Post Trip Notes: a final mtg with Maria Lopez Vigil

I had wanted to add a few thoughts about the last meeting we had in Nicaragua on the study tour. We were privileged to meet with Maria Lopez Vigil, director of the magazine Envio, which is linked with the UCA, the Jesuit university. If you would like to read more about Nicaraguan politics and culture, and English language version of the magazine is on the web, including back issues. I can't say enough about what a great resource this is. It is analysis that is fresh, free of the U.S. political perspective, full of sandanismo, and yet critical of the FSLN leadership.

Ms. Vigil is part of the intellectual left in Nicaragua that has lost faith in and broken away from the FSLN. Much of that group has put its support in the political party, the MRS. She had much to say about the new Ortega government, and was very honest and open with her critique. She stated "It is a time that is interesting in the sense that it is new; but with with the same old actors."

Ms. Vigil gave us her initial reaction to the inaugural events earlier in the week and to the first announcements made by the new FSLN government.

• First, she felt it was offensive to all Nicaraguans to have Arnoldo Aleman not only present at Ortega's inauguration, but sitting in the front row. She said he is a symbol of corruption in all of Latin America.
  
• She also feels that the strong presence of Rosario Murillo (Daniel Ortega's wife) in the new government is offensive. She feels Rosario has promoted a very unhealthy mix of religion and politics in Nicaragua. [Personal note: even back in the late 80's when I lived in Nicaragua Rosario was seen as an antagonist in Nicaraguan politics, and was not a well loved figure. This feeling appears to have deepened even further.]
  
• Another critique Maria Lopez Vigil made of the new Ortega government was that of its relationship with Venezuela. While she feels that Venezuela will indeed help in some instances, such as the need for oil, and things will improve slightly as a result of the Chavez-Ortega relationship, she feels that Venezuela is replacing the old Soviet block in terms of Nicaraguan dependency on the outside. She feels that Nicaragua is "begging for crumbs" from Venezuela. She went on to say that she feels under development in not just a question of capital. This, she feels, is a neo-liberal theory. She feels it is, in part, cultural. My sense was she felt great frustration with the popular belief inside Nicaragua that someone must come from the outside to "save" Nicaragua.
  
• Finally, Ms. Vigil talked about the new cabinet positions which are being announced for the new government. She says many are unknown in Nicaraguan politics, and as a result one can assume they are Ortega loyalists. It was clear there was uncertainty and a level of mistrust in the new FSLN government.
  

I think it will be very interesting to see how things unfold in Nicaragua in the coming few years. And I believe the presence of the MRS as a counter-weight to the FSLN will prove to be important. Much of Nicaragua is divided along the lines of "Sandanista" or "anti-Sandanista". The MRS is a political movement which embraces sandanismo, but is highly critical of the FSLN leadership. It adds dimension to the otherwise black and white picture of the country simply being pro- or anti- Sandanista. I greatly appreciate the ability to read Envio online, as I think it is an invaluable resource to following & understanding this internal debate.

Goodbye to Nicaragua

If you ever find yourself in Managua, Nicaragua, Casa San Juan is a reasonably priced guest house that welcomes many tourists and delegations of all kinds ("pinkos" adds Alex). While we were here, coincidentally, there was a delegation which included a few folks from Equal Exchange.

You can contact Casa San Juan by email at: sanjuan@cablenet.com.ni
or telephone: 278-3220 or 267-0419

Remember to consider traveling with WCCN if you are looking for an insightful study tour rather then general tourism. Below is a picture of the group participants' on this tour:

Tourism Day

Lago de Apoyo. Catarina, Nicaragua.

Alex at the Masaya Volcano.
(Notice the hilltop cross behind his head.)

The Masaya Volcano is one of those experiences that leaves you wondering. The brochure they give you at the entrance to this national park advises you in a very matter-of-fact manner to park your vehicle "downhill", to facilitate a speedy exit in the event of an eruption. And it left quite a pit in my stomach when we were shown where the other parking lot "used" to be. Originally one parked their vehicle on the other side of the volcano, however it was covered in a landslide not that many years ago! The staircase up to a cross is another reminder of just how active the Masaya Volcano is -- those stairs are now cordoned off, as part of that hill has been eaten away by the lava. It is now considered unsafe. A student from Managua explained how 7 or 8 years ago when his elementary school class made a trip to visit the volcano, those stairs were still open. He said that students would be vomiting over the rails all the way up the staircase (in part because of the height of the staircase, and in part from the gases of the volcano)! Today visitors still frequent the volcano, but are advised to only stay approximately 15 minutes, so that the gases don't make you ill.

Finally, this evening we went dancing at a local popular fresh air discoteque called "La Discoteca Palmera". It was a very open and friendly place with traditional latin music mixed with some Euro-Tecno. It was fun to unwind and cut loose on the dance floor after a week of meetings and discussions. Even Alex was out there quite a bit. (But not directly near me, mind you. I can't say that I blame him.)

Mural in artesan market in the city of Masaya

The organizers of the neighborhood Carlos Fonseca

"Carlos Fonseca" is a neighborhood of tin shacks and dwellings put together in whatever manner possible. A shanty town, really. It is an organized neighborhood which began when a group of squatters moved onto a piece of land in Managua in 1989 (if I remember right). Since that time they have struggled and won legal land titles for their lots, electricity service, potable water, etc.

A Nicaraguan NGO called Habitar has worked with them in their organizing efforts, and hopes to complete a modest campaign to begin rebuilding homes in the neighborhood one by one so that the families have modest, but well built homes made from durable construction materials. The last government did not follow through with funding for the first phase of a planned project, and families are waiting to see if the new government will approve funding so that they may begin to further improve their neighborhood. To listen to the organizers of this neighborhood tell their story and express their great frustration over the project not moving forward was both heartbreaking and inspiring. My true hope is that they will be able to move on to the next phase of developing their neighborhood, and that true homes will begin replacing their current structures.

The Value of a Plastic Chair

Look closely at this chair. (If you click on the picture, you will get a close-up.) This chair is owned by the family's whose house we visited in the neighborhood of Managua known as Carlos Fonseca. The chair is made of plastic, the kind you would buy at Walmart for a few dollars. If it broke in two, you'd probably throw it out. Right?

But it is valuable enough to this family that when it broke into two piece they carefully sewed it back together. (Look closely and you can see the thread.)

Credit Cooperative "20 de Abril" in Quilali

Once again it is nearly midnight. The last few nights we have been up in the mountains of The Segovias, without a good opportunity to gain internet access. I must say that even though we were in town up in the mountains there are internet cafes in town. I just didn't have the chance to go to one because we were in meetings from morning to night. It just wasn't practical to visit one.

At any rate, we had the opportunity to travel to the town of Quilali to visit a Credit Cooperative (Credit Union) called the "20 de Abril" Cooperative. They serve some of the poorest micro enterprise men and women in the country. We were privileged to be able to walk through the town with one of the cooperative's Credit Promoters (loan officer) and meet some of the borrowers of this cooperative. We met with a tailor, a small store owner, a woman who sold coffee and tortillas, and raised pigs to supplement her family's income, and with a married couple who were elementary school teachers. We also traveled up the moutain side a short ways to visit a woman who runs a small bakery. They were happy to tell us how they used very small loans to build their businesses little by little. Many of these borrowers had taken out a number of loans from the cooperative. The Credit Promoter was a young woman who clearly shared a close relationship with the borrowers, as well as with nearly everyone who passed us in the street. This type of lending clearly takes place in a community where everyone knows each other.

This woman owns a small bakery and neighborhood store

This man is the local tailor.

The NICA Fund has an investment in the "20 de Abril" Cooperative, and it was quite inspiring to see how that money has gone right into this village to improve they quality of life for these very small business owners. It is very clear with every visit we make that if The NICA Fund could easily double or triple its investments in Nicaragua, and this money would still have plenty of demand. There is much more demand than there is supply. If you are considering a social investment, this is a fund that can put your money to work quickly and effectively. You can donate to them as well.

A Chance to Get Together with Old Friends

Here we are, three families who onced shared a home. Reunited for a visit, 14 years later!
(Note: the home we lived in is now the Canadian Embassy!)

Jorgito, Sofia, and Alex.

Tonight Alex and I were able to get together with friends. We went and had dinner at "la fritanga". We talked and laughed, and it was very good. I was so happy to see them all again, and to share such an enjoyable evening. I hope the next meeting won't take another 14 years.

Children in Quilali

For Mrs. DiIulio's Class

These boys live in Quilali, Nicaragua. Quilali is a small town in the mountains. It is very beautiful.

Hello to Katja and everyone!

More pictures from the Nueva Vida Cooperative

Micro Finance in Nicaragua

For a broader view of Nicaragua's place in the Central American Micro Finance industry, please read the article by Carlos Arenas, Executive Director of WCCN. (click here!)

Carlos Arenas, Exececutive Director of WCCN with Alfredo Alaniz, President of ASOMIF

This morning in Managua we started our day with a visit to ASOMIF, the Institute of Micro Finance Organizations of Nicaragua. There are 20 NGO members of ASOMIF that provide micro credit in Nicaragua. The combined total portfolio of these 20 members is approximately $150 million. Currently, only nonprofit organizations are allowed to be members of ASOMIF. They are working to reform ASOMIF so that regulated institutions may also become members. When this happens, at least three other institutions intend to join ASOMIF. With these additions, ASOMIF would have a combined portfolio of approximately $300 million, serving 400,000 clients. ASOMIF provides assistance and training in accounting, loan processing, audits, and in the development of new products. They publish a magazine which provides financial statistics for all of its members. This publication provides transparency for the industry and allows members to assess their own statistics as compared to the industry.

Right now there is a lot of uncertainty as to whether micro finance organizations in Nicaragua should become regulated by the national government. The fear is that they could be treated like banks and misunderstood as an industry. The Executive Director, Alfredo Alaniz, had a lot to say about state regulation and the role of micro finance in Nicaragua, which has not been understood or supported by the Nicaraguan government in recent years.

One critique of Nicaraguan MFI's (micro finance institutions) has been what is perceived as an excessively high interest rate charged to borrowers, which can be approximately 24% to 36% annually. MFI's are criticized for charging high interest rates to the borrowers who can least afford it. But a closer look at this suggests a more complex situation:

• First, MFI's are the only institutions offering any credit to the poor in Nicaragua.
  
• Second, the annual rate may be very high, but a small shop owner may only take an inventory loan, for example, for a few months. Thus the cost of their credit may only be 4% to 9%. This might be perfectly acceptable for the micro business owner. Indeed, over and over end borrowers told us the credit terms were acceptable, and had helped them grow their businesses. The tailor in Quilali told us that without inventory loans from his local credit cooperative, it would have been impossible to purchase the cloth and supplies needed to operate his business. Before becoming a member of the credit cooperative (before its existence in his village), he explained to us that he was a drunk who hung around in the streets and did little work. He said his business really couldn't operate without access to credit to purchase material.
• And third, the cost of providing tens of thousands of very small loans carries a much higher transaction cost than a multi-million dollar loan to a single large corporate borrower. ASOMIF has determined that the combined portfolio of its members yields about 30 to 32% annually. The cost of funds for this combined portfolio is 10% to 12%, and the operating costs are 15% to 25%, depending on the individual member's portfolio. Looking at these figures, it is obvious there are no excessive profits being made, and should leave the debate open as to just how fair or unfair interest rates really are.

An interesting note is that because this year's Nobel Peace prize went to Muhammad Yunus of the Grameen Bank, it has re-opened possibilities for a meaningful dialogue between the Nicaraguan micro-finance sector and government officials. The peace prize has helped on some level to raise the credibility of the sector. One hopes this kind of impact is felt throughout the world.

Alex pays close attention to all that is said.

The Fair Trade Zone: a Sweatshop Alternative

We had the privilege today to visit the Cooperativa Nueva Vida in Ciudad Sandino. Please link to their site to read their story.












Rosa Davila, on the right, is one of the original founders of the Nueva Vida Cooperative. Before becoming involved, she used to wash other people's clothes for a living. As the oldest of eleven children, she had only studied in school through the 6th grade. Once becoming a co-op member she completed high school by attending school from 8AM to 5PM on Saturdays for five years. It was hard for her to work and study at the same time, but she has now completed high school, and has also studied a little accounting and how to do exporting. She imports raw materials for the cooperative, and manages the storage warehouse.



The bottom photo shows Bella, a pet monkey that visited with our tour group when we met with an American NGO that assisted the Nueva Vida Cooperative during its formation. Bella moved from lap to lap throughout our meeting. In this picture Bella is sitting with Michael.

This photo is a billboard in Managua from the Sandanista electoral campaign. It reads

"FSLN in reconciliation. We are Peace and Progress. With Daniel Nicaragua will triumph."

Ruins from the Earthquake of 1972

These photos are ruins of the old National Cathedral. The Cathedral, and most of downtown Managua were left in ruins after the earthquake of 1972.

Today many of the gutted out remains of old buildings that were left structurally unsound still stand in the old downtown section of Managua. These ruins are 35 years old. The cathedral itself is cordoned off now, and you can no longer enter it. However many squatters live in the ruins of other buildings, despite the fact they are not safe. They have tapped into electric poles and "hot-wired" electrical service, but clearly have no plumbing or running water. These buildings simply provide shelter from the most extreme elements and a little electricity.

Looking forward to the rest of the week...

The rest of this week we will be meeting with many Nicaraguan non-profit organizations (known as non-governmental organizations, or NGOs) dedicated to improving the conditions for the poor. They provide credit to individuals involved in very small businesses which the banking sector has ignored. Most of these “micro-enterprise borrowers” are women who are single mothers or the sole economic providers for their household. Many live in conditions of extreme poverty. Other NGOs we will visit work directly with cooperatives and the “free trade” sector of the economy. And yet other NGOs we will visit with work in the area of affordable housing. I believe in the absence of a government that is able and/or willing to prioritize economic development for the half of Nicaragua living in poverty, these NGOs provide an invaluable contribution to society and the Nicaraguan economy. Yet they are largely invisible to the larger economy. As we visit the organizations I’ve just described I will try to write more about what it is they are doing and the stories they share with us.

We will have the opportunity to visit a number of end borrowers of the NICA Fund's investments in Nicaragua as well this week. I'm having a hard time getting to sleep this evening in anticipation of all the exciting conversations we will be having in the days ahead.

A Tour of Managua

This afternoon we had the opportunity to have a tour of Managua. This is a Managua so very different from the one I lived in. When I lived in Nicaragua in the late 1980s and early 1990s, it was the very end of the Sandanista revolution. The U.S. trade embargo had been in place for many years, and the Berlin Wall had come down. Nicaragua was isolated from much of the world and in great economic crisis. For example, I remember that there was only one building in the country open to the public that had air conditioning. (And Managua is a very hot city!) This building housed the “diplotienda”, a store that originally had been accessible only to foreign diplomats and members of the press. Because I suffered from allergies while living here, I would on occasion go to the diplotienda only for the air conditioning, which would clear up my sinus and give instant relief. Today there are four large shopping malls filled with air conditioning, not to mention movie theatres, and countless other homes and businesses including, I imagine, those big casinos I saw last night as we left the airport.

Now you might think to yourself how wonderful it is that this city has so many new amenities. It must mean that the quality of life has improved greatly for Nicaraguan citizens. Clearly much foreign capital has flown into the country and the infrastructure has been greatly developed in the 15 years since I’ve been here. And that may be true for the Nicaraguan elite and members of the middle class. But Nicaragua is a country where roughly 50% of the population lives in conditions of poverty. All of these improvements have done very little to improve their lives. In fact the poor continue to become poorer. This is a country where half the people have limited opportunity to improve the conditions of poverty in which they live.

Current Events in Nicaragua

Our second speaker was Jose Luis Rocha, from the Research Institute Nitlapan here in Nicaragua. He came for a coyuntura, or political discussion of current events. This was especially interesting as the inauguration of Daniel Ortega will take place here on Wednesday. (Dignitaries from around the world are descending upon Nicaragua as I write this.)

Mr. Rocha gave us the history of Nicaragua’s internal debt & its impact on the national economy. In the early 1990’s, four Nicaraguan banks failed and their portfolios were reassigned to private banks owned by Nicaragua’s elite. These banks received bonds from the Nicaraguan government as insurance against potential loan losses. In many cases the government issued bonds (at rates of 17% to 18%) worth as much as 70% of the assumed portfolios, when the risk in reality wasn’t nearly this high. Thus the government was lining the pockets of these banks using funds from the national budget. In effect, money that should be used to improve a national economic crisis and improve conditions for the poor is instead being spent on the elite Nicaraguan banking sector.

To make matters worse there is, of course, debt service on the external debt to pay as well. While terms with the IMF (International Monetary Fund) are more favorable (lower interest rate and much longer term), the cumulative effect of payment on both internal and external debt has squeezed the national budget.

One of the first things that Daniel Ortega and the new government about to take power has done has been to meet with the leaders of this banking sector to give assurance that the new government has no intention of changing the terms of the internal debt. (That is to say, they assured the elite bankers that they would continue to pay the very favorable interest rate on the bonds, and keep the situation very profitable for them.) They have also reassured the IMF that they will keep inflation low and continue to service the internal and external debts under the current terms agreed to. This means that social programs for the poor are not likely to be the top priority for the new government of Daniel Ortega. There simply isn’t room in the national budget. These next few years will tell much about the intentions of the new Sandanista government and how it will work to improve the economy for ALL Nicaraguans.

Throughout the week in Nicaragua it was apparent that Nicaraguans from every political perspective are watching the FSLN and Daniel Ortega closely with a great deal of uncertainty. No one is quite sure how they will govern, and neither the left nor the right feel certain of what this new government will do to change things as they are in Nicaragua.

A lesson in Nicarguan history

We were in Managua today, and began our study tour this morning with two lectures/discussions.

The first was a lecture by Mark Lester, an American who works with the Center for Global Education out of Augsburg College in Minnesota and the Winds of Peace Foundation . His wife, Ann McSweeney, is our interpreter during the entire week. Their son Roque is also a member of our study tour. He is fifteen years old, and like Alex, was born in Nicaragua. The difference is that Roque has lived in Nicaragua his entire life. Mark and Ann have lived and worked in Nicaragua since 1985.

The theme of U.S. intervention and meddling in Nicaragua’s internal politics was quite evident in Mark Lester’s presentation. I don’t think most of us are aware of how the U.S. military occupied Nicaragua throughout much of its history. Perhaps the days of Ronald Reagan and Oliver North are still in the back of our minds, and we may remember how our government covertly funded the contra war. But our intervention has been going on much longer than that. U.S. Marines occupied Nicaragua for significant periods of its history, specifically from 1912 - 1933. The U.S. then assisted in the installation of the Somoza family who ruled with dictatorships until the time of the Sandanista Revolutionary triumph in 1979.

I could elaborate more on this topic, and I'm not doing justice to the content of Mark's presentation. Suffice to say that many Nicaraguans are suspect of the U.S. government meddling too much in their own internal politics.

Saludos from Nicaragua!

Greetings from Nicaragua! Alex and I arrived around 9:30PM last night. It was dark, so I couldn’t see much during the drive from the airport to our guest house. But the ultra-bright lights from two casinos certainly caught my attention. Casinos?? They certainly weren’t here when we left in 1992.

The children on Carretera Sur

This photo was taken in Managua in 1991. We had an ecclectic household whose members were Nicaraguan, Salvadoran, U.S., French and Belgian. We lived on Km. 10 1/2 of the Carretera Sur.

Alex, Then and Now

This is Alex in 1992 on his 1st birthday. I had to dress him up for this picture.
Managua is so hot, that he rarely wore a shirt at home.

This is a more current picture. Alex is fifteen years old, and a high school senior.