Swimming, sweating...and hoping I still have a job next week.

Time is flying by and I just realized I haven't taken a single picture yet. I need to get on it.

I joined a gym here last week, called Megatlon, mainly for the indoor lap pool. And swimming has been an unbelievable experience thus far. There are only four lanes in this pool -- one for slow (lente), medium (medio), and fast (rapido) swimmers. The last lane is for lessons. So, it's basically three lanes to share with an entire gym's worth of people who want to swim. I've been there three times so far and have had to share the rapido lane with no less than four other people every time. Which doesn't sound that bad...expect the other swimmers don't like to swim for long spurts of time. They like to take breaks -- a lot of breaks. They socialize. They hangout. And they do all this inside the lane. It doesn't even cross their minds to get out of the pool if they're swimming. So, it's usually two or three others swimming around two people just hanging out...talking. And, then one of the swimmers will take a breather and stand next to them. And you're left with no wall space to kick off of. I've almost run head on with somebody, been kicked by breaststrokers swimming in the opposite direction, and pushed off of the wall at the same time as someone else, vying for one spot. It's a nerve-wracking experience.

The best part of all this...the pool lifeguard sitting back, sipping on mate (the local tea), talking to...the other lifeguard.

The other thing I don't get is having to wear a swimcap and flip-flops. If Lifetime fitness in the states doesn't make you wear those...is it really necessary? But then I realize that Lifetime doesn't require these because they're cleaning their floors and pool regularly. What I think Megatlon is trying to say: "look, the mop handle broke years ago...and the pool water isn't blue for a reason...enter at your own risk".

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My coworker and I have a coined the term, Sweat O'clock...which is normally about 5pm, when the heat reaches the daytime high and I start sweating through my shirt in the office.

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It's been raining like crazy the last few days. They had major floods last Friday evening. It took me over 2.5 hours to get home from work on the city bus. Can't complain though...at least I can be reading or sleeping instead of driving.

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Work took major change today. The GM called Ford (other American coworker) into the office to him

1) they're completely changing our audience from people who have little to no credit histories to people with credit histories and established business (kind of goes against the social -- and premier -- mission of microfinance)
2) they want to cut back the number of loan officers from 5 to 2, and
3) they do not want him working on "state of the company" report because it's going to reflect very poorly on the managers' performance.

This basically turns all the work Ford has put into improving operations (and eventually bottomline) into a waste of time. The GM is getting pressure from the directors to be sustainable in a year's time and, as a result, is making the very rash decision to make the portfolio a majority of individual lenders, as opposed to group lenders (the proven Grameen method). Individual loans of the same size as one big group loan (divvied up among 4 group members) have much better returns than group loans. This is because you're doing leg work and administrative work for the same revenues. The biggest problem, however, is the company does not have tight enough credit policies to pick out minimally risky individuals. Such tight credit policies include background check, verifying long-term established business income, etc. This is the whole point of microfinance: finding a way to sustainably lend to poor people who have little or no collateral. And group lending is the way. The GM's answer is forget microfinance to the people that most need it...let's lend to people who we can trust and our bottom line will be better.

It's very demoralizing. The GM is very stubborn. And as good as Ford's Spanish is...there's still a major language and cultural barrier between him and the GM.

The GM has given us a week to present our results with a group-lending dominated portfolio. We have to show that the company can be sustainable, and sooner rather than later. It will involve growth models...something I know little about. I'm looking forward to the learning opportunity.

One week under my belt...!

Buenos Aires has been great so far. This city is absolutely crazy. I read in Lonely Planet that typical nuisances are stepping on dog crap, getting ripped off by taxis, and tripping on loose stones on the sidewalk. It took me less than 48 for all that to happen. It's no joke apparently.

Other nuisances are the city runs on cash and coins. Very few places take credit cards. I take the city bus to work everyday and it only takes coins. And because half of Buenos Aires takes the bus everyday, the city has a major coin shortage...and thus a blackmarket has developed. I get my coins from this guy near the bustop: a 10 peso bill in return for 8 peso coins and two cookies. You can't make this stuff up!!

I'm still getting used to the lifestyle: go to bed late -- very late -- and wake up late. Dinner at 10pm. The city here never sleeps. There are an endless amount of bars and clubs and they are always croweded (once 1 am rolls around). Every night here is a weekend night. A very crazy lifestyle.

BA has been having one of its hottest summers on record, which isn't quite as bad as Houston summers...except there is no central A/C here. Just fans and wall units. I've been in a constant state of sweat since I got here.

I found an apartment in Palermo...on craigslist. Craigslist rocks. I have three other roomates -- a Dutch guy, local Argie guy, and French girl. All seem like good people so far. The Dutchie is impressed with my knowledge of Dutch cursewords...kanker #$%! Think I should give it a few weeks before I show him my obnoxious Dutch / English accent.

Haven't had any crazy sleepwalking episodes...that my roommates are aware of at least.

The food has been good so far. A friend introduced me to Choripan...the Argie version of a hotdog. Chorizo on french bread. The chimmichurri sauce you put on it is awwwwwesome. I'm only doing about 2-3 bowls of cereal / day...which is pretty good. Found this cereal called Kellness (some international Kellogg's brand)...it's a mix of granola and corn flakes...yea buddy.

...

But...the reason I'm down here is Microlending. I'm working at a local microfinance institution (MFI) and it's been great so far. There's 10 employees at the company. I'm working with another gringo, Ford, a 24 year old from Connecticut. He's been at the company for 5 months now and the GM has basically put him in charge of turning the company around. The institution, called Entre Todos (translates Between / Among Everyone), is only about 8 years old and has very poor lending strategies. They have been lending to individuals and groups without solid background checks (living situation, microbusiness finances, expenses, etc), and they haven't been enforcing their contracts. As a result, nearly a third of their loan portfolio is behind payment and more than half is at risk of default (about 10% of the portfolio at serious risk). Ford is working on developing a standardized list of loan products, a borrower financial training program, and making the loan officers more efficient. It doesn't stop there: their contracts are obsolete and incorrect and their database system has glitches. Bottom line: the institution is unsustainable (but luckily funded by a well off hedge fund employee -- the founder).

I've come into a great situation with a ton of ownership...and the learning curve is steep. I've been helping Ford with his projects so far and I've already learned a ton. The guy's a rockstar. Not sure how the company will survive if, and when, he returns to the states. Some interesting things I've learned so far...

- The interest rates we loan money at are very high, which sounds a little counterintuitive for microfinance. The whole point is to provide the people with affordable loans and keep them from goign to loan sharks, right? But, the microentrepeneurs can handle the high interest rates because they make very high returns themselves. 100+% even. If you take out a loan to buy a microwave for your microbusiness and it quadruples your output, then the high interest rate seems reasonable. And, MFI's typically have to have high interest rates because the microloans are proportionately very expensive. The interest made on the loans are so small that the MFI profits very little from each loan after you factor in operating costs. Loan operating costs are more or less the same regardless of the size of loan. So, ideally, you want to lend much bigger loans. And it's this incentive that typically puts the MFI -- and borrower -- both at risk: lending more money than is repayable to a borrower and risking default.

- The government provides an 800 peso monthly stipend to families with 7 or more children. As a result, it's very rare to find a family with 5 or 6 children. But, our first loan is only 500 pesos. We're challenged with competing with the government stipend.

- A great success story: a women started several years ago with an entry level 500 peso loan for a breadmaking / pastry business and now has her own store and has an 18,000 loan.

- The hype about 98% global ontime repayment rates is a bit inflated. Most MFI's forgive their customers if they pay late...and consider it on time. However, default rates are still remarkably low.

Two Days to Departure

I'm heading to BA in two days. By way of Toronto. Using my frequent flyer miles nearly doubles my travel time from 10 hours to 18. Toronto to BA is a 14 hour flight...and it wouldn't be complete without a pit stop in Panama City.

Still need to pack, do my '09 taxes, and get rid of this bronchitis.