The Solutions to Poverty and Unemployment Will Look Something Like This: An Interview with Rachel Cook

Rachel Cook is a friend of mine from college who let me interview her about her upcoming film, currently titled the Microlending Film Project. Rachel shot footage for Kiva - an awesome organization that has stoked the fires of entrepreneurship in Africa, Southeast Asia, and around the world, and is now stoking the fires of entrepreneurship here in America:

    

The Microlending Film Project (film title TBD) was conceived as a passion project by Futures Trader turned Director/Producer Rachel Cook after she read a Nicholas Kristof op-ed in The New York Times late one night at a Chicago trading desk.  The article was about how empowering women in the developing world with tools like microfinance can bring about positive, sustainable change (Saving the World's Women).

The project has been undertaken with the best interests of poor women at heart, as the film seeks to show a balanced, comprehensive picture of microfinance through the lens of the personal stories of the women it impacts. The issue of transparency and its paramount importance to the industry is a key focus, as is showcasing best-practices and suggesting how microfinance can most effectively be used as one development tool in a larger box both domestically and abroad, specifically in terms of the opportunities mobile banking and crowdsourcing promise.

The Microlending Film Project is holding a DVD pre-sale and offering other perks to raise funding for post-production.  To view a trailer and/or purchase a DVD, please follow this link: http://www.indiegogo.com/Finishing-The-Microlending-Film-Project?a=238586&i=addr

       

The filmmaking crew is also actively seeking out investors at multiple levels. If you have an interest in learning more about investment opportunities in the film, please contact Rachel Cook at rachel at microlendingfilm dot com.

   

Anyways, here comes the interview:

    

Christopher Carr: How did you come to where you are now? Describe your life after graduating from college. How did you choose your current path? Where do you see yourself going after this?

     

Rachel Cook: I knew I wanted to do something involving writing and film, and after studying for a semester in Los Angeles junior year at Duke I knew I hated that "city". I'd heard about Second City/iO and all of the comedy writers and performers it had produced, people like Bill Murray, Chris Farley and Tina Fey, and studying there seemed like it provided more of a sort of clear path than would toiling in obscurity somewhere else, so I moved to Chicago. While there, I picked up an equities trading position to pay the bills, and I took a ton of improv classes and put on a few shows.

   

While it was gratifying to put on a show and have 30 people come, or even say, 5, obviously film can reach a much larger audience, so I think that notion was percolating in the back of my mind through the Second City period. Meanwhile, a few years in to my Chicago tenure, I started trading Futures on the European shift, which was in the middle of the night of course, Chicago time.

  

The trading environment was so surprisingly sexist that it really affected me. I worked at four firms total - three in Chicago and one in Manhattan - and I was always the only girl trader, or one of a few. It was definitely one of the last bastions of old school sexism and it was infuriating and upsetting. So I guess that's why, one night in September 2009 when I came across a Kristof op-ed in the NYT about the positive impact of microfinance globally, particularly on poor women, that I immediately felt compelled to text my sister and tell her that I was going to make a film on just this topic. Microfinance appealed to both my feminist sensibilities, and to the interest in good investment I'd cultivated while on the trading desk.

   

From there, it was just a matter of figuring out how the hell to make a global feature film, because I definitely didn't know how to do that, and we ended up shooting on four continents. In hindsight, I'm glad that I was arrogant and ignorant enough about the process to take all of this on; and it's grown from here. I quit the trading job I was working in Manhattan in November of 2010 and started working on the film full time, and we just wrapped principal photography this past week in Detroit, so we'll be heavily editing from here on out.

  

Going forward, I plan to collaborate with Duke and the iHub, a shared start-up space in Nairobi that we discovered when filming, to launch a social gaming application that facilitates mobile-to-mobile microlending across continents. It's in its very early stages, but we have high hopes.

  

Christopher Carr: So, it's safe to say you're a microfinance believer. A lot of controversy has come about recently around Nicholas Kristof, who supposedly fabricated a lot of his pro-microfinance columns. Do you think the ends justify the means? Also, could you elaborate on how microfinance appealed to your feminist sensibilities?

  

Rachel Cook: Yes, from what I've seen, it mostly works, and the offer of an alternative method of financial access that it presents is a good thing. Though I haven't come across accusations of Kristof specifically fabricating pro-microfinance columns, I know he's been criticized for oversimplifying issues relating to development and resultantly misrepresenting large, complicated problems.

   

What I know of Kristof's response (and I'm paraphrasing/summarizing of course) had to do with the contention that in the interest of advancing public knowledge and involvement in development issues, telling a single, powerful story that sheds light on a particular situation because it incites empathy for the person or the people it impacts can bring about political and financial support for an important human rights issue that wouldn't necessarily otherwise exist, and that that has value. I agree with this idea.

  

Trying to elaborate on my statement about microfinance appealing to my feminist sensibilities is difficult to answer because the answer is complex; it's hard to distill into a few paragraphs. I don't think I had a conscious awareness of sexism prior to college - coming from a small town in Ohio, and being the "smartest kid" in my class or whatever helped me to avoid some of that shit, at least on a more sort of conscious level - but leaving that and first coming into contact with rich 18-year-old boys who were entitled and presented themselves as "super smart" and were into making girls less obnoxious than they were feel silly or stupid was really jarring, and took me years to process and become equipped to combat, in a way.  That was probably my official introduction to sexism.

  

And unsurprisingly, in the trading world, it was sort of rampant in a way that was crazy to imagine still existed in 2008 - I sometimes felt like I was on the inside of some terrible fraternity and my female presence wasn't enough to stop any sexist awfulness they were inclined to, so they behaved in appalling ways and I just sat there on my machine staring at gold ETFs or whatever and had to witness it.

   

So yeah, I guess I was primed to respond strongly to the first sort of pro-feminist, effective-sounding development tool, any pro-feminist anything, really - and when I came across that article while actually sitting at my trading desk, and it talked about how microfinance has the capability to transform a woman's life, to give her a voice within her household, to stop her from getting beatings from her husband because she's now a viable source of family income, whatever, I was like, yeah, this is important.  I want to be involved in something that has the potential to do this.

   

Christopher Carr: Can you give us some examples of how microfinance has the capability to transform a woman's life?

   

Rachel Cook: The example that immediately comes to mind is the one Kristof wrote about that inspired this project, which was actually a part of the excerpt from his book. To paraphrase, it was about a Pakistani woman named Saima whose husband had gotten the family deep in debt, something like $3,000, which seemed like this amount that it would take the family generations to pay off. And the husband was unemployed and took out his frustrations on her, often beating her. Once she took out a microloan and started a successful embroidery business, she was able to pull the family out of debt surprisingly quickly, and largely because she was now the family's breadwinner, she commanded a lot more respect within her family and in the community at large, and her husband stopped beating her. So stories like that I think can be very powerful, although this is an ineloquent retelling.

   

In terms of what we've seen ourselves when filming, there were stories like those of Pablina Portillo, the women we spent time with in Paraguay. Her youngest son had a tumor on his abdomen, and the family spent all of their savings to cover his medical expenses (luckily he survived and is now very healthy), but after that they weren't sure what they'd do to stay afloat. But because microloans were available to her, she was able to launch a successful business selling sweetcakes at a roadside stand outside her home, and the family got back on its feet. Beyond that, because of her relationship with the microfinance institution that had initially given her the loan, the Fundacion Paraguaya, she was made aware of a local agricultural boarding school, and her daughter Antonia was able to win a scholarship to attend there. Antonia now learns progressive farming techniques that she brings home, which helps out her parents. So the positive impact here spanned generations.

  

And even in Detroit, for instance, to place my response to this question in a Western context, taking out the $2000 loan from Kiva that Emily Thornhill of Homeslice Clothing took out this June has resulted in lots of free publicity for her business, and lots of excitement surrounding entrepreneurial and creative efforts in a beleaguered American city. I mean, in no small part because of what I saw microfinance doing in Detroit, some of the ripple effects of that, I came away in love with the city. So the positive effects of successful microentrepreneurship can not only impact women in sometimes incredible ways, but they can add a certain shine to a community in a very palpable way as well. I actually plan to launch a Kiva City in my own hometown of Canton, Ohio, which is similar in make-up to Detroit in many ways, in conjunction with the screening of the feature there next spring, and I'm excited about what this could do for my own economically troubled area.

  

And then there's the flipside, which we saw a lot of in India, in which the institution of microfinance was failing the women it had purported to help. But that's another story.

  

Christopher Carr: Can you tell us a bit about the failings of microfinance, where it has to grow as a field, what kind of future you see for it, and how it compares to public measures like welfare or aid?

   

Rachel Cook: The failings of microfinance, given what I've seen, tend to have to do with a lack of access - supply not meeting demand - or with government interference, as in India and Bangladesh. In terms of lack of access being an issue, it's not like Yunus invented the idea of giving out $27.00 to a poor person in 1976 - global communities around the world had been finding ways to finance things for much, much longer, it just wasn't formalized, and lending on that scale wasn't something that interested banks. But in modern times, when someone can't get a loan from a microfinance institution because they can't get a group of ten people together to apply and that's a requirement, or because the government has shut lending in their state down, that person will often have no choice but to turn to a loan shark, who may charge upwards of 50% interest, and who may use any of a number of unscrupulous methods to later collect.

  

Another problem that I think was hugely significant in the failing of the big for-profit microfinance institution, SKS, and the subsequent shutdown of microlending in Andhra Pradesh had to do with the product they offered being a solely financial thing - they just made loans. In that sense, they operated just like a bank, and very differently from many microfinance organizations the world over. There wasn't any assistance in the design of business plans, any mentorship, and the group lending model was less emphasized, so people didn't feel the peer pressure to repay that they would've felt if they were taking out a loan of with their mother, their sisters, and their neighbors. There wasn't the sense that they'd really be letting someone down if they didn't do their part to repay, it was just a faceless bank, and they didn't feel they were being partnered with in their microbusiness initiatives.

  

And then, when people started hearing about the suicides and they were so widely publicized, people were told that they didn't have to repay. We interviewed the head of SKS, Vikram Akula, and he was adamant that his company was a victim of "state brutality", that the government had played the key role in the problems SKS was having. I don't know how much truth there is in that, but certainly the supply of loans was limited by government intervention, while demand remained high.

   

In terms of the direction it has to grow in as a field, issues of transparency are big - there's no real standardized metric for the determination of what interest rate is actually charged on a loan, it's often this insanely complicated formula, and one institution that says it charges a 25% interest rate in Bangladesh versus one that says its charging the same in Uganda may in fact be financing these loans at wildly different costs, and not necessarily telling its customers this. The other for-profit MFI that was founded before SKS (It was really the first large-scale for-profit.), Compartamos in Mexico, was charging over 100% according to the Microfinance Transparency Initiatives data, and the CEO of that company is now a billionaire, and they were obviously not publishing this data back in 2007 in a transparent manner, but they also weren't required to by any central regulatory agency because there literally wasn't any, and that has to change.

  

In the future, I think microfinance will become increasingly mobile-to-mobile, which is already happening in East Africa. There's a company called Musoni, a very new MFI, that is the first in the world to microlend 100% via mobile phone, and I think person-to-person lending that operates on a similar platform is sure to follow. In this way, it'll become cheaper - what people often don't realize is how expensive it actually is to amortize these tiny loans - and because mobile phone usage is becoming more and more popular in the developing world, people who need these loans will be able to find them. In Paraguay, for instance, at least as of 2010, there was something like six million people, and 6.6 million mobile phones.

  

We saw amazing things in Nairobi - people use their cell phones like debit cards, people living in the slums would buy tomatoes at an outdoor market and pay via text message. In five years, Nairobi may very well be a global tech hub, and I think microfinance will be a huge part of that.

  

I don't think microfinance really compares to public measures like welfare or aid; as Matt Flannery, one of the co-founders of Kiva said in a talk he gave at the Kiva City launch in Detroit, "microfinance isn't a sophisticated financial commercial instrument, but it's not charity either." I think that's right; microloans are simple loans, but they're loans, and people who receive them pay them back at statistically incredibly high rates. So that lends itself to greater efficiency as well; aid dollars may be more likely to be used in less efficient ways, but the level of accountability that traditionally is extended with a microloan sort of cultivates a different attitude among the people receiving the money, and I think that is largely a very good thing.

  

Christoper Carr: We've been hearing recently about the end of poverty, the paradox of thrift, globalization, specifically of commodities and finance, and it seems like all of these forces meet at microfinance. Do you think microfinance has the power to create a new, organic, bottom-up world order? And, if so, would microfinance supplant traditional economic arrangements like apprentice systems and barter markets? Is that even a bad thing? Or is it all so complex and so different from place to place that nothing can really be generalized from it? 

   

Rachel Cook: I would agree that all of these things you're mentioning seem to meet at microfiance, and though some people may be interested in pushing the narrative that microfinance has the power to create a new bottom-up world order, I would argue that a more precise description of what it does is that it presents an alternative, certainly more democratic means by which to access capital - so in essence, it offers the world more options for financing, and in that sense I think it sort of broadens the applications of capitalism rather than knocking that world order over on its head. It is, by definition, inclusive, so everyone can join in and reap certain benefits.

   

But I would, however, strongly argue that microfinance has the power to play a key role in toppling certain elements of the "cultural world order," if you will, that are overly patriarchal and oppressive of women. Additionally, if people are to become convinced of Yunus's claim, that access to credit is an "inalienable human right," than I suppose it could be argued that microfinance goes so far as to expand the general conception of what it means to be human. That's a pretty powerful thing for $25.00 to do.

   

I don't think microfinance will supplant traditional arrangements like barter systems, etc. - it can co-exist peacefully with other aspects of economics and perhaps even enhance them. But yeah, while its applications differ in marked ways from place to place for sure, I think the generalizations above can hold - microfinance can help women, and it absolutely makes capital more accessible to people who wouldn't otherwise have a chance at finding any, which is in and of itself a transformative thing.