On my last day in Huancayo, I saw two examples of village banking that showed why this approach works for PRISMA in Peru. “Village banking strengthens social networks,” PRISMA Director Diego Fernandez told me. It is the best way to educate and motivate clients, he says, because they can learn from and support each other.

In the morning a group of 15 clients, 11 women and 4 men (spouses) gathered at the PRISMA office. This was a “mature” group which had been through multiple loan cycles together, some as many as 14. The topic for the meeting was money management: why it is important to keep business funds and family money separate. The session ended with a written, ten-question test, labored over by the clients. Example: I have to know enough mathematics to be able to understand my bills and to determine exactly the profits from my business—true or false.

 In mid-afternoon I visited quite a different village bank meeting—this one held outdoors in the middle of a potato field. It was potato harvest time and the dozen clients who made up the village bank chose to gather in a corner of the field with their loan officer rather than leaving the field. Some clients had been in this group for seven years. One older mother was joined in the group by a daughter and a daughter-in-law, each with one a swaddled baby. All said they used their PRISMA loans for growing their crops, and for some animals including cows, sheep, pigs, bulls and guinea pigs. With their harvest income, they buy seeds and fertilizer for their next crop. “We always win at harvest time,” said one. The group confirmed that they had never experienced losses with their harvested crops. When the meeting ended, they all drifted back into the field to continue the harvest.

Pat Kelly is Senior Communications Officer at the Grameen Foundation Social Performance Management Center (SPMC). She is based in Washington, DC.

In the Peruvian city of Huancayo, PRISMA microfinance clients clearly are urban entrepreneurs. Two have located their small businesses in a downtown mini-mall. Ana Pomasonco is a photographer who keeps a small studio there. She specializes in passport photos. Ana’s PRISMA loan allowed her to purchase a printer, so that she could print her own photos. Now she hopes to open another business selling cellphones and accessories, with the help of her daughter who is studying business administration in Lima.

Guillermina Mauricio is positioned in the hallway outside Ana’s studio. Guillermina sells cheese and meat from a small cart, and she also rents entry to the two bathrooms in the mall. Both women have been able to save money and have succeeded in providing higher education for their older children—nursing and chemical engineering, in addition to business administration.

A newcomer to the city is Gloria Gomez, who sews flowers for traditional skirts. Gloria used to live two and one-half hours away in an area made dangerous by terrorism. She moved to Huancayo three years ago, and is saving to buy a house. When asked how she had used her PRISMA loans to improve her life, Gloria answered simply, “I moved.” For many PRISMA clients, living in a safe place and, ultimately, owning a home, is a major goal.

Urban areas like Huancayo have lower poverty rates than rural areas in Peru. PRISMA’s 2009 PPI survey of clients in Huancayo revealed that 22.66 percent of all clients were likely to be below the national poverty line, and 34.66 percent of new clients were likely to be below the poverty line. PRISMA will conduct its 2010 survey within weeks, and for the first time, the survey will track progress by measuring the poverty of the new clients from 2009.

Pat Kelly is Senior Communications Officer at the Grameen Foundation Social Performance Management Center (SPMC). She is based in Washington, DC.

It is not so easy to get to Pampas. Our group—Norma Rosas from PRISMA, Yolirruth Nunez, social monitoring officer with Oikocredit, and myself—set out from the nearest city, Huancayo. After two hours on a rocky road with hair-pin curves, we arrived at this rural town in a deep valley. It was worth the journey. We spent the day visiting with five PRISMA clients whose businesses ranged from selling potatoes, foods and prepared meals, clothing, and sundries. But agriculture dominates the region, and most clients work at that. And most—even those selling food and clothing—have cows. 

We learned this during a village bank meeting held at the PRISMA office when we arrived. From the dozen clients in attendance, almost all of them owned at least one cow. One client owns 11. One key reason: a Peruvian dairy, Leche Gloria, has offered contracts to the clients, ensuring the purchase, and pick-up, of milk and cheese. For most, this is extra income they can earn in addition to their main businesses.

For others, like Julia de la Cruz and her daughter-in-law, Irma Cardenas, raising cows and selling milk and cheese is their business. Both have been PRISMA clients for three years. Julia now owns one cow, but has two calves. She typically sells 10-20 liters of milk each day, depending on production. One liter brings one Peruvian sol, or about 30 cents.

There are currently 1,271 PRISMA clients in the Pampas area, and more than half—the poorest—live in surrounding communities, often bordering on the rainforest. The farthest community is one and one-half hours from the town. Some numbers for context: when PRISMA conducted its PPI survey in Pampas in May 2009, 69.29 percent of its representative clientele was found likely to be below the national poverty line. New clients surveyed were 51.97 percent likely to be below that line. PRISMA is prepared to begin its annual survey within weeks, and this year it plans to track the new clients from 2009 to check their progress.

Pat Kelly is Senior Communications Officer at the Grameen Foundation Social Performance Management Center (SPMC). She is based in Washington, DC.

I arrived at PRISMA headquarters in Peru during a busy week for the microfinance institution. Director Diego Fernandez, who founded PRISMA in 1986, showed me around the four-story building where 38 staff members share space. They are administrators of every kind: accountants, human resource personnel, program managers and assistants—every position required by a mature microfinance organization. Lunch in the cafeteria was a highlight—Diego himself often helps “organize” the service and I was told he sometimes even cooks!

I was here to learn more about PRISMA’s experience with the Progress Out of Poverty Index (PPI). The result of my trip would be a case study to share PRISMA’s knowledge with other MFIs using the PPI.

This day Norma Rosas, who heads PRISMA’s social development area, was training loan officers from numerous branches. The topic was gender issues, a key focus for PRISMA. Diego was hosting a board meeting, but we met much of the day to talk about the challenges and lessons learned from two years of working with the PPI. PRISMA focuses on the rural poor, especially women, and has used its PPI results to shape more effective ways of reaching them.

I will see this work in action tomorrow, when I leave Lima to begin a two-day visit to Pampas, a rural poor area of Peru, where I will visit with PRISMA clients.

Pat Kelly is Senior Communications Officer at the Grameen Foundation Social Performance Management Center (SPMC). She is based in Washington, DC.