Moldova’s economy practically dissolved after the collapse of the Soviet Union. thousands of young Moldovans, desperate to survive and thrive, sought new lives by emigrating, and thousands of Moldovan young women fell victim to traffickers.
the Soros economic Development Fund, working with Microinvest, a registered financial institution in the capital city, Chis¸inaˇu, is assisting Moldovan entrepreneurs, including people who have survived trafficking, to rebuild their lives.
transforming an existing Soros-supported microfinance organization into Microinvest grew out of the career choice of its present director, 31-year-old artur Munteanu, who, despite offers of work in england where he went to business school, decided to accept the challenge awaiting him in Moldova. the company was launched in 2003 with funding from the Soros economic Development Fund and the Soros Foundation–Moldova. Microinvest made its first loan to a man who wanted to refurbish an old bus and begin transporting passengers between Chis¸inaˇu and the south of Moldova. now, thousands of loan clients later, Microinvest has a portfolio of $12.8 million and total assets of $25 million, Munteanu said.
“We market a specific credit product for young entrepreneurs, for members of the age group that is most exposed to traffickers,”
Munteanu said. “If young people don’t have jobs, they will move away. they will risk going abroad illegally to find jobs, lacking information, lacking
education, lacking skills.” this puts some at the mercy of prostitution rings.
“I remember two women clients who had been trafficked,” Munteanu said. “We knew this at the management level, but the loan officers were not informed. they received a loan, the equivalent of $5,000 at that time, to plant a potato crop. It is not an easy job to plant potatoes. I know they paid the loan back.”
Moldova’s roma are another group Micro-invest is targeting. “roma face great difficulty obtaining loans anywhere else,” Munteanu said.
A Blacksmith Shop
Fiodor Zeleni, a 42-year-old roma blacksmith from the outskirts of the town of Orhei, to the north of Chis¸inaˇu, has taken his second loan from Microinvest, the equivalent of $3,500 in Moldovan currency, to obtain coal and scrap metal for fashioning farm implements. In a shed behind the fine house he built for his wife and four children, Zeleni has set up an anvil and a forge in an open brick shed with a corrugated-metal roof and a blow-dryer fan that force-feeds oxygen to the flames.
“My father was a blacksmith,” he said.
“I have done the same thing since childhood in Soviet times, but I couldn’t get a loan then either.
I can sell between 8 and 20 horseshoes and hoes in a day at the town market. Without the loan money, I could do nothing.”
Belief in the profitability of Moldova’s fertile black earth involved a leap of faith for artur Bobirke, 31, and his brother, Gheorghe, 25. the sons of a nurse and an accountant, neither brother had experience in farming before Gheorghe Bobirke graduated from a Moldovan university with a degree in agriculture and went to work as an intern on a dairy farm in Wisconsin. he
“if young people don’t have jobs, they will move away. they will risk going abroad illegally to find jobs, lacking information, lacking education, lacking skills.”
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returned home convinced that Moldova’s farmers were mired in the obsolescence of a Soviet-era collective farm and that, by applying new ideas, he could make a private farm profitable.
the brothers pooled their savings together with money sent by their sister who is working abroad. they bought a parcel of undeveloped farmland, built five greenhouses for vegetables, and sowed a crop of cabbage in the open fields.
then they bought a wheezing Soviet-era tanker truck and began carrying water to irrigate the fields over the scorching summer. the cost of transporting the water was exorbitant, about $50 per day. the Bobirkes borrowed the equivalent of $5,000 from Microinvest to build an irrigation pipe. Over the winter, the brothers built 15 more greenhouses, each of them covered by clear plastic and heated by small wood-burning stoves.
Inside, they are growing sweet peppers, tomatoes, cucumbers, and radishes. they sell directly to a stand on the roadside and to the green market in Chis¸inaˇu, where they pay a daily wage to two people who maintain a stand.
“this year, we are paying $10 a day for water,”
Gheorghe Bobirke said. “I can employ three people for a day for what I had been paying for the water.”
“I made my choice. I want to be here,” he added. “I want to be in my country. I am a boss.
My brother is a boss. My sister is a boss. and this year, the return will triple our investment and we will have enough of a yield to export to russia.”
Laundry Services
Soiled towels and napkins were the opportunity 42-year-old Dora rotari spotted while she was working in Soviet times as an accountant for
an enterprise involved in hotel and restaurant services. She noticed that the quality of laundry services for restaurants and hotels in Chis¸inaˇu was miserable. She and her husband invested in two washing machines and a dryer that they installed in a cramped rented room. So much dirty laundry arrived that the business outgrew the rented space in only four months. “the quality is what brought the customers,” rotari said.
In March 2006, they needed a loan for a pressing machine. “Microinvest was the only company working with beginners like us,”
rotari said. “the banks presented too many requirements, because they are afraid of taking any risk. I had 20 years of experience in accounting. I couldn’t figure out everything they wanted. It would have taken forever.”
today, the rotaris have 24 washing machines, dryers, and a pressing machine. “We want small washers,” she said, “because the customers’
laundry has to be kept separate. the towels have to come out white. Colors can’t be allowed to fade. We have a five-star hotel as our client, and wash everything from the chef hats to stiff dining-room napkins and the bedding. We work overnight and can turn around 400 kilos of laundry in 24 hours. In three years, we shut down a total of three nights, and those were new year’s eve and Orthodox Christmas and easter.”
In 2007, the rotaris signed the papers for a 24-month loan for $18,000, and by the end of the year, they were seeking a five-year loan of
$240,000 to purchase more space for their laundry.
“We just landed a contract for Chis¸inaˇu’s
largest fitness center,” Dora rotari said. “they
need us to wash a lot of towels.”
Tameer Microfinance:
Banking for Pakistan’s Working Poor
Fulfilling Tameer’s mission is difficult, however, because providing a full range of banking services in Pakistan is expensive. The monthly cost of maintaining each of Tameer’s 25 branches is the equivalent of about
$10,000. If a branch performs 10,000 transactions each month, the cost of each transaction is $1. This is exorbitant, because most of Tameer’s depositors have only $100 in their accounts, most of its loan customers borrow only $500 to $1,500, and most transactions total only $2 to $3.
Tameer needed to maximize the number of its customers without increasing its investment in new branches.
During 2007, the Soros Economic Development Fund awarded Tameer a grant of $175,000 to solve this problem by developing capacity in
“branchless banking.” Tameer used the grant money first to give its bankcard holders access to Pakistan’s network of automatic teller machines (ATMs) and then to develop the infrastructure to allow its cardholders to withdraw cash, make deposits and loan payments, and purchase goods through point of sale (POS) card readers at the counters of thousands of retail shops around the country.
“We are making the banking experience the same as buying a pint of milk or bread—buy a dozen eggs and here’s my loan payment as well,” Mustafa said.
“This solution will enable the bank to reach thousands of new borrowers and depositors.”
The capacity came on line in late 2007.
The number of store-counter machines soon grew to 30. “We are in the process of booking new agents and have issued cards to about 6,000 people,” Mustafa said. “You can’t just go and leave a machine in a store. You have to evaluate the agent. You are putting your name on a third person’s place of business.”
Mustafa added that Tameer was close to breaking even and looking to expand.
“We want 90,000 customers by the end of 2008 and 250,000 by end of 2009.”
“Integrating the Tameer Microfinance Bank into Pakistan’s national payments system, via ATMs and the POS network, brings thousands of low-income households into the formal financial system,” said Fawzia Naqvi, vice president of the Soros Economic Development Fund. “It helps the Tameer Bank take one more step toward breaking down the financial apartheid which exists in countries such as Pakistan.”
The mission of Pakistan’s Tameer Microfinance Bank is simple to state:
provide a full range of banking services to the country’s working poor—not the poorest of the poor, but the shopkeepers, seamstresses, artisans, and other people who are able save the equivalent of $10 or $100 a month but who are forced to hide their money inside bed mattresses because bank charges are too high, people who help alleviate poverty by employing the poorest of the poor in small workshops and other tiny enterprises.
Pakistan has about 170 million people, but only 10 million bank accounts, said Shahid Mustafa, Tameer Bank’s chief financial officer and cofounder. “This means that 94 percent of the people are not saving and borrowing in the formal economy. Fewer than 2 percent of the people borrow from banks. One way to give people access to banking is to make it cheap.”
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