The micro-bank that grew large

“This is really an incredible story,” says Nils Atle Krokeide, the Mission Alliance representative in Bolivia.

He leans back in his chair at the Diaconia Bank headquarters in La Paz, where he’s meeting with the bank’s general director, Ricardo Suxo; its director of finance, Juan Carlos Aramayo; and Kristian Larsen. The latter is now a senior advisor with Digni, but he also helped to launch this bank together with Krokeide and local actors. Larsen and Krokeide were sent by the Mission Alliance in the ‘80s and ‘90s. Today, Krokeide also serves as the bank’s president.

The bank has become a poster child for the adventure of development cooperation. Over the course of its first 15 years of banking operations, Diaconia has obtained around 5 million dollars in support from Digni and the Norwegian Mission Alliance. Today, the bank’s assets have grown to over 50 million dollars.

“Now this is an important bank. It’s much bigger than Norwegian regional banks,” says Krokeide.

“But this bank is different. This bank is for the poor,” says the director of finance, Juan Carlos Aramayo. He adds that Diaconia now has offices in eight of the country’s nine territorial departments.

“And by the end of 2016 we plan to be all over the country. Right now we have 58 branches throughout the country,” he says.


“We’re all created equal”

The Mission Alliance has worked in Bolivia since the 80s, but the banking adventure first began in 1991.

“Before that, we’d been working on teaching, social work, agriculture, and health and nutrition,” Larsen recounts.

“But it was frustrating to see that no matter how much we taught people about eating healthy and nutritious foods, we saw few results, because people didn’t have enough money to buy food or school supplies for their children,” he says.

And that’s how the idea of starting a bank was born. The organization wanted to help create a bank that would truly provide loans to the poor.

“Because in those days it was unthinkable that the poor could get a loan. But as a diaconal organization, the foundational idea was that God has created all people with abilities and resources. Everyone has the potential to develop these, and to take responsibility for their own lives and futures. If we want to take the seriously the Bible’s message that we are all equal, we ought to also trust in poor peoples’ sense of duty and integrity when we loan money to those who have the least,” says Larsen.


More than 115 million dollars loaned

The project was supported by Digni and the Norway Mission Alliance from 1991 until 2005. Since then, just the opposite has happened: the bank has contributed to support Mission Alliance projects in Bolivia. At the same time, new financial regulations implemented in recent years have made it difficult to transfer funds to Mission Alliance projects. Despite this, the bank has supported other diaconal projects.

“The bank’s DNA continues to be that we are a diacional foundation,” says Ricardo Suxo.

This stands out especially in the way in which the bank gives loans to its clients.

“We were probably the first microfinance bank in the world to provide credit insurance to our clients. This means that if a person dies or is incapacitated, their debt is cancelled. In this way we ensure that individuals who are left as their families’ sole breadwinners are not stuck paying off someone else’s debt.”

The bank also carefully reviews whether potential loan recipients will really be able to administer their loan.

“Loaning money to people who won’t be able to pay it back is not a diacional action,” Krokeide emphasizes.

The bank’s clients, on the other hand, have been very responsible. In recent years Diaconia’s default rate has been around 1.5 percent, which is very low compared to industry standards.

“All told we’ve loaned more than 115 million dollars,” Juan Carlos explains.

A dream of building stables

A small loan was what helped David Machaca Mamani to escape poverty.

“Here you can see my and my family’s livelihood,” says Mamani proudly as he points to some ten cows grazing on the plains on the outskirts of El Alto, Bolivia.

Farmer David Machaca Mamani

The vast prairies are situation nearly 4,000 meters above sea level. Despite the altitude, the area is good for dairy production, according to this experienced farmhand.

“I was interesting in obtaining income. That’s why I wanted to start doing agriculture. I asked around to find a back that could offer the lowest interest rates, and I heard about Diaconia,” he says.

“The first loan I got was for about 400 dollars. I bought a cow and sold milk. After a few months I was able to pay back the loan,” he says.

But Mamani wanted to extend his operations. After applying for a new loan, gradually he sold cows and obtained new loans.  Today, milk sales are the primary source of income for his entire extended family.

“I make my payments to the bank diligently. I feel like the bank employees have a lot of goodwill and understanding for people like me,” he says.

“When I’ve paid off my current loan, my dream is to build a stable for the cows. It’s hard to be a farmer, but there’s no doubt that this has improved my life. Now we use our time to take care of our animals. That’s what we we’ve dedicated ourselves to doing,” he says.