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.