A Discussion with Maria Silvia Abalo, Senior Manager for All Agencies of Protagonizar, San Miguel, Buenos Aires, Argentina

With: Maria Silva Abalo Berkley Center Profile

July 3, 2013

Background: As part of the Education and Social Justice Project, in July 2013 undergraduate student Sarah Baran interviewed Maria Silva Abalo, senior manager for all agencies at Protagonizar, a microfinance lender in the lower class community of San Miguel, Buenos Aires, Argentina. In this interview Silva Abalo discusses the career path that led to her current position, changes she has implemented at Protagonizar, what makes the agency unique, and various challenges Protagonizar faces every day.

Can you tell me a little bit more about your professional experience that lead you to Protagonizar?

I was born in Lomas Dezamora, which is in the south of Argentina. My father was in the Navy, and since we moved a lot, I spent two-and-a-half years in Bethesda, Maryland, when I was eleven and learned English. While growing up, I went for three consecutive summers to a French nun school in the south of Argentina that was committed to reaching out to the poor. I think this was the beginning of my path here, working for Protagonizar, because after that contact, I wanted to change reality. So I studied economics with this intention, but when I started working, it was first in banks and I was not changing anything. I was promoted to manager, and then we had the crisis in 2002-2003, which forced me and other workmates out of the labor market. So, I decided to go back to the university to teach. I was a teacher for ten years until I had children and did not have enough time. After they grew up some, I went back to teaching introductory economics and macroeconomics. Throughout my career, I taught for Catholic University, University of Buenos Aires, and Technologica Argentina.

There were few full-time teachers, and usually they were not well paid, so I also became a consultant. In 2007, I was appointed advisor of Banco de la Ciudad de Buenos Aires, which used to be the third largest bank of deposits in Argentina. By then, I had read about microcredit and told the bank’s president that we had to do something about this. Thus, we set up the line to fund the Public Bank of Microfinance Institutions.

The Fundacion Banco de Mundial de la Mujer asked me to be on the board pro bono. It was around this time that I decided to formally study microfinance and began attending Red Argentina Micro Credit Institution meetings. I wanted to teach microfinance, so I had a short career at la Universidad en España, Centro Institucional. The university set up the first International Diploma de Microfinance online, for which you had to take your tests in Bolivia. Thus, I took the tests and passed. I then wanted to learn how to microlend. I knew how to lend from my consulting work and prior experience working with the banks, but I did not know how to microlend. Moreover, the degree did not include any ground-level work experience. Thus I interned for a summer at the Banco de los Andes Procredit from Germany in Santa Cruz la Sierra Bolivia.

When I returned back to Argentina, I had to learn how to apply what was being implemented in Bolivia to a different economy, thus I interned with LINEAR agency Oportunidad Microfinacera Latino America. I was appointed as directory advisor with the Banco Providencia de Buenos Aires, where I did some microfinance, but it was not my main activity. ABBRA, the largest bank in Argentina, organized a public microfinance conference with Bolivia and Peru to convene on best practices, and it was while I was working for them that I was contacted by Protagonizar two years ago, in November 2011.

How did you know you wanted to work with this specific organization?

Well, Padre Rodrigo interviewed me in the US through Skype. I had not been in San Miguel before I started with Protagonizar. I have a husband and three girls named Mercedes, Lucia, and Sofia. They are beginning to move out now, but they are all still dependent on the family. We live on the border of Buenos Aires, a block away from the center in a neighborhood called Vicente Lopex, which is about an hour and a half to two hours from here. I take two buses to come to work. It was around this time that I was looking for a change where I would be more on the ground level. Then, with Protagonizar—I’m not sure how to express it—but I fell in love with them and the work of the organization; found a ring that fit me. It’s amazing what they have done—now, what we do. I have seen many microfinance institutes not be able to sustain themselves for this long, and they usually have to go under after a couple years principally because of their funding. The main cost is salary, and by law they have to be included in a trade union, but there is no trade union for microfinance.

What is your current position now and what are your responsibilities?

I am manager of the four branches, and my responsibilities are regarding administration, finance, training, and director of specific projects. I also conduct the loan commit meetings held every Friday, which are supervised by the president. In these meetings, I ensure that everybody complies with principles and loan regulations and that we are reaching our targeted population by lending to the poor, as surely as can be given the circumstance.

However, beyond just within our organization’s policies, we also have to ensure that the money circulated complies with the law as well. There are three different county regulations we have to consider, and this year twelve different points changed. We want to be recognized by the General Welfare within the county tax exemptions. If we are not recognized, then we would have to pay $15,000 per month to be recognized by a private institution. One part of being recognized is keeping good records through balance sheets. Currently, we have 2008 to 2012 finished, something that Ariel, our president, is very keen on.

One of my responsibilities is to form contacts that will help us improve. For example, one of my visions for the future development of Protagonizar is to expand in order to help improve quality of life. For example, Crecer, another microfinance organization in Bolivia, served primarily poor women who were dying at age 32. As a solution to address this, they installed TVs in the lobbies, and while people are waiting to pay or receive loans, the medical channel is playing in the background. It goes over information about how to care for wounds from fights and accidents and basic information that hopefully the clients can utilize.

You mentioned before that you are in charge of specific projects. Can you please give an example of one?

Sure. For example, when I arrived, I wanted to push our staff to further their training. Consequently, since I been here, five have gone to universities and three—Maria Lujan, Damian, Sefarimo—have received diplomas in microfinance. This additional training was possible through several scholarships: three from Banco Valores and two from Universidad Catolica, which paid for 75 percent of the cost. The employees also helped pay for part of their degrees. The training of the credit assessors is provided by the government and is intended to instruct those involved in loan recovery on how to lend.

Please describe some of the principal changes you have instituted since you began at Protagonizar.

The first order of work here has been to get the branches in order. We are poor, and our facilities need improvement, but we are this way because the areas we work in are poor. Nevertheless, we work to make each branch as pretty as can be because we bring people here. I brought in the magazines for the lobby--we still need new magazines--the welcoming banner, and the coffee. When I came, there were a couple of things I changed and added immediately. For example, for our administrative organization, I added a lot of administrator and balance sheets and worked to ensure that our facility records compiled with the law. I also did some long-term financial planning. However, overall it is a beautiful institution with beautiful employees. They are honest and formed from the Jesuit respect for people. We welcome and listen to our entrepreneurs, and the success is evident by the number of invitations we receive to attend birthdays, funerals, and weddings, anything that is important in life.

What is it about Protagonizar that makes it an exemplar microfinance institution?

We are like a family and have been here since 1999. They know they can come whenever they need a loan. They know where to find us. There is consistency as well as assurance that we are always here and on their side. Other lenders don’t offer the same promise. It is easy to mislead people. For example, Pago Diario is another loan group that has interest rates around 700 percent. It’s set up to take advantage of the clients where nothing is charged apart from that week.

Thus far we are doing a good job with the evaluations because those in mora, which is the period past when the total for their loan was due—for example after ten weeks—well the number of those in mora with Protagonizar is lower than that in the average market. The average is right around 5.5 percent, and ours is 2.2 percent. In total it is 5.5 percent in Marilo and Teresa Brogan, which are the newest, but in Santa Bridgia and Mitre it is lower, which brings our total average down. Thus the other newer branches can take more of a risk to draw in more entrepreneurs. We don’t like the use of the word clients because we don’t want to be compared to banks—it’s an ethical point. We also just added a pro bono lawyer who helps in terms of legal consequences for our entrepreneurs. Before they sign the contract of the loan, they have to list an item of value that serves as a form of insurance if they cannot return the loan. If they bought a piece of new equipment with the loans, such as a fridge, we ask that they return it. However, we never go so far if it is a home loan. They never go so far as to take it. From a legal standpoint, we send letters stating that we could take it to show them how the system works institutionally; however, usually it is all they have, so we would not take it.

On the other hand, the smallest loan we offer is fifty dollars, and 76 percent of our entrepreneurs are women. In many cases, she’s supporting two or three kids by herself. Our loans allow her to lend more merchandise initially or over a longer period, say two years, so that she can invest in a machine. We have different loans for that, too. Each loan is given over a ten-week period on average. Eighty percent of the rest are short. Summer is usually not good for business, but then many of our entrepreneurs need more money around Christmastime.

We receive the majority of our funds from Fe y Alegria, another Jesuit institution, and a Jesuit order lends us money that we return when they need it. The growth of our loans is dependent upon the ration of what we have; and in equilibrium we are at the point to pay for expenses and are not a burden for the Jesuit order. Of the loan portfolio that is alive, not money that is freely available, a large percentage is currently loaned out, but the total comes to a free exchange rate of 200,000 US dollars. Given the size of our portfolio, our expenditures on employees are very inexpensive, and we are much more productive than the average for-credit organization of our own size. We also have more donors than other NGOs of the same size. The company’s largest donors are Johns Day, Ford, Help Argentina, Jesuits en Nuremburg, and Spanish Corporation Agencies. Different foundations recently donated seven new computers.

What are the obstacles facing Protagonizar?

Funding. Funding is an issue because our entrepreneurs grow and then return to our office, expecting to be able to continue to sustain their growth. However, to be able to sustain their growth, the agency needs to grow by at least two people by the end of the year to keep up with the numbers. This year there were 2 million pesos of loans, and 3 million in growth above inflation is needed to stay sustainable; Based off our strategic planning, to stay sustainable usually requires that some funding come from sources such as a second collection in Catholic parishes in Florida, where we have gone for several years and will be going again for missionary week.

Another difficulty is maintaining a balance of growing as a foundation while still serving those we committed to serve in our mission. For example, to grow without stopping our financing to the poor, we are pushed to the minimum 300 to 1,000 dollar loans. We could grow larger, like the microfinance organization Banco de los Andes en La Paz, Brazil, but then we would be forced to leave out a large sector of our current entrepreneurs. Thus we need to maintain a balance of those entrepreneurs that take out large loans in order to account for those that take out the little ones. We want to grow but do so through assisting the people we want to assist: mothers, older people, those that have practically nothing. The word of God is seen in our work. We are conscious of the fact that we show in our lives what we believe and why we don’t want to change the people we assist.

We are constantly fighting an inflation war and are able to only raise our interest to match the inflation increases. We cannot decide what we charge. Up until now we have been self-sustainable without donations; however, we need to receive donations and continue to grow in order to invest, which itself is necessary to survive and grow as well. Our entrepreneurs ask for more money, and, with a 25 percent inflation rate right now, we need to give them larger sums if only to increase the real value of what they can buy with the money. This increase does not even include growth for their business. We are also unable to protect ourselves if something were to happen. Our insurance is low.

We survive even though sometimes we don’t have Internet or water and conditions are hard. For example, once when there was bad weather, the ceiling leaked water and ruined our computers. There are things we would like to change. For instance, we hope to one day own our agencies. Currently, all of our agencies are rented. There are studies we would like to do, such as measuring our impact. We could use these results to see in what directions we need to improve and also as evidence for our donors.

We could also use a lot of improvements with our technology. For example, we do all the projections of loan development manually. These time-consuming tasks divert energy and time that could be better spent, and there is always much more work than we can do. Right now we have projected until December, so we will see what we need. We always need more money. Our systems manager lives in Nicaragua. He repairs it at a distance, but it’s not easy through Skype. We also need to renew the bikes we take for our evaluations, and there is still some more training to be done.
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