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Travel Wise

Banking on Bulgaria's Gypsy businesses

Seattle Times staff columnist

Making lending easier

Microfinancing — the making of small loans to entrepreneurs in poor or developing countries — isn't new, but use of the Web to connect individuals and borrowers takes online social networking to a new level.

Since starting up a year ago, nonprofit Kiva, which means "unity" or "agreement" in Swahili, has worked with 75,000 individuals to broker $7.6 million worth of loans to 11,500 entrepreneurs in 33 countries, from Ecuador to Iraq.

Neither Kiva nor the lenders collect any interest (administration costs are funded by donations). Borrowers pay interest to Kiva's partners — 48 microfinancing institutions around the world — who identify businesses in need and arrange the loans. In Iraq, Kiva works through an organization in Kirkuk funded by USAID. Investors can loan as little as $25, money they can recoup when the loan is paid back (the default rate so far is under 1 percent), or reloan.

Most people connect with their borrowers through updates on, but Kiva and its partners will help travelers arrange personal visits.

"Fundamentally, it's all about knowing where your money goes and who it's helping and actually following that person," says Kiva president Premal Shah, 31, a former PayPal executive.

Global Giving ( does similar work, but focuses on donations rather than loans.

Carol Pucci

SLIVEN, Bulgaria — Shortly before leaving on a trip to Eastern Europe, my husband and I did something that would baffle any traveler who's been approached at a train station in Rome or Paris by women in flowing skirts, cradling babies in their arms and begging for coins.

We loaned money to Gypsies.

Meet our new business partners, Diana Beleva, 26, a traveling sock saleswoman; and her brother Todor Belev and his wife, Silvia, who make a living selling firewood in the Balkan mountain town of Sliven.

In their T-shirts and ball caps, they look no different from most Bulgarians. But they are Roma, an Eastern European ethnic minority more commonly known as Gypsies.

First migrating from India to Turkey around the 11th century and later into Eastern Europe to find work, the Roma still live on the fringes of society, often in separate neighborhoods called "mahalas" or in hillside camps. Resentment against them is openly expressed.

"Eat, drink, babies, go," is how one Bulgarian I met described his impression of the Gypsy lifestyle.

It's true that many do move from town to town looking for work, or get by on welfare. Some show up at train stations with their children to beg or steal.

Many more — Diana, Silvia, Todor and others like them — are settled in towns like Sliven, the sock-manufacturing empire of the Soviet bloc until the communist government fell in 1989 and most of the factories closed.

They want to work, send their children to school and build a future.

Enter After working in East Africa, Stanford Business School students Matt and Jessica Flannery founded the San Francisco-based Web site a year ago. Their aim: to forge one-on-one connections between individuals with a few dollars to spare and entrepreneurs in developing countries in need of a banker.

Through Kiva, we made interest-free loans of $25 each to Diana and to Silvia and Todor whose pictures, bios and business plans were posted on the nonprofit's Web site. Then on a recent trip to Bulgaria, we veered off the tourist route to visit our new partners and see how business was going.

Getting involved in microlending, we found, not only makes for an interesting business proposition. It makes for good travel.

Banking on the future

Bulgaria is filled with interesting towns and villages that don't get much mention in the guidebooks. Sliven is one I probably would have missed if it weren't for the Kiva connection.

"To most Bulgarians, Sliven is notable for two things: the wind and the Roma," says U.S. Peace Corps volunteer Greg Kelly, who helped arrange our visit.

Halfway between the capital of Sofia and the Black Sea coast, Sliven attracts hikers and skiers to a mountain area called the Blue Rocks. Mainly, though, it's a middle-class town of about 125,000 that's prospered in the post-communist era with new shops and a small technical university. Life centers around a shady pedestrian mall lined with cafes and outdoor lounges furnished with living-room-like furniture and coffee tables.

A few blocks away, in a former prison built as a factory in 1834 by the Ottoman Turks, are the offices of Kiva's Bulgarian partner, the Regional Economic Development Center (REDC), a microcredit organization funded by Hungarian-American businessman George Soros.

"The reason there are so many Roma in Sliven is that they were recruited from Turkey to work in the factory which at that time made military uniforms," explains Nikolay Sidjimov, REDC's director.

"Everyone worked during the communist times, even the Roma," says Sidjimov. When the factories closed, many found they had no marketable skills. Unemployment is high among Bulgarians and even higher among the Roma. "It's very difficult to convince them [bankers] that these people need something to start with," he says. With bank interest rates between 30 and 40 percent, the alternatives for most Roma are loan sharks who charge 100 percent or more.

Socks and firewood

Dressed in Capri pants and a pink T-shirt with "New York" stenciled across the front, Diana is a mother of two with the take-charge look of a successful businesswoman.

It was Saturday, her day off, when we met at REDC's office and walked down a dirt street to the concrete-block-and-brick house she shares with her husband, next door to Silvia and Todor in the better of Slevin's two Roma neighborhoods.

Diana worked in a canning factory for a while, tried baby-sitting, then started her sock business five years ago. Her business plan is simple: She buys socks from local factories for about 35 cents a pair, and travels in a chartered minivan to outdoor markets four days a week where she sells the socks for 70 cents, undercutting the regular stores by half.

She nets around $150 a month, a decent amount in a country where the average income is $250, but she knew she could sell more if she had the cash to stock a broader inventory of styles.

In April, she became one of 35 business owners in Slevin — bakers, barbers, musicians and others — to benefit from Kiva loans. Thirty-two lenders in all, including an Oregon author and a Seattle bus driver, chipped in various amounts to help Diana raise $1,000, money she'll pay back over the next 12-18 months at no interest to us or Kiva and at 10 percent to REDC.

She's using the loan to buy more socks, replace her hand-lettered cardboard sign and buy an awning to replace the plastic tarp she uses when it rains.

"Here in Bulgaria, you could not find anyone to help you out like this," she told me when we met.

Diana's brother Todor, 30, and his wife, Silvia, 25, ball caps shading them from the sun, seemed as proud of their new electric saw as they are of their 11-month-old son.

People cook and heat with wood, and stock up during the summer months. This is the busy season and Todor and his father are cutting wood 10 to 12 hours a day while Silvia goes door-to-door drumming up business.

Most of their business used to come from parking their truck along the side of the road and waiting for customers. Now, with proceeds from a $750 Kiva loan, they are generating regular clients by cutting wood to size and offering free home deliveries. They had a new corporate logo stenciled on their overalls and have begun to advertise.

A neighborhood of hope

Kelly, 30, a California investment banker who joined the Peace Corps in 2005, had been working with REDC for two months when he heard about Kiva's loan program. There were plenty of organizations willing to donate money for Roma projects, but nothing seemed to be having much impact.

"Handouts weren't working," says Kelly, recalling how in the other of Slevin's two Roma neighborhoods, a rundown ghetto called Nadeshjda, he found toothbrushes still in their packages scattered on the ground. "I was quickly realizing that these people didn't need another foreigner handing out freebies; they needed the opportunity to change their lives."

Kelly's co-workers were skeptical.

"You know these Gypsies," one said. "They're very tricky. You lend them money today, you won't be able to find them tomorrow."

Walking through the ghetto is a little like crossing the border from Arizona or California into Mexico. About 20,000 of Sliven's Roma live here, literally on the other side of the railroad tracks, separated from the main part of town by walls on three sides built in the 1960s.

People careen around in carts pulled by horses or get around on small one-speed bikes. Concrete-block houses line dirt streets, some with no windows, others with satellite dishes. What passes for a "store" might be an open-air porch lined with a few bottles of beer. Many homes have no running water.

Nadeshjda is the Bulgarian word for "hope." That's an odd word to describe this neighborhood, I thought. Then I met some of the people who live here.

One is Radka Borisova, 30, a Kiva borrower whose son, Boris, 11, is a star in Kelly's English class. She and her husband run a walnut-cracking business. He drives all over Bulgaria buying walnuts in shells which they crack and then sell to processors. They usually have to wait until they get paid to buy more nuts. Now they can replenish their supplies right away, and business is up between 20 and 30 percent.

Another is Angel Isaev, 30, Kiva's first borrower in Sliven.

Turned down by six banks after losing his job in a bike-repair shop in town, he applied for an $850 Kiva loan to start his own shop in the four-room house he shares with his mother and brother.

The owners of a local hardware store refused to serve him on his first attempt to buy tools, Kelly recalls. He's since paid off the first loan, and is onto his second, using the cash to buy welding tools to start a business building window and door frames.

We found Angel kneeling on the ground hammering a window frame when we stopped by to talk. He wiped his hands on a rag, shook our hands and went to get one of his business cards.

He's proud of his new tools, and anxious to get going on his next project, a workhorse version of a bicycle built for two.

Most of all, he seems full of hope. So does Kelly, who is ending his Peace Corps stint this summer. One borrower disappeared, as his co-worker predicted, but the others are repaying. Todor and Silvia surprised everyone last week when they walked into REDC's offices and repaid their entire $750 loan 15 months ahead of schedule. We and all the other lenders have been repaid.

How did they do it?

"It was all hustle," says Kelly. "I see people like Todor and Silvia and Angel, and I am reminded that with a little capital, these people have been able to change their reality."

Carol Pucci's Travel Wise column runs the last Sunday of the month in the Travel section.

Comments are welcome: 206-464-3701 or

Copyright © 2007 The Seattle Times Company


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