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At Play in God’s Sandbox

2001 Microenterprise Conference Address

Welcome to the Fourth Annual Microenterprise Conference—Practical Approaches to Ending Poverty. This is my favorite conference, held at my favorite time of the year, at the most beautiful location I get to visit. This is where I drag my over-traveled, sleep-deprived body to be nourished, to reconnect with old friends, and to be replenished for the challenges of the year ahead.

Microenterprise 101

Let me begin with the basics—what microenterprise means and the kind of poverty it is meant to prevent. By microenterprise we mean tiny businesses or self-employment activities conducted by the world’s poorest families. These activities are usually lead by mothers. How “micro” is a microenterprise? On average the typical microenterprise overseas operates on less than one hundred dollars of working capital and generates an average net income of less than three U.S. dollars per day.

What do we mean by poverty? Did you know that out of the world’s six billion inhabitants, 1.5 billion of them—mostly women and children—are subsisting on a per-capita income of less than one dollar per day? Double the per-capita cutoff and you have roughly half the human race subsisting on less than two dollars per day.

As a direct result of this widespread deprivation, some thirty-two thousand children worldwide die each day from chronic malnutrition and hunger-related disease. That’s more than twelve million preventable deaths each year. But what really takes my breath away is the fact that this vast and deadly holocaust is rarely mentioned in the media, is not part of our public consciousness, and is not a high priority for our elected officials.

What’s Being Done

Some might be tempted to blame God for allowing such an outrage to continue on our crowded planet. But God knows exactly what he’s doing. You see, we are not just God’s children but the instruments of his continuing creation. Only we can end poverty, and it can only end when we have the will to make it happen. Imagine that God, as our parent, was to offer some suggestions to his children on how they might end poverty. What kind of poverty vaccine would he give us?

I believe he would give us an idea so utterly simple, so inexpensive, so efficient, so fast-growing, so empowering, so loving, and so universally applicable that we would be incapable of managing it. Our only options would be to support and accelerate the process or get out of its way.

The good news is that God gave us exactly such an idea about twenty-five years ago. Mohammad Yunus was the first to hear it and several years later so did I. This idea has already spread to every continent of the world, to more than one hundred nations, and is promoted by more than two thousand agencies. Today at least twenty-five million low-income mothers benefit from poverty-alleviation efforts. Since 1975 another twenty-five million women have graduated or withdrawn from treatment to allow their share of the vaccine to be recycled to other women who still feel a need for it.

How it’s Being Done

In its original and most restrictive sense, microfinance means making small loans of working capital to a low-income mother so she can create or expand a microenterprise. In turn, the mother’s self-employment activities generate additional income—in most cases no more than an extra two to three dollars per day—that enable her to better feed her children, provide them with health care, and keep them in school. These three investments in children are the real business of every low-income mother because this is precisely how her family will escape poverty. It is a push-pull strategy that requires at least two decades and the participation of two generations. The mother pushes by keeping her children alive and in school as long as possible. With more schooling, the child is more likely to find better-paid employment as an adult, and with this income will pull his or her parents and siblings toward a higher standard of living. In case the perfection of this model still escapes some of you, let me point out seven of its suspiciously godly strengths:

1. All the hard work is done by the borrower and her children, not the creditor—self-help at its finest.

2. The borrower is allowed to choose her business, how she will invest her loan, and how it will be run—freedom.

3. This is not charity or paternalism; the client creates her business with borrowed funds, generates wealth, and repays principle and interest—capitalism in action.

4. Creating business and earning an income enhances the dignity and self-worth of women—empowerment.

5. When a borrower leaves the program, her loan funds are re-lent to the new client who replaces her—recycling of scarce resources.

6. The funding agency is able to offer its microfinance services in a way that builds its own accountability and self-sufficiency—one of the most efficient foreign aid or public assistance delivery systems ever created.

7. Nobody controls the world microfinance movement as a whole, nor does anybody control the operations of the individual borrower—not the multilateral or bilateral aid agencies; not the international consultants or governments; not the corporations, churches, and service clubs; not the banking industry; not the financial markets; and not even the microfinance industry itself—pure innovative chaos.
As the Blues Brothers would say, it indeed looks like “we are on a mission from God.” And like it or not, this mission is as close to flying on automatic pilot as you will ever see. You can either support it and enjoy the ride or ignore it and miss out on all the excitement. But I believe one thing is now certain—most of us in this room will live to see the day when severe poverty has been ended on planet Earth.

One Final Conquest

I want to share some very personal, spiritual thoughts about my own role in all of this. I am a veteran of village banking—a microenterprise methodology that led to the creation of my own nonprofit agency, Foundation for International Community Assistance (FINCA). Today FINCA, a non-profit agency, works in twenty-two countries and is serving about two hundred thousand clients through more than nine thousand village banks. As proud as I am of this result, I am much more impressed by the fact that my village banking methodology—in pure or modified form—is now practiced by some three hundred agencies in sixty countries and perhaps serves more than two million clients—an outcome created without my participation or guidance. Which proves once again that great inspirations really begin with God, and if they are truly great, they will acquire a life of their own beyond our control.

In 1983, on a flight to Bolivia, I experienced what can be best described as a “channeling” in which the village banking idea came through me from somewhere outside myself. Eighteen years have passed, and I now look at the microenterprise movement overseas and see that I have already become redundant. Within FINCA itself there are now at least one thousand credit officers who can implement the village banking methodology better than I can. At age sixty, with five good years before retirement, I find myself seeking, like a rusty conquistador, for one last campaign against my arch enemy—poverty. And here it is.


In 1998 I became the fourth director of FINCA’s most unsuccessful microenterprise program ever created—FINCA-USA. When I took over, the program had shrunk to only fourteen clients and had a loan portfolio of only $28,000, 40 percent of it in arrears. Its operating budget was 98 percent grant-dependent, and its principle donor—the U.S. Treasury’s Community Development Financial Institution’s program—scored FINCA-USA’s performance as “unacceptable.” Not surprisingly, my board of directors asked me to put the program out of its misery as quickly as possible. But, being what my wife calls “a difficult boy,” I chose to first entirely overhaul the program’s methodology and then launch a rapid expansion. Today FINCA-USA has 219 clients—all of them borrowers—a current loan portfolio of $180,000, an on-time repayment rate of 97 percent, and is 25 percent self-sufficient. Our rating with CDFI has grown from “unacceptable” to “below expectations” to “adequate” to “good” and even “outstanding” on one indicator. However, these positive results disguise many mistakes and many lessons learned.

As I have attempted to apply my overseas experience to the U.S. market, I have had to modify or discard virtually every principle and key methodology that has guided FINCA’s overseas programs. I have had many epiphanies and spent many sleepless nights talking with my business partner. I wouldn’t trade a minute of it! Every single day there is innovation, a new lesson learned, a mistake to be embraced, analyzed, and corrected. Not since the 1980s have I had so much fire in the belly. Every day I am reinventing FINCA.

The core message I wish to share is, “Go with the flow.” Make God your business partner, trust your insights and inner voice, stay in close touch with your clients, embrace change, and learn from your mistakes. When you do this and go with the flow, you get out of your box and jump into God’s sandbox.

Where Will The Flow Go?

By the time I retire, five years from now, I hope to return to the ninth BYU Microenterprise Conference and be able to announce the following results:

By April 2006, FINCA-USA will have completed three consecutive years of full operational and financial self-sufficiency.

FINCA-USA’s methodology will have expanded beyond credit to include savings mobilization, client support groups, business training, and business coaching services.

To provide these services FINCA-USA will have implemented a franchise model wherein hundreds of its best clients, on a part-time basis, will serve their neighborhoods of residence as part-time credit officers and business coaches. I imagine them as the Mary Kays of microfinance, the Starbucks of the self-employed.

That’s a brief glimpse into my still-evolving business plan. If any of you want to beat me to it, be my guest. There’s enough poverty for everyone. And if you can’t beat me, join me. I expect this could become the largest and most exciting sandbox ever created for microenterprise practitioners to revel in.


Article written by John K. Hatch

John K. Hatch is director of special operations and founder of FINCA International. For thirty-nine years, he has served in development assistance programs of Third-World nations, starting with the Peace Corps and later as manager and consultant to projects benefiting low-income families in Latin America, the Caribbean, Asia, Africa, and the Middle East.

Hatch earned a BA in history from Johns Hopkins University in 1962 and an MA in economic history in 1969 and a PhD in economic development in 1974, both from the University of Wisconsin. He gave this address at the Fourth Annual Microenterprise Conference at BYU, 6 April 2001

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