That's Me with Pedro (the local Kiva Coordinator) in Cuenca

There are three major types of unemployment: cyclical, frictional and structural. Cyclical unemployment is a result of economic downturns and upturns, causing the national rate to vary based on the business cycle. Frictional unemployment, on the other hand, is a result of workers in transition, searching for new jobs. The most severe form is structural, which involves a mismatch between the number of job vacancies and number of available workers. Ecuador is suffering from all 3, where both cyclical and frictional unemployment are being extended to a more serious structural problem for the country.

Since November 5, a nationwide energy crisis has crippled most businesses with daily power rationing in every zone of every town and city lasting between 3 and 5 hours every day. Half of Ecuador’s economic output is petroleum, but most is destined for foreign lands. Domestically, the country relies on hydroelectric power, and the nationwide drought and lack of alternative fuel sources have brought the country to a standstill. With so much oil, it’s a shame that not more could be used domestically to offset this problem. Coupled with the global financial crisis, the energy crunch could be disastrous for Ecuador as access to capital becomes that much more strained.

The electrical authority does not regularly publish the outage schedule, and so businesses are left without knowing when they need to close their doors. Here at my MFI Fundacion Espoir (“Mi Bankito”), we are currently without power this morning, leaving loan officers with limited resources to complete their duties such as scheduling community bank meetings, arranging car schedules and monitoring delinquencies. Luckily, every community bank portfolio is maintained in triplicate form and updated at each and every meeting, sometimes by the borrowers themselves — of course, being verified by the loan officers prior to the end of the meeting.

Examples of how Kiva borrowers are being affected are unfortunately easy to find in interviews. For example, Felinda in Manta has a restaurant that needed to shut its doors in the evening for dinner, as she could not service her clients. Astromelia in Portoviejo could not use her computer nor print photos for clients using her digital printer when the power went out for 5 hours in the middle of a work day. Here in Cuenca, the drought itself is impacting the many agricultural businesses of Kiva borrowers such as Teresa who lives in the hills behind Cuenca. Many of her chickens and pigs purchased with a Kiva loan have passed away, and she is currently behind on her payments.

The crisis is reported to last until shortly before Christmas as deals with Peru and Colombia to import energy have been signed and are being implemented. The good news is that most Kiva borrowers here in Ecuador for Fundacion Espoir are able to keep up with loan payments due to alternative income streams within the family. The entire country seems to be saving money for a spending splurge during the holiday season. Like U-IMCEC in Senegal, Fundacion Espoir “could take more risks in extending credit to even poorer clients – we have too many ‘safe’ clients in our portfolio today”, says the regional manager of the Manabi office near the coast. With the desire and means to extend more loans to poorer individuals, Espoir’s policies are being altered – what better way to bring the economy out of its exascerbated “F-Bomb” crisis than to further extend credit rather than locking it up?

Zal Bilimoria is a Kiva Fellow based in Ecuador (currently, Cuenca) working for Fundacion ESPOIR. Consider making a loan to the working poor of this South American country.

Mote (Corn) with Egg and Cheese

This is typically the dry season for much of Ecuador, but for the past two years, it has rained just enough to support the energy demands of the country, which hinge on the Paute hydroelectric dam south of Cuenca. Unfortunately, the presidential administration and the energy department decided to forgo plans to build additional hydroelectric installations and bet Ecuador’s future on their belief that rain would come once again for a third year in a row. However, here in Cuenca just 100 miles north of the dam, clear blue skies and record high temperatures suggest that pending rainfall is but a dream.  Paute needs to operate at roughly 70% efficiency in order to satisfy domestic demand; at the present time, the most it can muster is 35%.

Paute Hydroelectric Dam South of Cuenca

You might wonder why a single dam is responsible for supplying most of Ecuador’s energy. As do I. Essentially, it comes down to a lack of financial resources to design, build and manage further capacity. Ecuador’s relationships with neighboring countries are sub-par at the moment, but after two weeks of power rationing, Peru has agreed to sell 1,200 megawatts per hour per day and Colombia has committed to increasing cross-border provisions — at a great economic and political cost to the Ecuadorian presidential administration of Rafael Correa. Daily power rationing began on November 5, and each zone in every town nationwide is without power for 3-5 hours on average, and on Sundays for up to 12 hours — when everyone (including me) flocks to the beaches. Even though some headway is being made, the government estimates that power rationing in some form will last through the holidays.

The rationing has severely injured the economic health of Ecuador’s population, especially the working poor. All of you have likely been through rolling brownouts or even the massive east coast blackout during the very hot summer of 2002. Mostly a temporary inconvenience for us. But imagine it being a daily occurrence with no idea when the government will manually shut down electricity in your place of business, never mind your home. Luckily, the authorities are beginning to publish and distribute more schedules of non-operation.

Here is just a brief list of situational examples of how Ecuador is being impacted:

• Kiva entrepreneur with a photography business forced to turn away clients because she could not print photos
• Kiva entrepreneur with a restaurant needed to close on Sunday since there was no power during daylight hours
• Long bank lines during peak hours in order to cash in government-aid vouchers with many being turned away
• Extensive automobile lines for purchasing gas during hours of electricity operation, thus pushing up prices
• Major bus accident outside Cuenca last night at dusk prior to street lights turning on for the night, taking 14 souls
• No running water in many locations during times of power rationing since they share the same electricity lines

Again, the government feels like they have a handle on the crisis now and will begin to reduce the power rationing. But until then, I think I’ll stay away from cheese and its distant cousin sour cream.

View of Cuenca from Turi Hillside

Sorry for the radio silence, but I just spent the long holiday weekend in Cuenca in the south of Ecuador up in the mountains.  What holiday, you ask?  Well, there were two holidays back to back.  The first was on Monday, Nov 2, which was Dia de los Muertos (Day of the Dead).  In Spanish-speaking countries, this is the time where families visit the graves of loved ones who have passed away and share memories of their lives in celebration.  It is commonly thought that since Halloween falls around the same time, the two holidays are linked.  According to Wikipedia and some local sources here in Ecuador, that is incorrect.  Just a coincidence.

Market Outside Catedral Nueva in Cuenca During Day of the Dead

The second holiday was on Tuesday, Nov 3, which was Cuenca’s Independence Day from Spain.  Spanish flags lined the streets of the beautiful colonial streets of the city in the days prior, and then were converted on Tuesday to Cuenca’s city flags.  In contrast to such large cities in Ecuador as Quito and Guayaquil, I found Cuenca to be a much cleaner and more tourist-friendly city.  Kimia (a Kiva Fellow in Guayaquil) and I have been traveling together on weekends to visit various spots in the country, and on the bus to Cuenca, we met a few Canadians on the way to celebrate the holidays as well.  We ended up spending much of the weekend with them and a few friends from World Teach who Kimia knew.  Definitely lots of gringos (read: Westerners) filled the streets of Cuenca that weekend, enjoying the street parties, outdoor markets and great weather.

Spanish Flags Line the Streets of Cuenca Before Independence Day

I’m heading back to Cuenca in a week or so and staying for a month working with Fundacion ESPOIR there.  That means I need to get some serious beach time in this coming weekend and take a bite out of life.  (Yes, I know, a bit staid but appropriate.)

Eating a Colombian Oblea ("Waffle") in Cuenca

Cloudy day, yes, but the sun came out two hours after I took this!

After a great night out with ESPOIR staff members Karina, Yadi and her husband in the historic downtown area of Quito, I had to wake up at 5 am today to catch my 30-minute flight to Manta at 7 am.  After downing a mini ham and cheese sandwich and a cafe con leche on the plane to get me going, I arrived with all of my things (standard backpack and suitcase) in tact and met my driver, Roger, right outside the door.  I had finally arrived at the coast with its incredibly warm waters after nearly two cool weeks in Quito (my weekend in Guayaquil aside).

A very friendly local from Portoviejo, Roger started by giving me the layout of the coastal areas with Manta as the commercial center with wonderful beaches and seafood, and of course, la Ruta del Sol (the Sun Route).  Up and down the Pacific coast of Ecuador are wonderful beaches with great weather (85 degrees and sunny daily) and in some locations, enough wind where you can go kite sailing and paragliding.  A novice surfer, I plan to try both during my one-month stay, including surfing on head-high waves!

So what am I doing on the coast for one whole month besides surfing, you might ask?  ESPOIR has its largest office here in Portoviejo in the province of Manabi.  This is where the real work begins of completing borrower interviews (verifying that their information about their loan, amount, photo, etc. all match the information uploaded on Kiva.org) and journal updates (after the loan is disbursed, we follow up with the entrepreneur to understand their progress, family updates, etc. — for good and for bad, in support of full transparency).  Today I’m heading to my first meeting with clients in a group bank (banco comunal) to interview them and post their loans up on Kiva.org with the Kiva Coordinator Monica.  Looking forward to that, and also going back to jeans and a polo (vs. biz casual in the more formal Quito office).

I leave you with a video from the Iguana Park in Guayaquil where a certain iguana got pretty uppity with me, I think, primarily due the red light coming from my Flip Mino HD camera.  You can see him staring at me and turning his head to get a better look.  I quickly turned off the camera as he started walking briskly over to me.

I’ll be back on Monday and will post photos from our sightseeing, nightlife and good eating from Guayaquil.  In the meantime, here is a view from ESPOIR’s offices in Quito on my first clear day here.

I was facing the terrace window at the time and saw a large flash followed by smoke as the ground shook momentarily on the top floor of the Comandato building where ESPOIR’s administrative office is located in Quito.  Simultaneously, we lost power, and fire alarms started to pierce our ears.  We quickly went outside to the terrace – unwisely I must say – to understand the cause.  Based on the location from where the smoke was coming, it could only have been the elevator right outside the office.  My heart sunk a bit, as I feared for any people that might have been inside (luckily, no one was).  We still do not know the cause, as this just happened less than 30 minutes ago.

Apparently, the cable broke, but the elevator had remained steadfastly in place.  I can still smell some smoke, but what I’ll remember most is the terrified look of a few individuals in the office who were being comforted by those of us who were trying to calm them down and even laugh about it a bit to ease the tension.  Even more concerning, there is a gas station next door!

I walked over to the desk of Karina – with whom I’m currently staying in a very nice, comfortable apartment in New Town – and asked her how the servers were doing since she’s been head of Systems for ESPOIR for 15+ years.  All of them were down, and the head office was not able to connect to the branch offices – a potentially serious issue when thinking about the sheer amount of data that is being downloaded and stored – tens of thousands of loans and the associated data.  We believe there was no data loss, but the staff is still in the process of verifying as the servers are now back up and running.

We quickly exited the building as the fire truck, ambulance, and police cars drove up.  After 20 minutes, we re-entered the building after the emergency support crew reassured us.

The cable broke.  I found it incredible that I was speaking to a few friends and family back home last night about my overdependence on the Internet, as both Facebook and YouTube are blocked in ESPOIR’s offices and there is no connection available in the apartment where I’m staying.  I even started a draft of that post, but when I heard that the cause was a broken cable, it reminded me that there are more important things in life than my access to the web.  As I now hear laughter and talk of where to each lunch permeating the office, I know we’ll all be fine, and that I bonded 30 minutes ago with the incredibly warm and friendly staff members at ESPOIR.

Check out Kiva.org and lend to the hard-working women of Ecuador.

Good day, folks.  My name is Zal, and this Friday, September 25, I’ll officially be anointed a Kiva Fellow for the KF9 Class bound for Ecuador working with Fundacion ESPOIR!  It’s been an absolutely wonderful experience meeting all the Kiva Fellows this week at the Kiva HQ in San Francisco, CA.

I’ve been working as a Product Manager at YouTube for the past two years and will be taking a three-month leave for my fellowship.  Previously, I spent three years at Microsoft in Seattle working on Windows anti-piracy in China and Brazil.  So, I’m very excited to be returning to South America!  After volunteering on and off for Kiva.org over the past year, the day is fast approaching for my departure to Quito, and I couldn’t be more excited.

You can find me on Facebook and YouTube, and of course, right here on the Kiva Fellows blog with more updates, videos, thoughts and experiences from my time at ESPOIR’s offices in Quito, Cuenca and Portoviejo (in Manabi).  Look forward to more ESPOIR loans, journal updates and blogs from me starting the second week of October!

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