Monthly Interview Fort Dauphin: Delicia Rasoambiniaina

My name is Delicia Rasoambiniaina and I am 63 years old. I am single with one son and three daughters. My business is selling cakes, sweet donuts, coffee and cigarettes along the road in town.

Each morning I get up to buy the things I am going to sell:  lemons, little cakes and doughnuts, cigarettes, sugar and coffee.  I spend 20,000 ariary each day.  Then, I earn 23,000 ariary by sundown.  Thus, my daily profit is 3,000 ariary.  My clients are all kinds of people:  children, young people adults, passers-by, workers, the people in my neighbourhood as well as people who live far away.  I have about 40 clients each day.

Here is how my family spends the day:  I get up early each morning to buy the things I will sell.  My son who is already an adult goes to work and my other little children go to school.  I take advantage of selling on the weekends, because the other sellers take a day of rest on these days.

Someone I admire is Djipi, an Indian family who lives in Fort Dauphin.  I admire their way of life because they are rich:  they have a car, a big house in concrete and a large food shop.

Each Saturday and Sunday, my sales do very well because most of the sellers do not sell on Sundays since they go to church.  It is at the beginning of the week, on Monday, that my sales do not do well, because everyone has spent their money on the weekend, celebrating when they all get together.  Thus, they aren’t hungry on Monday.

I have chosen to sell in a little shop because I know how to cook the doughnuts and little cakes that everybody needs each day.  This job of selling in my little shop is a parallel job to my principal work and thus, I am able to reap an additional benefit.

Since I have received the loan from OSI, my business has increased because I have been able to increase the things that I sell. My hope for the future is continuing to have good results from my sales and to turn my little shop into a bigger food shop or even a big hotel. Because of my present financial situation, I would like to change my life by leaving poverty and becoming rich. Being a seller is an occupation that I like the most because one can earn a lot of money and I am content when sales do well.  

Here are the Malagasy proverbs that I like:

      It is in suffering that one finds happiness.

      It is money that makes the person.

      Mutual love makes a good friend.

I would like to thank those who give me the financial aid and hope that this helps continues because life proves to be very difficult with this financial help.

I thank you very much.

Incentives that work: 100% repayment rate

I just got off the phone with Ravo. She is our field manager in Ambalavao for the Masomboly project.

She reports that everything is running along smoothly. They had the first loan reimbursement on Saturday and she was very pleased to report that 88 out of 89 women made their payments on time and the holdout plans to pay back later this week. This is great news. It means that the project is maintaining its momentum even after near-doubling in size.

Since the group is so large now, we do the reimbursements in two meetings: one with all of the women who are borrowing individually and one with all of the women borrowing as part of groups.

Ravo reported that the women were paying back on time because they wanted to receive their bonus at the end of the lending cycle. This is exactly the response we planned when we set up the bonus system.

It works like this: We collect 10% interest, so essentially the women are required to pay back $33 for a loan of $30 due in six months. But, to incentivize reimbursement, Alison designed a system whereby the women who pay back every monthly installment on time get all of their interest back at the end of the lending cycle.

On my last trip in March I made sure we called out each woman by name and applauded for them both individually, when they received their envelopes, and as a group. You can see in this picture how excited the women were to receive their prizes. We were hoping that the message would be clear to the new borrowers that they too could get that bonus. So far it seems to be working.

It is surprising sometimes how such simple incentives can have such profound effects. But someone once said that you shouldn’t question success, so we’ll just enjoy the 100% repayment rate and keep working to make sure it continues.

The Informal Economy

Recently, Alison and I have been making fundraising presentations about the Masomboly project. One of the most frequent questions we get is about how a small loan like $30 could really make a difference in these women’s lives.

The first thing to realize is that many of the women in our project are considered to be in “extreme poverty” making less than $1 a day. But what does an income of $1 a day really mean?

It is important to understand that the majority of people in a country like Madagascar do not have wage or salaried jobs. Instead, they work in something called the “informal market”. They aren’t showing up for a job, they are out on the street, selling their wares or agricultural products. At the core, these people are already self-employed entrepreneurs.

As you can see from these photos, this mass of informal market activity leads to a vibrant array of goods being sold everywhere you turn. As I mentioned in my last post about the diversity of our borrowers, Masomboly includes all sorts of businesses.

The key concept that ties together the success of a small $30 loan in this informal economy is the idea of liquidity. People living day-to-day off whatever profits they can make in the market do not have enough capital to invest in growing their business.

Take, for example, Rakoto who sells tomatoes in the market. Typically she wakes up in the morning and walks to a local village where she buys two handfuls of tomatoes, say $2 worth. Then she spends a few hours at her stand in the market selling the tomatoes for a total of $3. That is a profit of $1 that then gets spent on her family’s daily needs: food, cooking fuel, clothes, school supplies, etc.

So you see the problem. Capital of $2 yields only a $1 profit that is immediately eaten up by household expenses. But if we can provide her with more capital, say $30, she can buy a bag’s worth of tomatoes and begin to accumulate more profit for use 1) in household spending that improves her family’s daily life, 2) as capital for the next day’s bag of tomatoes and 3) to pay off the loan.

Just like in Newtonian physics, where certain laws no longer apply on very small (quantum physics) or very large (astrophysics) scales, the rules sometimes change when people are living off very small incomes in these informal markets. Thus a small loan of $30 can be used as a tool to make big changes in people’s lives.

Faces of Diversity

One of the original goals of the Masomboly project was to build a community of women based on a spirit of entrepreneurship. Our success so far has been humbling, because all it has taken is a simple faith in the ability of the poor to help themselves, given a chance. This is, at its core, the real innovation of micro-lending.

But, on my recent trip to Madagascar, I was struck by another aspect of the group we are creating: it is incredibly diverse.

If you have a chance to browse our website,, you will see that we have added a filtering feature that allows users to choose women that meet certain criteria like education level, number of children, etc.

We have diversity in age:

Jacopy Patricia Ravaniaina is just 16 years old. She is still in school, but she wants to use the loan to buy and resell trinkets in the market on weekends. Then we have 73 years old Charlotte Helene Razaimalala. She sells firewood in the market. In a country where the life expectancy for women is only 64 years, I imagine the 73 year old Charlotte carrying her armfuls of firewood to market each day.

We have diversity in businesses:

We have pig farmers like Maminirina Rakotovao, and seamstresses like Marcelline Ratalata. We have fruit vendors like Lantanirina Olga Razafimaharo and shop owners like Rasoarimalala Florentine. We have women selling gold, furniture, batteries, honey, chickens, rice, used clothing and even baking cakes.

And it goes on from there: we have women who are single, divorced, widowed and married. From completely illiterate to university-educated. From no children at all to one woman who has 8.

For me, this is an exciting part of our project. Masomboly is acting simply as a catalyst, bringing together these poor women and creating a diverse entrepreneurial community.

They are the ones who are out there doing the real work, building better lives for themselves and their families.

What is Masomboly’s impact?

How does one measure the impact of projects that are not always easily quantifiable? This is one of the questions that was brought up in an article series on philanthropy in the New York Times Magazine. Such measurements are easy to establish with projects like distribution of childhood vaccines. We simply count the number of vaccines given out, compare this with the cost of getting these vaccines to the target groups, and figure out whether the intervention is cost-effective.

This type of impact assessment is not as straightforward for the Masomboly micro-lending project. One of the questions we are interested in, is finding out whether the individual lending model promotes greater entrepreneurial activity. Are women who area funded with individual loans able to be more creative and take more risks? The question is, how do we measure this? We were thinking of categorizing the types of businesses funded through the  group versus individual loans. This would show us if there were businesses that were ‘out of the ordinary’ in the individual lending group. We are also recording weekly consumption, so that we can see if consumption of households with individual loans increase by more. This would capture whether individual loans lead to more profitable businesses. Any other ideas?

There are other outcomes from the project that are even more difficult to quantify. Women are telling us that they are more respected by their husbands now that they have these loans and businesses. Some women say they are proud to have been able to celebrate a real Christmas. Others are proud to put better food on the table for their families. These are not necessarily easy outcomes to measure in a survey. But to an investor, these are just as important outcomes that should be taken into account in evaluating the impact of such an intervention.