loss cause.  I’ve already eaten about thirty of them in the month that I’ve been here.”  I then sat down at the table where Claire, the lady that owns the house, was reading a note she just found from the housekeeper Jessica.  The note read, “Dear Claire, the big ants from the big tree ate your shirt.  I don’t know what to do.  Sincerely, Jessica.”  Claire held up the shirt that now has multiple holes in it.  And then to top it off, immediately after reading the note, Claire found a worm in her tangerine.

As far as work goes, I just started last week so there’s not too much to talk about there.  I’m sure I’ll have some good stories from work on my next post.

Best,
Tyler