March 15, 2010
Monthly Income, gross: **US$352
Monthly Income, net: US$156
Monthly Remittances: US$50-98
Source of income: Remittances, monthly salary
Loan amount: US$1,572
Term of loan: 36 months
Monthly payment range: US$45-76
The home of Juana Sosa* stands out on one of the main roads in her city, with its bright pink paint and its welcoming porch adorned with a hammock. The family has been in the house for 18 years. Juana and her husband, Gustavo, raised two of their daughters almost exclusively in this house. Rosa, 16, studies at the local secondary school, and Sara, 20, graduated from high school and now studies business at a nearby educational institute.
Juana works full time on the cleaning staff at a hospital, and her earnings of about US$155 a month are the main income that supports the household. Gustavo is unable to work, since he lost his vision four years ago, ending his career as an artisan. He hopes to get an operation one day to correct the problem, but the cost of the operation is not affordable for the family right now.
Their oldest daughter, Marta, used to live at home, but left three years ago to find work in Costa Rica. An uncle who lived there funded her trip and supported her when she arrived. Gustavo said that his daughter went to Costa Rica, “for the simple reason that pay is better there”.
Marta married while in Costa Rica and is raising her nine year old child with her there. She sends about US$50-60 a month in remittances to help the family, always sending it to her sister Sara, who then gives it to their parents. She makes a return visit to Nicaragua every Christmas. The family does not know if Marta will ever return to live in Nicaragua permanently.
Juana and her husband recounted that in 1991, “the revolution gave us this land where the house sits;” a result of a land distribution program to poor families in the area where she lives. There was nothing on the land, so the family began to construct a small dwelling that Gustavo called mamarracho, or poorly constructed. That one room makeshift house evolved into a more permanent dwelling a few years later when they received free concrete block from another government program and paid for the labor to install the block out of their own savings.
The next step, in the late ‘90’s, was to embaldosar the floor, or set down a thin layer of polished concrete that is scored to give it the appearance of a tile floor. This was also funded out of savings.
In 2003, they received their first loan from the Local Development Fund (FDL in Spanish), for 3,375 córdobas, or roughly US$200. They combined this loan with savings to begin the construction of a bedroom and the front porch.
In 2004 they took out another loan of US$300 to complete the floor in the new room and porch and install two new windows in the front, again combining the loan with savings. The following year they took out another housing loan but wound up using it for personal reasons, according to Juana.
In October of 2008, they took out their current loan with FDL in the amount of US$500, paid over 24 months. The loan served to complete the work on the porch and to pay off some debts that Gustavo had incurred for medical treatments. The income from remittances from Marta factored into the decision to approve this loan, the largest they had received from FDL.
Juana and her husband related that the loans have been an indispensable tool in their efforts to progressively improve their home. They borrowed small amounts at first and slowly borrowed more over the course of four loans. Their payments have always been made on time or even early, Juana commented, because they realize that their payback performance will determine whether they get loans in the future.
The interest rate on the loans is reasonable, they said, and they are treated well by FDL staff. The couple commented that the application process was straightforward, and they did not need to turn in too much paperwork. After six years as clients of FDL, they trust that the organization has their best interests in mind. This fact has cemented their loyalty to FDL, even as other microfinance institutions have tried to gain their business.
Juana and Gustavo recognized how much FDL had grown since its founding, and said that households like theirs were one of the reasons for that growth. They said that it would be nice to receive a “little gift” or something symbolic to acknowledge this, mentioning the idea of giving clients a calendar at Christmas.
Finally, the couple said that the technical assistance provided by FDL was helpful, primarily because the estimate of the construction budget for their last loan gave them a realistic sense of how much work they would be able to complete. Furthermore, it gave them accurate information about material costs and estimated labor time that they used to structure their negotiations with the mason.
The family hopes to be able to borrow again in the future, since they still plan to build permanent walls in the kitchen area (now partly outdoors) and complete partition walls in the second room to create private sleeping areas. Their savings will also be directed toward the goal of restoring Gustavo’s vision, since doctors have told him that a retinal surgery could enable him to see again.
Key points from Juana’s story:
- This household, like many others, started with a piece of raw land and limited resources. Through their perseverance and resourcefulness, they slowly built a basic home piece by piece. Three loans from FDL accelerated this process, according to the borrower, allowing them to more rapidly expand the house and complete rooms that they had begun on their own. In the case of all of their loans, the family combined the loan with their savings to expand the scope of the work they could carry out.
- The current loan may not have been approved if remittance flows were not factored into the family’s income. (The previous three loans had been approved on the basis of the incomes of both heads of household). The loss of the father’s vision and the subsequent loss of his income might have meant that they would not qualify on the basis of a single income. The inclusion of remittances from abroad (which increases the household income by 32-39 percent) may have played a key role in their loan approval.
- The family related that the technical assistance had been helpful in giving them a realistic sense of what they could build with the resources at hand (loan and savings), and gave them information that enabled them to negotiate with the mason.
Story and photos courtesy of Habitat for Humanity consultant, Brendan McBride.
*The names of the families have been changes to protect their identity.
**Gross income is the total of all income sources, whereas net income reflects the number of family members that are supported by that income. The calculation is made by subtracting from the gross income an estimate of the minimum cost of living (including food, transportation and education) for all family members.