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Small loans, big change

page break line Small loans, big change

This spring, 10 undergraduate students took part in the Carroll School of Management's first-ever international service trip. Led by romance language professors Christopher Wood (right) and Dwayne E. Carpenter, the students spent nine days studying the local economy in Bolivia's third-largest city, Cochabamba.

The group was housed with local families and met with various Non-Governmental Organizations and non-profits to discuss how microfinance had begun to change the economics of an area where, until recently, cash loans were often paid back with agricultural harvests such as potatoes. Their work also included a few days spent building, conducting, and analyzing survey packages with ProMujer, an international microfinance network that offers an integrated program of financial services, business training, and healthcare to local women.

Three seniors, Annie Chor, Leigh Moran, and Kyung-A Im Son initiated the trip, and participants prepared for the excursion by studying the area's history. Moran said this background work proved invaluable. She specifically noted the significance of understanding rural Bolivia's agricultural reliance on the illegal coca crop, a plant whose easy cultivation affected "everything from economics to culture to politics."

Chor said her experience meeting with representatives from the Programa de Desarrollo Agropecuario Integrado (The Integrated Agricultural Development Program) or PDAI-which offers small loans to local farming families-showed her not just how microfinance projects could be successful, but how they can fail: After receiving a $500,000 loan from the Inter-American Development Bank in 1987, the PDAI gave out $250,000 in loans to local farmers, but were unable to recover most of their funds. It seems the locals had regarded the money as handouts rather than loans, and their inability to repay caused the PDAI to default on its own loan. The PDAI has since learned from these mistakes, adjusting their rates and targeting more urban clientele, and they passed these lessons on to the Boston College group.