From Vegetables to Vegetables
Alex Hartzler credits his entrepreneurial spirit to working in his grandparent's fruit and vegetable stand as a kid. So it is quite ironic that 30 years later, he's still working to help people maintain their fruit and vegetable stands.
“The similarity between my grandparents ‘microenterprise' in their roadside fruit and vegetable stand and many of the microentrepreneurs who receive loans through microfinance organizations is unmistakable,” he remarks.
For those of us not in the global entrepreneurial loop, microfinance is a growing trend that sounds small but, is, in fact, a gigantic force in helping underdeveloped countries. The idea is simplicity itself: to provide very poor people with very small loans—known as microcredit—to help them begin small, usually family-run businesses. This concept of helping the poor is radically different than the traditional method of funding, and, says Hartzler, who is an enthusiastic advocate of the smaller approach, is much more effective.
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Alex Hartzler |
“It's been proven time and time again that funds from the IMF or the World Bank often do little for a developing country,” he says. “My guess is that the reason for this is the lack of democratic institutions to safeguard and oversee funding. A tremendous amount gets wasted and the average person sees nothing of it.”
Hartzler first became involved in microfinance during a year-long trip to Bolivia he took after graduation from Penn State, a year before he attended law school at the George Washington University National Law Center. He has remained involved since then, through his stints at law firm Buchanan Ingersoll P.C., Webclients.net, and currently, as a substantial investor in MicroVest, LP, a microfinance organization based in Bethesda, Maryland and his work with Mennonite Economic Development Associates. Hartzler is also a real estate investor and developer in Harrisburg, among other places.
“I was in Santa Cruz, Bolivia, working on a microenterprise economic development project for the Mennonite Central Committee, giving local people small business loans,” he recalls. “That program became an early model for other organizations.”
In a place like Bolivia or Bangladesh, the loan size is typically fifty dollars to a hundred dollars, says Hartzler. Usually women are the recipients, and their business is modest: shoe repair, cooking, crafts, or another type of roadside stand. An essential part of the loan is another reason why the notion of microfinance has become so successful.
“After MicroVest or its partners make the loan, they provide training that teaches people how to separate their business and personal finance, for example,” says Hartzler. “They also conduct weekly or monthly checkups to see how they're doing. It's time-intensive but worth it.”
And the reason people on the loaning end of microfinance know the time invested is worth it is because the repayment rate is very high.
“MicroVest and other similar microfinance organizations are dealing with real people who are honest and hardworking and who traditionally have had no access to credit,” he explains. “These people wouldn't dream of not repaying their loans. They understand that the money is then recycled to new loans, thus multiplying the value of each dollar in defeating global poverty, and changing lives and communities.”
Besides the United Nations declaring 2005 as the year of microcredit, there are other attempts to widen the appeal to the broader investment community. Hartzler says the hot topic right now is to make microinvestment funds part of an investment portfolio.
“The hope is that if you're buying a 401K for example, you'll put three to five percent into these kinds of loans,” he explains. “We should be investing private dollars to help create jobs in the developing world.”
Hartzler is planning a trip to Central America in January and to Argentina in March. He says it's a way of looking after his investment.
“I may also be looking for private and microinvestors to team up,” he says. “I really believe in this stuff. It's the chance to do good while doing well.”
For more information, go to: www.microvestfund.com, www.meda.org, http://www.yearofmicrocredit.org