Farewell Zacatecas

10 months turns out to be a very short time. Today is May 19, 2011 - almost a year and half since I first wrote my advisor here in Zacatecas seeking a university affiliation for my Fulbright application. When I sit back and reflect on how many changes, emotions, challenges, and life shaping experiences those months have held, it leaves me with a profound awe of the fullness of the past, and an excitement for the future. 

Today I fly out from Zacatecas for a summer of music making and time with family in the United States. In early July, however, I will be returning to Mexico this time to Mexico City. I am excited to be working in the microfinance department of the Instituto Mexicano de Investigación de Familia y Población (IMIFAP), a not-for-profit organization promoting economic and social development throughout Mexico. I am looking forward to continuing in the trajectory my Fulbright experience has sent me on, and I am confident my time at IMIFAP will be well spent. 

Noemí de la Torre (SEDEZAC), Daniella Burgi-Palomino,
Aaron Malone, Matt Rolland, Dr. García Zamora (UAZ)

To close out this phase of my Fulbright research, all three of the Fulbright scholars in Zacatecas decided to present our results at the University of Zacatecas this past friday.  The presentations went well, with a small but friendly turn-out. Our advisor, Profesor Rodolfo García Zamora, shared a few meaningful words at the beginning, commenting that he still remembers the days in 2009 when he began receiving our emails about the possibility of working at the UAZ with him. Almost two whole years ago! That made me appreciate the investment we all made in seeking the Fulbright, and all the planning it took to get here. What an adventure. He also observed the change he saw in each of us after we had our first 'visita al campo' (field visit), to Nochistlan back in October. We rightly observed that we returned motivated, moved by the reality of need and interest in migrant-spurred development. He formed words that I had felt, but had not yet expressed. He has been an encouraging advisor, and always had resources to set me down a new direction when I was feeling at a loss. I am very grateful for the warm welcome I have received at the Development Studies department at the university. 

In case you are interested in reading a short summary of my the first phase of research, an english version of my final presentation is available below. 

Microfinance and International Migration: Strengthening Financial Inclusion in Zacatecas

View more presentations from Matt Rolland

Also, there was an article published about our presentations. It was published in three of the local papers. Here's a link to one of them.  I made a basic translation and uploaded to my gmail account. You can download the pdf here. The article has things right for the most part, with the exception of mis-reporting the government institution represented. Noemí de la Torre is the director of the SEDEZAC migrant investment program, Zacatecano Invierte en Zacatecas.  I interviewed her several months back about the program.  SEDEZAC is the state level entity that promotes economic development, whereas SEDESOL is the federal level government agency that runs similar programs, albeit on a national scale. 

Friends at our 'callejoneada' farewell

Nevertheless, a little bit of press feels good. As the article mentions, we have a publishing opportunity! Our professor invited us each to submit articles for a forth-coming book on political economy in Zacatecas. I will be submitting an analysis of the financial sector in Zacatecas, with a focus on how microfinance institutions can help improve the very few financial services available in rural areas, and the general under development of the financial sector in Zacatecas. The book will be published in late August through the university publishing company. 

Adios to our querido Zacatecas. Until next time. 

Over the weekend, we had our farewell 'callejoneada' (parade). We had over 50 people attend and it turned out to be a great way to see all of our friends and acquiantances before leaving. We wanted to say farewell to Zacatecas in a traditional way for the region, and the callejoneada was an event I will never forget. My legs were sore for two days straight from all the dancing. If you'd like to see what the weekend held for use, hear what zacatecan 'banda' music sounds like, and what a 'callejoneada' is, I encourage you to watch a five minute video I made. I hope you enjoy it as much as we enjoyed living it.

Callejoneando in Zacatecas from Matt Rolland on Vimeo.

Branchless Banking

It's been a while since I've posted, and an update is long over-due.  However, I promise the wait will be worth your while!  I've had some wonderful experiences since the Fulbright mid-term reunion, including a visit to northern Puebla to an AMUCSS microbank, a trip to Guanajuato to visit a female-focused development NGO (Ceremuba), as well as enjoying some vacation time exploring another beautiful colonial city with Fulbright friends.  The last few weeks have seen me busy in Zacatecas City going back through my research and working on drafting a paper synthesizing all that I've learned. We've scheduled our final presentations at the university for May 13, to be followed by a 'callejoneada' farewell party on Saturday the 14th. So, there's a lot to look forward to, as well as a lot to look back on. 


I thought I'd share a well written article on one of the recent changes in Mexican microfinance I've been learning about. A law passed in late 2010 permitted the expansion of what are called Corresponsales, or 'correspondance banking.' The idea is that registered banks are now able to create agreements with non-financial entities, such as convenience stores and grocery stores, to conduct financial transactions in these stores. The change is going to drastically change the financial sector in the next ten years, and we are already seeing a rapid race to link once expensive and complex financial services to everyday activities. Soon, you will likely be able to make a deposit into your bank account from any convenience store in Mexico, open a bank account in Wal-Mart (already possible through their new Wal-mart Bank), and pay all sorts of bills through stores. 


So, if you're interested in the trend towards branchless or mobile banking in the developing world, or want to read a concise summary of some of the issues I'm looking at in Mexico, check out this article:

Mexico: Promising moves towards new banking models

"However, most of these strategies are still about reducing the cost to serve existing customers and much less about growing towards new lower income segments...In all, 35% of the economically active population completely lacks any form of formal financial services, 57% of the municipalities have no banking access, and only 25% of the Mexican population has a savings account." 

A visualization of microfinance and migration

Hi All,
Here is the presentation I will be giving on Friday, February 25, at the Fulbright-García Robles midterm reunion in Mexico City.  I used an amazing software product called Prezi that really challenges you to rethink presentations.  When I was chaperoning the Flinn trip in Hungary, we were able to talk with the founders of Prezi, a Hungarian company, and had an excellent demonstration of the power of prezi to illustrate connections. I hope you enjoy my effort to connect microfinance, international migration, and my research activities here in Zacatecas.

Off to Mexico City!

Microfinance and Migration on Prezi

FDI in Mexico: past and present trends

I've published an article with Ventana Magazine, a tourism and informational magazine for travelers and foreigners living in Mexico.  The article, Overview of Foreign Direct Investment in Mexico, is an expanded version of a previous blog post I wrote and provides a broader, historical context for understanding foreign business activity in Mexico.

This week I'm carrying out several interviews on government micro-financing programs for small and medium sized businesses in Zacatecas. Many of these programs have special emphasis on migrant investment, making up an interesting aspect to the development financing landscape here in Zacatecas. More to come on that later in the week.

Enjoy, Matt

A summary of my research here in Mexico

Can better financial services improve the lives of migrants and their families? This is the fundamental, motivating question behind my 2010-2011 research project in Mexico.  Microfinance is a movement to develop new tools and institutions that provide financial services to low-income groups.  In the last thirty years, microfinance has expanded from a few lone banks in Southeast Asia to include over 1000 institutions in 100 countries, reaching more than 150 million clients.  Microfinance is no longer a novel experiment but an entrenched camp of the development landscape.  As microfinance has grown, it has evolved differently in each region, demanding new tools as it expands wider and deeper.  My Fulbright-García Robles project is to explore the state of the microfinance sector in central Mexico with a specific interest in what tools have been developed to reach migrant communities.

Zacatecas is an interesting place to work because of a long history of international migration and a relatively undeveloped microfinance sector.  My first goal is to review the current financial sector in Zacatecas, documenting the credit and financial services available.  So far, my research has shown that financial programs for migrants are offered by a few private sector actors concentrated in the three largest cities - Zacatecas City, Guadalupe, and Fresnillo – and a few key government programs.  Rural options are scarce and costly.  Government programs include the Secretary of Economic Development’s “Zacatecano, Invierte en Zacatecas”, which offers start-up funding for migrant owned business, “Fondo Plata”, which supplies larger credit lines, and Sedesol’s “3x1 para Migrantes”.  A new program, “1x1”, looks to replace “3x1” as a funding source for productive projects by providing zero interest loans for migrant-owned businesses.

Isabel Cruz, founder of Amucss, received the
HESTA Onnasis award on immigration and
human development in 2010 at the
Global Forum on Migration and Development 

To compile and describe successful models, I am visiting prominent microfinance organizations throughout central Mexico.  In nearby states, such as Guanajuato and Puebla, innovative approaches to microfinance have been pioneered. One front-runner in the field, Mexico City-based Amucss, has developed affordable life insurance plans for migrants, remittance-based income insurance, body repatriation funds, and is developing a rural health insurance program.  Another innovation is the microfinance network, “Envíos Confianza”, which enables small banks to become international remittance providers, linking money transfers to savings accounts, education funds, and insurance programs.

Migration entails unique financial demands in terms of costs, risks, precariousness, and barriers to access financial services.  To better understand the impact of these conditions, I am surveying the federations of clubs of migrants in southern California and Chicago.  The goals of the survey are to test the level of interest in participating in hometown microfinance banks and to collect information on business perspective of these migrants, financial activity (health insurance, use of loans, etc.), and financial needs.

In addition to writing an academic article for publication, I am using these three research activities to equip the Federación Zacatecana (FEDZAC), the Zacatecan Federation of Clubs of Migrants, with a toolkit to design and expand a new credit program for migrant-financed productive projects in Zacatecas.  This program will begin operation later in 2011. With expanded services, migrants will be able to better manage the financial risks and costs incurred during international migration and access new avenues for investment in their hometowns. Reducing the financial gap in Zacatecas is a crucial step towards raising the developmental impact of international migration.

A country legend passes

I read the news today that country legend and hall-of-famer Charlie Louvin passed away on January 26th at the age of 83. Charlie died from complications resulting from pancreatic cancer but remained musically active until the day he died.  As one of the two members of the Louvin brothers, Charlie's music has inspired countless country acts and his songs have become staples of the folk and bluegrass repertoire. I thought I'd share a few of his favorite songs to honor his life and his music. 

I was introduced to the Louvin brothers about a year ago by a musician friend at the University of Arizona. One night, while sitting around jamming with a few friends, a left handed guitar player struck up and sang a beautiful traditional song, Katie Dear, that the Louvin Brothers performed on their album, Tragic Songs of Life. This became one of my favorite traditional songs and is special to me as the first Louvin Brothers song I ever heard.  Disarming in its lyrical simplicity, the song conveys the tragedy of impulsive young love with their trademark 'high-lonesome' harmonies.   I also found a nice rendition of Katie Dear on the newest Seldom Scene, the bluegrass recording legends, album.  Seldom Scene headlined the 2010 Pickin' in the Pines festival in Flagstaff, Arizona this past September. 

The Louvin Brothers created a tight sound that did not find immediate success in the commercial world.  It wasn't until they started to include secular songs in their repertoire that they began to get on the charts. Another one of my Louvin Brothers favorite, My Brother's Will, is a great story song that paints a harrowing scene of a man's final wish, to have his brother marry his love and take care of her.  What I love about the song is the way the short, concise lyrics skillfully convey the complicated life circumstances that can block our wishes. 


Despite their commercial success, their gospel songs remained a central part of their music and would help to define the bluegrass-gospel genre. There is an interesting article here on the fervent faith of Charlie and the role of his Christian spirituality in his long career.  While many of their songs might seem tongue-in-cheek to listeners (the chorus line to their hit Broadminded goes "that word broadminded is spelled S-I-N"), they created their own brand of sincere, but self-conscious gospel. 

Louvin Brothers cd, Satan is Real

The Louvin Brothers win the award in my book for the best pre-photoshop album cover. Their cover to their gospel album, Satan is Real, depicts Charlie and Ira in white suits singing in front of a giant fire, a cartoonish looking devil looming behind them.  The story behind the cover is even better than the image itself.  Charlie described the terrifying effort they undertook to make the cover:


"Ira built that set. The devil was twelve feet tall, built out of plywood. We went to this rock quarry and then took old tires and soaked them in kerosene, got them to burn good. It had just started to sprinkle rain when we got that picture taken. Those rocks, when they get hot, they blow up. They were throwing pieces of rock up into the air."


Luckily for the two brothers, and the rest of the world, their artistic ambitions were not their undoing. Had they burned in an out of control tire fire, smothered by a twelve foot satan cut-out, I'm sure they would have still made their way into countless country singers' repertoires, but luckily we can enjoy the fruits of their music-making and pyro-impulses. Charlie's life and music are an inspiration to musicians everywhere, especially this one in Mexico who enjoys an old radio country hit every once in a while to remind him of another place and time. Rest in Peace Charlie. 


You can read a nice biography in honor of Charlie's passing at allmusic.com. I'll leave you with a cover of the Louvin Brother's song, Atomic Power, by the band Uncle Tupelo, a country-folk rock band new to me but prominent during the late 80s and 90s.

A year half over is a cup half full

Today is January 28th, 2011, the exact mid-point of my Fulbright experience. I arrived to Zacatecas on August 28th, five months of books, trips, and meetings ago.  A lot has happened during the past five months. I thought I would share a few thoughts from the mid-term reflection I submitted today to the Institute of International Education.  Reflections are a demanding but very valuable exercise.  I always emerge more focused, more appreciative, and humbled by reviewing the joys and challenges of a part of my life.  A friend once told me that an awareness of time is a fundamental aspect of being human.  I agree, but have learned that there are multiple ways to look at time.  While focusing on the fleeting nature of time can render us depressed and trepid, when we probe our past for growth and challenge, the wheels of time become an engine propelling us into the future.

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I decided to apply for a Fulbright grant to Mexico because I thought the experience would be a meaningful way to follow up on my undergraduate years.  During my four and a half years at the University of Arizona, I learned Spanish, studied migration in southern Mexico, spent a semester in Argentina, and wrote a thesis on the political economy of immigrant remittances.  A Fulbright project in Mexico on microfinance and migration seemed a good way to synthesize these experiences; I could see a new part of Mexico, keep developing my Spanish, and apply the international studies and economics lessons I learned in college.  Looking at the spectrum of my undergraduate experiences and finding a way to apply those experiences was a way to guide that uncertain step forward, beyond the commencement podium with diploma in hand.

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In my Fulbright application, I combined four central goals.  My primary goal is to deepen my understanding of microfinance in Mexico.  Paired with this goal is the desire to learn more about the financial, economic, and developmental aspects of Mexican migration to the United States.  I want to carry out a project that is of value to migrant communities in Zacatecas and the Federación Zacatecana de migrantes en los EEUU (Fedzac).  I measure the value of my project by the potential impact of the ideas and research, thoroughness and integrity of my investigation, and uniqueness of the project among the related literature. I will compile my research into an academic paper, a document for in-house use of Fedzac, and a presentation of my results at Fedzac in May.  Some of my more personal goals include learning about the culture, history, and people of Zacatecas; advance my level of Spanish fluency; and share my Fulbright experience with family and friends through emails, blogs, videos, and music.  On top of all of these, I strive to make my research available and accessible to the wider public.

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Outside of the Development Studies Department, UAZ

     My central motivation in applying for a Fulbright grant was to gain an on the-ground perspective of the economic factors behind Mexican migration to the U.S. and carry out a project that strengthens the economic development of sending regions.  While this motivation has not changed, my project has shifted to match the local needs and opportunities in Zacatecas.  Midway through my grant, my project focus is well refined and has already provided many meaningful cultural experiences, improved my Spanish, and taught me much about Mexico, microfinance, and the nature of research.
     In August, my advisor, Dr. García Zamora, introduced me to Fedzac, the federation of Zacatecan migrant clubs in the U.S., and communicated an opportunity to collaborate with Fedzac on a research project.  Fedzac wanted to explore the possibilities of creating a migrant-funded microfinance bank in Zacatecas, and my professor suggested I make this my research focus.  The opportunity was close to my original interest in financial needs of migrant communities and I eagerly agreed to dedicate my year to this project.
     From August to October, I spent my time reading literature about the global state of microfinance and the microfinance sector in Mexico.  This time was a period of focusing my project and deepening my knowledge of microfinance and migration.  In November, I attended the People’s Global Action conference on Migration and Development in Mexico City.  At this conference, I met with the president of Fedzac, Efraín Jimenez, and connected with Leila Rispens-Noel, a Senior Advisor at a global microfinance network.  Following the conference, I accompanied Leila and Efraín on a trip to visit 3x1 projects in Zacatecas. This trip was a turning point towards realizing my second goal: to shape and carry out a project of direct benefit to migrant communities in Zacatecas.  This trip to a rural area was also a unique opportunity to experience the ‘charro’ culture of Zacatecas, eat new food, and learn regional words and songs– all part of the cultural exchange I hoped to experience on my Fulbright year.
     From November to the end of the year, I worked with Fedzac to develop an outline of a feasibility study to explore the possibilities of a new micro-bank.  In January, I have been writing and distributing surveys of financial needs to migrant clubs in the U.S.  Meanwhile, I am reviewing the microfinance sector in Mexico and organizing visits to key organizations for February.  I am also beginning my fieldwork in the most promising community for the new bank, Nochistlán de Mejía.  I am well on track to complete my primary research, field interviews, and compile these projects into a paper.

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From one angle, I am a White (non-hispanic), Under-25 Male with a Bachelor’s Degree but no Graduate Work researching Economic Development in Mexico.  From another angle, I am me.

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Feria Nacional in Zacatecas

     My efforts to get to know people in Zacatecas and the culture were facilitated by the presence of the state fair my first few weeks in Zacatecas.  I went to the fair regularly, listening to Banda music, learning to dance, trying different local foods, and meeting many return migrants eager to practice their English.  In general, I strove to be open to new experiences, conversational, and put myself in as many new situations as I could to experience a different part of the city.  My first few weeks, I regularly visited the museums in Zacatecas and studied in different locations.
     I also learned a great deal about Mexican culture and language from my Spanish courses. I enrolled for three weeks in the Fenix Language Institute with small classes and excellent teachers. We went to hear local concerts together and talked daily about the history of Mexico, Zacatecas, and local culture - all peppered with common regional phrases and sayings.
     I also had the good fortune of joining a basketball team a few weeks into my grant period.  The tortilla shop owner a block away from my house invited me to join his team, Tortillería Guadalupana.  We play every few days in three different leagues, and I’ve been practicing regularly in pick-up games at the parks.   This athletic outlet has been a great way to make friends and learn about the regional customs for basketball.  Sports are a language that transcends borders.

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Fulbright Researchers in Zacatecas 2010-2011
with Efraín Jiminez (left) of Fedzac

I should mention that I feel very fortunate to have two other Fulbright researchers living with me in Zacatecas. It was a coincidence that all three of us applied not only to work in Zacatecas City, but with the same advisor, Dr. Rodolfo García Zamora.  Our advisor has been excellent at working with each of us separately and equally and we all feel like our institutional support is fine.  We each have desk spaces at our university and meet regularly with our professor. However, there has been a great benefit in having fellow researchers and friends to share our Fulbright experience.  We now live together in an apartment, sharing a passion to experience Zacatecas and carry out meaningful projects. The three of us have been able to host several parties for our friends here and connect with a larger community of researchers and foreigners living in Zacatecas City.  If it weren’t for having two other Fulbright fellows here in Zacatecas, I would not have access to such a strong community of friends and social network.

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View of Avenida Juárez in Zacatecas, Mexico

     I feel welcomed in Zacatecas and adjusted quickly to life here.  Many of the changes were logistical adaptations. I’ve never had to ride the bus regularly and here the bus is my principle means of transportation.  Learning all the bus routes, fares, and customs for public transport took a bit of effort.  It also took me a good three weeks to learn the layout of the city.  With so many winding streets defined by the hills and slopes, Zacatecas is a confusing city to navigate.  However, the streets and plazas have now become places to me and I can easily find my way.  I have also adjusted my eating habits in line with local culture.  I now eat lunch at the Mexican hour of 2 or 3 PM and enjoy this schedule.  When I returned home for Christmas, it felt like a late breakfast to be eating lunch at noon.

Food stand where I buy fruit, standing

The customs and traditions of Zacatecas have also changed the way I live and eat, though.  I have enjoyed exploring the culinary traditions of Zacatecas.  I cook regularly with different chilies, nopales, prickly pear fruit, tomatillos, and eat everything with a corn tortilla.  I enjoy listening to Banda music and have found a new love for tamborazo and Joan Sebastian. I can’t hear Banda music or tamborazo without immediately being carried back to the state fair in my mind and dancing a little Banda two-step.
Being a gringo in Zacatecas is a unique experience because so many people have lived in the United States.  I’ve grown used to hearing, “Hey dude!” or “What’s up man?” when I am out at night.  I’ve come to expect these short interactions and enjoy the unique bridge they make between perfect strangers.  I am here to study migration and these kinds of exchanges are welcome and interesting.  The recently returned migrants always finish by saying, “Welcome to my city. I hope you enjoy yourself.” I thank them, and say that I am.

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My first five months have provided a valuable lesson in the nature of research.  I have learned a great deal about a new field and about Zacatecas.  But more importantly, I have learned that uncertainty and perseverance yield confidence.  By wading through doubt, struggling to define my project, and gaining confidence in my skills to carry out research, I have learned a greater sense of patience, humility, and respect for time.

Happy New Year from Mexico!

Foreign Investment in Mexico

This past week, I began the great data hunt.  Right now I'm working on a profile of the financial market in Zacatecas. The goal is to describe the level of access to financial services, both rural and urban, and the types of financial services offered here.  In my past research, I've learned that poring through different data sets can be quite over-whelming, especially when dealing with regional or national indicators.  Especially difficult is learning to handle the different software and data storage systems for each department, each survey, and even for each topic.  Yesterday, I quickly found myself swimming in a sea of tabs, windows, foreign file endings and a very cluttered desktop. It was like Tron 4D. 

Nevertheless, I've started to find some useful data sets and am learning how to navigate the Mexican systems.  I'm primarily looking for data to describe the financial market in Zacatecas, but in the process, have come across some interesting economic data sets. As an exercise, and to reacquaint myself with my old buddy Excel, I put together a few graphs.  I hope you enjoy them.  The data comes from INEGI, the Instituto Nacional de Estadística y Geografia, which is the primary Mexican census and data collection agency.  They have some excellent resources for sifting through the stacks and reams and mountains of data. You can search for data by region, by theme, or by the specific survey or census you're interested in.  My favorite online tool I've found so far is the Directorio Estadístico Nacional de Unidades Económicas (National Statistical Directory of Economic Entities). DENUE is a new geo-mapping tool that uses data from the Economic Census.  You can search for any business or organization by type or name and build maps based on that. Little did I know I live kitty-corner to the Association of Writers and Composers! Most importantly, DENUE will be a useful tool for deciding which banks to interview and finding relevant finance organizations in my field work. I'll write more about my research progress soon. 


On to the data! Here are graphs of two data sets from INEGI on foreign investment in Mexico.  There were a few surprises that become clear in the graphs.   In all the graphs it is easy to see the impact of the global financial crisis in Mexico (2007-2009).  Here are a few interesting questions to preface the graphs: 

• What countries are the primary investors in Mexico?
• What sectors of the economy receive the largest investments from foreigners?
• What sectors of the economy should be most impacted by the 'credit crunch'?

 In looking at overall investment, it was no surprise to see that the USA is the largest investor in Mexico. With NAFTA, Mexico is the US's largest and most important trade partner.  What was surprising was that both Spain and Holland are larger investors in Mexico than Canada (our other NAFTA partner).  Spain's investment makes sense because of the large presence of Spanish banks in Mexico and all of Latin America (such as Santander and BBVA).

The largest investors in Mexico in 2008 were USA (42%), Spain (19%), Canada (12%), Holland (6%), UK (4%), all other countries (17%).  I looked at 2008 because there were some dramatic drops from 2008-2009 (described below). The whole list, averaged from 2000-2009, is as follows: USA, Spain, Holland, Canada, UK, Switzerland, Germany, Japan, Italy, Sweden, France.                                           

From this dataset, it is also interesting to see how foreign investors behaved in the global financial crisis (2007-2009). The data set shows that Mexico experienced a serious decrease in investment from 2007-2009, about a 50% decrease. The greatest change was from 2008 - 2009 which is broken down below by country.  Interestingly, the largest (relative) withdrawal of investment was generally by the smallest absolute investors.  You can almost see an inverse relationship between the size of investment and the percentage decrease in investment during the crisis.  

This suggests that a few things.  One is that countries are financially committed to their large economic partners.  Financial ties between the US and Mexico are deep and long term, so it makes sense the US decrease would be the smallest negative change.  This trend could also suggest that investors from certain countries develop economies of scale as investment levels increase.  That is to say, the more money a country as a whole invests in another country, the more people and resources there will be to collect information on the country, monitor changes, and make 'smart investments',  The smaller investors (like Italy, Sweden and Germany) might be making riskier investments because of poor information and as a result, withdraw their finances more quickly.  

However, there are three countries which buck this trend: France, japan, and Holland.  All of these countries invested more money in 2009 than in 2008. Why is this?  Well, looking at the data, all three of these countries made significant, sharp withdrawals of investment from 2007-2008.  It could be that investors were too quick to react in 2008, pulling out more money than they needed to, and than reinvested their liquid capital as the relative risk of investing in Mexico became clearer. 

Impact of global financial crisis on foreign investment in Mexico

It is also interesting to look at which economic sectors foreign investors most prefer in Mexico.  The order of investment can be seen in the adjacent donut graph, which is like a pie graph but lower in calories.  I was a bit surprised to see that financial services rank number two, ahead of mining and extractive industries.  Agricultural falls last claiming less than 1% of foreign investment. 

In the graph below, Foreign Direct Investment in Mexico by Sector, you can see the pronounced decrease in investment after 2007. 

Foreign Investment in Mexico by Sector, 2000-2009

We can do the same sort of number comparisons as in the analysis above, looking at the relative changes during the global financial crisis.  Interestingly, the sectors where financial investment was concentrated - commerce, manufacturing, and financial services - experienced the smallest relative decreases. Granted, the decreases still weren't small (25% - 40%), but relatively less.  Again, why these changes?  I would guess that the same line of logic holds as above. The sectors where most investment is directed are those that are most strongly linked to the U.S. economy, and where investors can build economies of scale based on experience.  Mining had a large increase, but if you look at the history of investment above, there was a spike in investment that corresponded to a gold and silver boom in Mexico 2007-2009. Right here in Zacatecas, there are several gold companies seeking to re-open, mines. A canadian company, Goldcorp, recently opened a new gold mine.  Interest in precious metals, such as gold and silver, are a reaction to the global financial crisis as more people are turning to metals as a store of value, over riskier stocks and mutual funds.  However, it's possible that there was an investment bubble, or logistics didn't work out, so funds had to be withdrawn.

Churros Nochistlan

Efrain Jimenez, director of the Federation of Zacatecan migrant clubs, recently shared this nicely made travelogue about Nochistlan. The video was made by David Herrera, General Director of "Mexico de mis Amores", a television program that celebrates Mexican culture, geography, and traditions. The video is in Spanish without subtitles, but has some very nice shots of Nochistlan, Zacatecas, and the Mexican culinary street gem: churros. The narration colorfully weaves together descriptions of a typical Sunday morning in rural Mexico - from the mass in the cathedral to the sweet treats waiting outside to the characters that make those traditions possible. Run time is about 4 minutes.

I visited Nochistlan a few weeks back with Efrain. I'll be going back that way not before too long, partly to find some of these churros.
Enjoy, Matt

Give the gift of music!

Hi friends, 

Matt, Bekah, Daniel, and David

If you're looking for a great gift for the holidays, check out The Hermit Tree CD available on most digital distributors and at cdbaby.com. We're offering a special holiday price for our album at $6.99 - physical copy or a digital download.

The Hermit Tree was my band while at the UA which blends irish, folk, and americana influences. Our music has been described as 'joyful', 'soothing', 'great road trip music', 'evocative', and 'good for studying'.  Whether you're looking for a gift for a friend, or something to play while baking those pies and cookies, take a look at 14 track album.  

The cd features David Berens (guitar), Matt Rolland (fiddle, mandolin, guitar), Daniel Sullivan (percussion), Bekah Sandoval (vocals), and Bob Hanshaw (bass). Also appearing on the album are Grace Rolland (vocals, cello), and Jen Sandoval (vocals). The physical cd comes with some wonderful art created by friends.


You can also listen to our music here:
http://www.myspace.com/thehermittree

Happy Holidays from the Hermits!

Video of Sweet Derrylin at the UA

Pasajeros con destino: Nochistlan

I recently returned from a whirlwind visit to Nochistlan, a ranching city in southern Zacatecas.  My fellow fulbright researchers and I were invited by the president of FedZac to visit a few migrant projects in the city, experience the ranching culture, and stay with his family. Fedzac is an umbrella organization that represents all the federations of migrant clubs of Zacatecan migrants living in the US.  

3x1 Paving Project in Zoquite

A migrant club, called a 'Hometown Association' is a charitable organization of migrants from the same hometown that organizes cultural events and participates in development projects back home, often through 3x1 para Migrantes.  Nochistlan has one of the highest concentration of 3x1 projects, a unique government program that triples migrants' community investments.  I will write about 3x1 more extensively sometime soon, but it is a very unique program that encourages investment and has realized paving of roads, new museums, schools, electricity, drainage projects - all financed by migrants in the US, the local government, the 

state government, and the federal government (that's why they call it 3 for 1). 

David Jimenez, Basco (M4D), Leila (INAFI),
Daniella, Me, Aaron, Manuel (Fedzac)

Along with my two fellow Fulbright researchers here, we were traveling with two acquaintances we met at the recent migration and development conference, the People's Global Action on Migration Development, and Human Rights, which we attended in Mexico City. One of them, Leila Rispens-Noel, is a very knowledgeable and helpful contact for the future of my project.  She is the Senior Advisor of INAFI, an international organization supporting 'alternative finance' institutions.  Leila is herself a migrant from the Philippines to the Netherlands, and participates actively in development in the Philippines through her own 'hometown association'. She is the president of a group called Wimler Partnership for Social Progress, the foundation she set up to help her hometown and nearby places in Mindanao.  Leila has done a lot of work in migration and microfinance, and is advising a very interesting research project in the European Union.  The 3 year project, Harnessing the Potentials of Migration for Development: Linking Microfinance Institutions and Immigrant Associations,  is equipping microfinance banks to act as money transfer companies for migrant remittances (money they send back to their home country), supporting new remittance-microfinance projects between Europe and Africa.  She was very encouraging about my research here on the possibilities of designing a migrant-funded and migrant-owned microfinance bank in Zacatecas.  Basco, another new friend from the migration conference, is also a Filipino living permanently in the Netherlands, who is working full time in migration and development.  He has worked on women's economic empowerment projects in the Philippines using remittances and is working on improving diaspora organization in the Netherlands, a topic very related to my undergraduate thesis at the University of Arizona. Basco also plays a mean game of billiards, as I found out in Nochistlan, and dances with Michael Jackson moves.  He was a favorite of all the grandchildren at the Jimenez house. 

Our hosts were the parents of Efrain Jimenez, the president of FedZac.  They are a hard-working, well respected family in the community and opened up their house and table to us.  There were some interesting cultural experiences for me as Nochistlan is a much more rural, family-centered community as to what I've experienced up until now in Mexico. The Jimenez family is very large, first of all, as the father, called with the respectful title 'Don', has several brothers and sisters, and he and Efrain's mom themselves have 12 children.  Don Jimenez and his Sra. Jimenez had a clock on the wall with a picture of each child on the hour.  The sense of family inclusion and tradition is very strong there. Every morning, grandchildren would stop by the house to greet their grandparents, the grandchildren kissing them on the hand and then receiving a blessing and a cookie. 

Jimenez ranch in Nochistlan

The father was a very successful cattle trader and increased his business until he was able to purchase over a 1000 acres of land. The land is now divided between the 6 sons, the girls inheriting money from sold land rather than the land itself.  Efrain explained that the tradition is to keep the land in ownership of the men so sons-in-law won't cause strife when ranching on the land. 

In addition to getting to know the Jimenez family, I also ate homemade menudo for breakfast, shot down avocados from a tree with a rifle, drank more mezcal (tequila) than I probably will for the rest of my life, and developed a new love for banda and mariachi music.  When in Zacatecas...

I've uploaded an album of pictures to my facebook profile.  You can see our visit to a migrant funded mezcal factory, a visit to a community museum built with 3x1 funds, some great ranch views and culture, and a few pictures of me playing fiddle for a big family dinner! I played a few fiddle tunes, sang turkey in the straw, and Cotton Eye Joe because they requested a country song. That was the only one I could think of (thanks dad) :)   

                                                                                                   My facebook album of Nochistlan, Zacatecas (available to all). 

And here's a short video of Leather Britches in Mexico. Enjoy

Banker to the Poor

This weekend, I finished reading Banker to the Poor by Nobel Peace Prize winner Muhammad Yunus.  If you haven’t heard of Yunus or his work before, Banker to the Poor is an excellent introduction to the world of rural microcredit in addition to an enjoyable and inspiring narrative.  Yunus, an economics professor in Bangladesh, describes how he journeyed from the realm of elegant but abstract economic theories to dedicating himself to a lifelong career of fighting poverty.  Yunus has a gift for story-telling and conveys his academic ideas in a straightforward, compelling way.  I recommend this book (a New York times best-seller) to anyone interested in learning a bit more about what I am doing in Mexico.

Yunus – who I found out was actually a Fulbright scholar to the U.S.! - studied economics in the U.S. and taught for many years in Chittagong, Bangladesh.  Moved by a major famine in 1974, Yunus realized he had to engage with the world as an agent for change and not just a thinker.  After carrying out an exploratory research study in a local village, he developed the idea of microcredit – providing small size, very low interest loans to the poorest of the poor.


I read this book my freshman year of college as part of an International Studies introductory course.  The book, and the topic of microfinance, impressed me back then and was even more interesting the second time around.  Reading the book with a more critical eye, and a bit more experience in development, a couple of things really struck me about Yunus’ story and the success of his microcredit bank - called the "Grameen Bank" because Grameen is the Bengali word for "rural" or "of the people".


Foundational Techniques
'Microfinance' as an organized effort has been around for nearly 40 years now, and has spread to every continent in the world.  However, reading through Banker to the Poor, I realized that the majority of the fundamental characteristics that are recognized as 'best practices' in microfinance originate from Grameen.  This makes sense because historically, Grameen was the organization that forced economists and bankers to take microfinance seriously.  Before Grameen, very few commercial bankers considered finance programs for the poor viable.  Yunus describes the incredulity and intense financial resistance he experienced from the formal banks in Bangladesh.  Even after they became a formal bank with thousands of creditors, people still disregarded the bank as unreplicable. Nonetheless, the model has been replicated, all over the world.


Microfinance programs are diverse and commercially commanding.  Assets of Microfinance Investment Vehicles (MIVs), companies that raise funds in richer countries and channel them to microfinance institutions in developing countries, amount to US$6 billion in 2009.  In 2007, a microfinance company in Mexico, Banco Compartamos, held an IPO resulting in a market valuation of US$1.5 billion, making world headlines for being the first bank to go public.  While the decision has been extremely controversial, many arguing Compartamos prioritizes profits over poverty reduction – a “double bottom line” - this was a landmark indicator that investors and banks have embraced the business potential of microfinance.


Here are some of the techniques and technologies that make microfinance programs work:
Members must be part of a loan group of five people.  Group members discuss new loan possibilities and are collectively responsible for repayments.  While this practice was developed out of experience, there is a very solid economic explanation for this practice. Tyler Cowen, George Mason economist, mentions how this system of community pressure serves as an implicit guarantee for the loans.  While poor people can’t offer collateral in most cases, their social network and fear of peer retribution (a form of ‘social capital’) ensure repayment.

Also, unlike most typical loans that require lump sums when a loan period ends, Grameen requires weekly payments.  The system helps people plan better, eases the shock of having to return a relatively large amount of money, and does not restrict the use of the money.  The loan rules, further, are incredibly streamlined and accessible to the illiterate.  Grameen requires an annual percentage contribution in savings to a group or individual fund.  This fund helps cover emergency situations and promotes better savings practices.

The other fundamental ‘best practice’ Grameen developed is a focus on women as borrowers.  While Grameen set a goal early on to have at least 50% female borrowers to advance women’s rights in a repressive society, they soon found that women turned out to be better clients.  Due to a whole host of social and cultural factors, many of which are connected to poverty, women are more reliable with loan repayments and less likely use the loan on drugs or alcohol.  However, in targeting women, Grameen experienced an intense cultural resistance due to strict conservative purdah laws in Bangladesh that prevent women from engaging in public life, leaving the home, or handling money. In 1985, Yunus was not permitted to attend a UN conference on women’s issues in Nairobi because the president raised the objection, “Why should a man go to a UN women’s conference?” (Yunus, 125)

Yunus describes the powerful psychological effect for a women upon receiving a loan:

“When she finally receives the twenty-five dollars, she is trembling. The money burns her fingers. Tears roll down her face. She has never seen so much money in her life… This is the beginning for almost every Grameen borrower.  All her life she has been told that she is no good, that she brings only misery to her family, and that they cannot afford to pay her dowry.  Many times she hears her mother or her father tell her she should have been killed at birth, aborted, or starved. To her family she has been nothing but another mouth to feed, another dowry to pay.  But today, for the first time in her life, an institution has trusted her with a great sum of money.  She promises that she will never let down the institution or herself. She will struggle to make sure that every penny is paid back.” (Yunus, 65)

In 1982, Grameen had 28,000 members and fewer than half were women.  Today, over 95% of the borrowers are women.

Grameen’s institutional structure
Grameen, despite it’s enormous trust and geographical presence, is run much more like a small, horizontal company.  Local branch managers are given almost complete autonomy to design specialty loan programs, experiment with new projects, and offer any quantity of loans within the basic framework and rules of the Grameen method.  Managers are trained by spending time working in a successful branch, and then sent out immediately to start their own - apprenticeship, intense knowledge sharing, and branch planting.

This institutional design helps explain the stunning rate of expansion in it’s early years.  In the 1980s, Grameen added approximately 100 branches every year.  Talk about aggressive expansion. Grameen was opening a branch almost every single day.  This growth is a testament to the skilled staff they recruited, and enormous un-met demand for credit in rural areas.  This idea of unmet demand is one of the major themes I’m encountering in the literature on Mexican microfinance.

Stunning rate of repayment
By 2003, Grameen had grown to 1181 branches in 42,127 villages, loaning out U.S.$3.9 billion since it’s inception.  Of that $3.9 billion, $3.6 billion was repaid.  That’s a recovery rate of 98%.  This success rate is mind-boggling and one of the enduring characteristics of Grameen replicants.  Defying all expectations, this rate of repayment has come under recent scrutiny.  Some argue Grameen’s method of rescheduling loans is a cheap slight of hand to avoid defaults, but their accounting books are transparent and even accounting for a possible over-statement, the recovery rate still far above larger commercial loans.

Ownership
Unlike the commercial oriented incarnations of Grameen, Yunus’ bank is owned by it’s borrowers.  According to their website, 95% is owned by the borrowers, the other 5% owned by the Bengali government.

Commitment to product innovation
The most impressive aspect to Grameen’s growth, to me, is their incredible agility in developing new products and venturing into new business fields.

One of their first innovations was a housing loan program.  Some early nay-sayers argued a loan program couldn’t succeed because there was no productive element involved.  However, since they started giving houseing loans, over US$190 million has been doled out to build more than 560,000 houses with a near perfect repayment rate.  Grameen’s housing programs was chosen in 1989 to receive the Aga Khan International Award for Architecture for ‘designing and building the $300 house’.  At the award ceremony, Yunus responded to the question of who designed the prototype by saying “no professional architect ever designed the houses…It is the borrowers who are the architects of their own houses…”(130).

Grameen has also created other innovations such as a loan insurance program that covers outstanding loans in the case of death.  On the last day of every year, subscribers deposit 2.5% of the outstanding amount, and in the case of death, the saved up money is given back to family and the outstanding loan is erased. They also have developed a very clever retirement program that serves as a huge source of liquid capital for the Grameen foundation.  Members that contribute a small amount every year to their ‘retirement’ fund, will see the amount doubled upon retirement.  The interest Grameen earns on the flow of funds more than covers the retirement allocations.

In the 1990s, Grameen started offering a tube-well loan program to sink hand powered wells, seasonal loans for land-owners, and an equipment and cattle leasing programs to help their borrowers slowly purchase equipment and livestock.  As Grameen has grown in size, their capacity to find start-up capital for larger ventures, as well as risk tolerance, has also increased. The Grameen spin-offs are stunning:
·      Fishery cooperatives with over 1000 ponds (Fisheries foundation)
·      A textile production company that sells materials and lunghis, employing over 200,000 hand-weavers (Grameen Check)
·      A company to market Grameen finished products to the domestic market (Grameen Shamogree)
·      A telephone and cell phone provider (GrameenPhone and Grameen Telecom)- In 1997, Bangladesh had the lowest telephone density in the world at 1 phone per 300 inhabitants. GrameenPhone now has 850,000 cellular phone subscribers in Bangladesh, 24,000 of which are ‘village phones’
·      An energy provider (Grameen shakti)
·      An internet service provider (Grameen cybernet)
·      An information technology company (Grameen communications)

Resilience to resistance
Culturally, Grameen has battled against ingrained beliefs of women’s roles. Politically, Grameen is seen as a threat to local land-owners, money-lenders, and patriarchal community leaders.  Grameen has an interesting approach to over-coming political sabotage – winning over the community members with goodwill.  Branch managers facing resistance are encouraged to start by serving the communities needs – starting a day care center, cleaning up trash, etc.

Resilience to natural disasters
Yunus estimates that about 5% of their loans go to survivors of natural catastrophes (139).  However, this is surprising considering the number of disasters Grameen has survived and how much effort Grameen has put into rebuilding credit after a disaster.  In April 30, 1991, a cyclone killed 110,000 people in one night in Bangladesh.  Grameen workers were the first volunteers cleaning up hit areas, providing emergency food and shelter.  They immediately rescheduled all loans, provided new housing loans, and offered new credit lines to all the affected borroers.  Amazingly, all these loans were repaid.  This resilience defies expectations, and reinforces the fundamental argument of Grameen, which is that the poor are the most trust-worthy borrowers because they have almost nothing to lose, and have so much to gain.

Over-reaching idealism
Despite the impressive trajectory of Grameen, and remarkable institutional design, their idealism has led to over-inflated expectations of the potential of microfinance.  Yunus has undeniably demonstrated the power of microfinance to strengthen communities and fight poverty.  However, the celebrity status of Yunus and the Grameen project has communicated the idea that microfinance can fundamentally eradicate poverty.  As Grameen’s adventurous foray into other ventures shows, microcredit alone does not solve every problem.  There is no silver bullet for development.

However, I believe microfinance has powerful benefits and works.  Microfinance does little harm, and a lot of good. However, Yunus’ confidence in microcredit to end poverty has left him vulnerable to criticism.

Yunus writes, “poverty does not belong in civilized human society. Its proper place is in a museum. That’s where it will be. I have always believed that elimination of poverty from the world is a matter of will.”  He continues, “The poor themselves can create a poverty free world.  All we have to do is to free them from the chains that we have put around them.”

I agree with Yunus that the poor are natural entrepreneurs and know their needs the best.  That’s why I’m in Mexico working with migrant clubs to adapt microfinance models to the unique needs of migrants.  However, the contextual factors that shape the outcome of microfinance projects are tantamount, and the creation of institutional support is central to the ability to overcome shocks, such as natural disasters.  Further, if microcredit becomes predatory, it will fail, as the recent microcredit crisis in India is demonstrating.  Onlookers must check their hopes that poverty has been solved.

I believe that microfinance when handled correctly acts as a economic and a social catalyst.  Not only does it raise income, but it helps the poor advocate for themselves.  In 1997, over 6% of the elected representatives in all the local bodies in Bangladesh were Grameen borrowers.  This goes to the heart of one of the biggest divides in development theory: Can sustainable economic development come from the bottom up, or must it be complemented by larger, structural changes?  I think that the Grameen case demonstrates there cannot be one without the other.  To allow for bottom-oriented growth, Yunus had to fight ingrained cultural institutions, financial laws, and political disbelief.  However, Yunus also showed that when you leave room for autonomy, and provide the resources to act on this initiative, there will be greater innovation and unexpected, locally oriented solutions.  And that, makes me excited.

I'll finish with a few more words from the Nobel winner himself:

“In reality, credit creates economic power, which quickly translates into social power.  When credit institutions and banks makes rules that favor a distinct section of the population, that section increases both its economic and its social status. In both rich and poor countries alike, credit institutions have favored the rich and in so doing have pronounced a death sentence on the poor…

To me, changing the quality of life of the bottom 50% of the population is the essence of development.  This is where growth and development part their ways. Those who believe that growth and development are synonymous, or move at the same speed, assume that the economic layers of society are some how linked to each other like so many railway carriages, and that one only need stoke the engine for the entire train and everyone in it to move forward at the same speed. In the case of human society, each economic entity or group has its own engine. Macro projects increase the efficiency of the engines in the first class carriages.  But whether these investments can help ignite or enhance the capacity of the engines in the subsequent carriages, in all other layers and strata of society, remains uncertain.”