In mid 1900s, the Dominican Republic lagged behind Cuba in terms of economic development and in poverty level (Muthayya 1990). However, immediately the Soviet regime and the embargoes imposed by the US government , poverty level increased in the country while on the other side of Dominican Republic , the government expanded its efforts in collaboration with international microfinance service providers to eliminate poverty. The Cuban government imposed excessive control power in ruling, which kept the foreign donors such as Esperanza at bay. The Cuban government imposed further strict control for the entry of the microfinance institutions in the country as most of them were under the control of foreigners’. As a result, the people who have no opportunities to exploit and earn a living were pushed further into poverty. The government has only improved the life of those near Habana, which is one of the tourist centers. On the other hand, the Dominican government extended the hand of poverty elimination in all parts of the country and it does not use excessive power to control the minds of the citizen hence all the people found it easy to cooperate with the government in eliminating poverty.
Secondly, the Dominican Republic has reduced the poverty in the country through the use of international incorporations such as Esperanza while the Cuban government used the Catholic Church in providing human aid for poverty elimination. In order to motivate the people so that they can pull themselves from poverty, a policy of Grameen bank of extending loan to the vulnerable groups such as women was adopted in Bangladesh. The microcredit services were offered at a lower interest of 2% and the first 25% portion of the loan was exempted from the charges .Through this, the people were able to obtain loans in a competitive manners and pay within the first two week. In addition to that, the people were supposed to bay back and if they failed, the group under which that client belongs was denied loan access. This led them to invest the fund and make profits which they later used to improve their standards of living. This helped the government as they paid taxes from the profits.
On the other hand, the Cuban governments failed since instead of using the microfinance to invest in the people or extend the donations inform of loan services, it used the local churches to give donation. As a result, the people became lazy and subsequently, they became dependants. This has led the poverty line in Cuba to encroach further as that in Dominican Republic diminish.
Thirdly, the Esperanza microfinance trained and educated the people on how they can invest the little amount of cash they obtain in small businesses or even in the production sectors like dairy farming and poultry. This enabled the people to make profit and develop a sense of being independent through handwork, thus elimination poverty. On the side of Cuba, the catholic Relief Service providers never educated the people on how to invest the donations .The people were given to consume and come for others tomorrow. This has made the people fail to explore the available business opportunities that can help them to walk out of the vicious circle of poverty. In addition to that, the fund was under the control of a country managers appointed by the government to monitor the distribution if cash. To add on that, the Esperanza contains numerous loan officers employed who went to the villages collect payments and secondly to assist those filling in the application forms.
According to an interview carried out between us and the Esperanza officials, 138000 loans have been extended to the poor families of which over 13914 clients have benefited and moved out of the poverty ditches. Over 32 million dollars have been issued annually since the microfinance program commenced. The fund does not miss as the fund given initially in loan forms is being paid back. In Cuba, since the Catholic Relief Services program was started, less than 26 million dollars have been distributed. A small percentage of the poorest group has so far benefited from the program. Currently, the government has cut off the program because the fund has no returns. This means that it’s beneficial to use microfinance program in eliminating poverty than to rely on donations. In order to wipe out poverty even to the sick, the institution collaborated with government to offer free credit services to the HIV/AIDS victims in Santo Domingo and Other parts of Santiago. This approach has facilitated more cooperation and harmony in the country between the government and the citizens. Thus from the field research, it was evident that microfinance have contributed greatly in poverty elimination than donations through churches by the Cuban government.
The field trip to the two countries revealed further income for poverty reduction was more wide spread in Dominican Republic than in Cuba. The Esperanza incorporation expanded the microcredit services not only in the churches but also in health centers, Non-Governmental Organization and education facilities. This enhances the spread of the information about cheap loan services for poverty reductions. People were encouraged in the institutions to rush for this opportunity and invest the fund in various income generating activities such as food sales and dairy farming. In Cuba all the donations were loaded on to the Catholic Church, which failed to tap all the poor people in the country .Those who don’t attend church missed the information. Secondly, lack of proper policy guideline on the loans services made it difficult for the church to classify the needy on the basis of their poverty level. This has led the Cubans and especially the women engage in prostitution and gambling to earn a living. This shows that proper approaches to poverty reduction are those relating extension of micro-credit services to the vulnerable groups in the society.
Moreover, the methodology used in the extension of the funds essential for poverty reduction is also very important in determining the degree of poverty reduction (Network of Economic Development Management for Asia and the Pacific, 1998). If the funds pass through the church, people may find it difficult to access them. If the fund is given inform of donations, the people will not invest and they will always go for them as they are free of charges. However if the funds are issued as microcredit facilities on certain solitary groups on the basis of no physical asset needed but be in a group of 5 people, then poverty reduction goals will be achieved. According to the field research in the two countries, it was observed that Esperanza promoted the latter methodology of income distribution to the poor. This has facilitated reduction of poverty in Dominican Republic at a higher rate than in Cuba.
In addition to the items discussed above, it’s quite essential for the government to allow microfinance institutions to provide essential funds for poverty reduction than use the churches . From the field trip, we observed that Esperanza made its way to rural areas and offer door to door banking. This means that they tap all the people regardless of where they stay. However, the Catholic Church assigned the duty to provide the emergency services did little to extend the services to the vulnerable groups’ door steps. As a result, the Cuban citizen continues to wallow in poverty amid the reliefs and donations extended to them by the government. In the door to door banking, the citizens appreciates time taken by the loan officers employed in provision training and management skills of the fund extended to them. This knowledge has greatly given them a sense of directions on where to invest the funds. The Cuban has not had this chance hence most of them are forced to engage in promiscuity to earn a living.
Lastly, there is a noted difference that the Cuban government never wants foreigners in the country and especially donors as strict procedure were found through the research analysis to have been imposed on all those institutions planning to enter the country (Banerjee, 2006). A good example we have is the Esperanza, where the government banned its service provision and entry in the country. This depicts how the government is ignorant to transform the living conditions of the citizens. It fails to recognize that the progressive achievements enjoyed by the Haiti and Dominican Republic citizens are as a result of the Non governmental institutions such as Esperanza. The government fears the organizations disclose its hidden agendas such as corruption and violation of human rights to the international community. We observe that during the field trip to the Habana town that the infrastructures and the standard of living are better. However, as we move to the Santiago town, people turn out to be weak and poor. This depicts that the government invests only in the tourist attraction sites and ignore the remote areas.