Microfinance in Senegal and a long technical blog entry

Just got back from the 'Jardin Thailandais' here in Dakar. If you've got a copy of Lonely Planet travelers guide for Senegal, you can read about it. It's not necessarily the best Thai food ever (although it's very tasty) but the atmosphere is fantastic, and the gorgeous patio out back where we (as a large group) tend to eat, is very oasis-like.
I splurged a little more on food and dessert (caramalized lychees!!!) than I normally would do, but it was our last dinner together as a group before we all disperse to pursue our various ISPs. ISP is independant study project, and we all have developed our own projects during the course of our semester here. We get 300,000 cfa for the month, so it's both an excersize in doing our own research and doing our own budgeting! Because I'm hoping to come back to Senegal next summer and do a bigger research project, I'm going ahead and using my time and project here to provide a basis of study that I hopefully will be able to work off of in the future. I'm going to copy-paste my long and boring ISP proposal here, for those of you to whom I haven't already explained at length my project. Sorry it's so long, but feel free to skim/skip as you wish!


Abstract/Project Summary
For my independent study project I will do a research paper on the topic of microfinance. I am specifically interested in micro-credit, and the impact of small loans on financial development in Senegal. The bulk of my research will be done while visiting Keur Gu Magg in Diorbel and Palmerin, two “ecovillages” supported by GENSEN. In my final paper I will present information a out what an ecovillage is and how it functions, as well as look at the implications of the micro-loans given by The SEM Fund to women in these ecovillages. (The SEM Fund is another NGO which works with GENSEN). I am especially interested on micro-credit’s impact on women’s financial and social situations in rural Senegal. Microfinance is an inherently gendered movement. It focuses on loans to women, who are both interested in and capable of bettering themselves and their families through these loans and repayments. I want to study how these loans and microfinance institutions (MFIs) impact communities as a whole, and especially on gender roles within a society. My ISP will hopefully provide a base of information from which I can pursue further research (possibly next summer) on the impact of micro-credit on gender relations and women’s self-esteem.

Background to the study
The concept of microfinance was recently popularized by Muhammad Yunus, a Bangladashi banker and economist. While visiting the very poor village of Jobra, he realized that it would only take a small amount of money to help the women there break the cycle of poverty and become financially stable. He founded the Grameen Bank in 1983, to serve as an institution which offers small loans without demanding collateral. Instead, the Grameen Bank relies on a system of ‘solidarity lending’, in which every person who receives a loan must belong to a smaller group of borrowers, whose job it is to support and oversee the lending process. This diminishes the bank’s risk and makes it possible for them to offer access to credit without demanding collateral. The Grameen Bank has expanded rapidly and, along with Muhammad Yunus, it was awarded the Nobel Peace Prize in 2006. The microfinance movement has attracted so much positive attention that the United Nations named 2005 “The International Year of Microfinance” to raise awareness about the movement, which has spread across the globe.
Micro-lending is a relatively new concept, and because of this there haven’t been many long-term studies of its effects. There have been some criticisms of the industry, some of which I would like to address in my research. It is important for microfinance organizations to look at the long-term well being of the participants, and monitor how the loans are actually being used. In some cases in Senegal, women who receive loans do not know what to do with them, and end up lending the money out in smaller sums to relatives or trusted friends, or letting their husbands take control of the loan. This, in many ways, defeats the purpose of micro-credit.
Microfinance has also rapidly spread to the digital world. Many of the microfinance organizations around the world have begun expanding their services online, linking lenders and borrowers half a world away. Kiva.org is a powerful example of a website which allows users all over the world to lend money to projects in developing countries and then monitor how that money is used.
Although Senegal is more politically stable than many of its neighbors, much of the population lives in poverty. Its highly rural population makes it a good candidate for microfinance ventures. Senegal is also a country where the majority of the population practices Islam, while the government remains officially secular. However, polygamy has been legalized, which makes Senegal an interesting study in gender relations. Microfinance has existed in many forms in Senegal, including a tradition of ‘tontines’, which are women’s lending groups and have deep roots in Senegalese tradition. Senegal also has a number of growing microfinance NGOs, one of which is The SEM Fund. The SEM Fund is a non-profit which began in 2004 with a pilot program of microfinance tested in a rural subsistence farming village of Louly Ngomone in Senegal. With the success and expansion of the program, the founder, John Fay, created the SEM Fund in 2006. Although the program is relatively new, its documented success is inspiring. It has opted to join forces with the Global Ecovillage Network, Senegal (GENSEN). This is an organization that supports village that are attempting to live sustainably. The SEM Fund provides socially and environmentally conscious loans to groups of villagers seeking to improve their individual financial situations and that of their village.

Specific objectives
I would like to witness first-hand how the microcredit industry works, and the effects it has on a population. My research will look into how microcredit has been used in the past, and ask questions about the effectiveness of the micro-loans and possible means of improving the microfinance system in Senegal. By researching and working in Keur Gu Magg and Palmerin, two of GENSEN’s Ecovillages, I will be able to study firsthand this developing industry which holds such promise for the third world, and especially for women. I will also include in my final ISP information about the specific ecovillages, including how they work and the effect they have on the financial and social well-being of their inhabitants.

Methods
My research will consist of participant observation in the daily life of an ecovillage, as well as archival research about microfinance and women in Senegal. I will conduct focus groups with the women and men’s groups already formed in the ecovillages, and use those focus groups to determine which participants would be good candidates for individual interviews. I will also seek out information from SEM Fund and GENSEN employees to round out my research, and, if relevant, conduct individual interviews with loan officers in the villages or in Dakar. I will then translate relevant portions of my interviews into English for my final paper and presentation.
Microfinance is a hot topic these days, as much of my background research showed. Yet it has not been around and popular long enough that there are many specific case studies of specific states. This is true especially in Africa, where microfinance initiatives are just developing. Many books and articles attempt to shape the current discussion of micro-credit, and influence the future of this growing movement. I hope that by doing research in the field, the information I gain from the focus groups and individual interviews will make up for any difficulties I encounter doing archival research.
I envision the most difficult part of my research will be to maintain neutrality in the ecovillages. I will be accompanied by a ‘facilitator’ from the ecovillage, who will serve as my informant and possibly my translator. It is important for this not to influence my research or my informant’s responses. I imagine that writing the ISP I will also come across ethical dilemmas, such as we discussed in class, in terms of being critical of an organization with whom I worked closely. In addition, I will be hoping to come back next summer to work again with SEM Fund. However, in being up front with the organization about my research and my open-ended research questions, I can hope to avoid any future awkwardness.

Project Calendar:
November 8-12: In Dakar, preparation for Keur Gu Magg, meetings with SEM Fund and GENSEN personnel, and moving into living space in Fass-Casier.
November 12: Depart for Keur Gu Magg, via taxi sept place.
November 13-16: Orientation in Keur Gu Magg, exploration of the village, focus groups and individual interviews.
November 17: Depart for Dakar
November 18-20: Preparation for Palmerin, meeting with advisor.
November 21: Depart for Palmerin
November 22-25: Orientation in Palmerin, exploration, focus groups and interviews.
November 26: Depart for Dakar
November 27: THANKSGIVING
November 28- December 9: Archival research, interviews with SEM Fund employees in Dakar, writing the ISP, arranging future study.



So anyway, if my blog entries are a few and far between for the next two weeks, it's because I'll be traveling. I will be back in Dakar for good around Thanksgiving, though, so hopefully I'll have much to say. I'm really excited about this, but obviously the project is still coming together. If you're really really really interested in all of this (and why wouldn't you be?) here are the websites for the two NGOs that I'll be working with:
www.sem-fund.org
www.gensenegal.org

Okay, more interesting updates to come, inch'allah!

Love,
Robin

p.s. inch'allah means god-willing, and it is used CONSTANTLY here as a sort of 'knock on wood' thing, and I've become quite fond of the expression.