By Deborah Van Hoewyk
In 1976, amidst crushing poverty on the other side of the world, an idea popped up. Muhammad Yunus, born into the British Raj in 1940 in what is now Bangladesh, was an economist with a crazy-quilt professional background. An academic, a social activist, a banker, and more, Yunus went out one day to visit the poorest households in rural Bangladesh. He found women making bamboo furniture; to buy the bamboo, they took out money-lender loans, but the interest rates were so high, the women earned practically nothing, despite all their work.
Lending to the “Unbanked” – and to Women
As a banker, Yunus knew that conventional banks would not make tiny loans at reasonable interest rates to the bamboo workers – the banks did not believe these people capable of paying back a loan.
Enter the idea, and what an idea it was! Microcredit – tiny loans for tiny businesses started by people so poor they’d never even been inside a bank. Yunus adapted the idea of lending circles – groups of women were issued the loan, picked the recipient out of the group, and members supported her in making sure her business did well enough to pay it back. Then it was someone else’s turn.
Over the next six years, Yunus would reach 28,000 microenterprise borrowers; the program became the Grameen Bank (“village bank”). Together, Yunus and the Grameen Bank were awarded the Nobel Peace Prize in 2006. The idea swept the social and academic world of poverty alleviation – microenterprise development was an innovative, sustainable path out of poverty. Today, 97% of Grameen borrowers are women; the repayment rate is 99.6%.
Why women? To Yunus, it was obvious that poverty inflicts greater stress on women, and when women make money they spend it first on their business, then on their families, and finally on their future. Pro Mujer is a U.S.-based women’s development organization that works throughout Latin America; in Mexico, it operates from Mexico City east to the state of Veracruz. Their research shows that Mexican women reinvest 90% of their income in their families and communities. Men? A measly 40%.
Born in the U.S.A., Bred in Latin America
Back on this side of the world, an organization called ACCIÓN International took shape fifteen years before Yunus came upon the bamboo furniture makers of Bangladesh. In the late 1950s, jumping the gun a bit on President Kennedy’s Peace Corps, a Berkeley law student named Joseph Blatchford undertook a thirty-stop goodwill tour involving tennis (he was an ace) and jazz, meeting with youth across South America in an effort to create cross-cultural understanding. He set up a volunteer “Youth Force” dedicated to international service in 1961, establishing ACCIÓN International in 22 barrios across Venezuela.
With the philosophy of listening to what local communities wanted to do, Acción volunteers helped build schools and water systems and health centers, giving people the tools they needed to help themselves. The United States Peace Corps started doing the same thing by the end of 1961; after eight years of expanding ACCIÓN International beyond Venezuela to Peru and Brazil, Blatchford went home and became Director of the Peace Corps. ACCIÓN International became just Accion and started focusing on microlending. In less than five years, Accion’s program in Recife, Brazil, made 885 small loans; those businesses employed 1,386 people.
Based in Cambridge, Massachusetts, Accion began to build a network of financial institutions willing to lend to the poor. The great majority of microlending is conducted through the lending-circle model (now also called a “communal bank”). The networking strategy allowed Accion to expand its microfinance programs to 14 Latin American countries – Mexico among them.
In Mexico, Banco Compartamos (the “We Share” bank) opened its doors in 1990, and Accion invested. Accion also partners with CrediConfia in east central Mexico (Mexico City and the states of Mexico, Hidalgo, Puebla, and Michoacán), as well as the online microfinance platform Konfio, which started up in 2016. There are branches of Banco Compartamos in the Huatulco area in Chahue, Santa María, and Pochutla. Moreover, Oaxaca is almost unique among Mexican states in having a growing universe of credit unions (casas de ahorro, caja popular), often located in remote locations and quite willing to set up lending-circle-type financing. The biggest credit union, Caja Popular Mexicana, has branches in La Crucecita and Santa María.
The Microfinance – Microenterprise Development Connection
Mexican statistics indicate that very large businesses (over 250 employees) make up less than 1% of all Mexican businesses. The remaining 99% comprises medium (51-250 employees), small (11-50), and micro (1-10) businesses. The microenterprises are about 94% of all businesses and provide half of all the jobs in Mexico.
What does it take for a woman to get started on her own business? Here we should note that microfinance and microenterprise development are not the same. Microfinance provides a key tool for business expansion – without money, even if a business owner only needs enough money to stock 20 more scarves in her shop, there is no growth. Starting up a microenterprise is something else entirely. Like poor women everywhere, Mexican women face institutional barriers to getting financing, and the pathways to education and training are often blocked. But they also face cultural barriers.
Gender discrimination in Mexico is far more explicit (and can be extreme, see the article “Hits, Blows and Coffins,” on page 18 in this issue) than in other countries. Sociologist Gina Zabludovsky Kuper, from the National Autonomous University of Mexico (UNAM), researches gender and power, and has written extensively about women as entrepreneurs and executives. In terms of microbusinesses, Zabludovsky Kuper points out that there’s a cultural perception about “women who start microbusiness in order to contribute to the family economy or get out of poverty” – they have to stay at the micro level because “their work is only viewed as auxiliary”; the women themselves often buy into the notion that just being a sideline business “is what is reasonable for them.”
Microenterprise – Making It Work
Nonetheless, in some places in Mexico, the programs to train and encourage women do come together with microfinance institutions, and women-owned microenterprises do start up and succeed.
The Mexico City nonprofit Crea Communidades de Emprendadores Sociales is typical of a microenterprise development organization. It offers programs to empower women entrepreneurs with training in business skills, technical assistance, and business support; it also brings participants into a support network for each other. It serves central Mexico (CDMX, and the states of Mexico, Aquascalientes, Guanajuato, and Querétaro), offering online services across the country as well.
From 2002 to 2006, the W.K. Kellogg Foundation in Michigan funded a program in Oaxaca called Yo Quiero, Yo Puedo … Empezar Mi Propio Negocio (I Want to, I Can … Start My Own Business). Yo Quiero arose out of a women’s health initiative founded in 1985, added life-skills training in 1990, and started Yo Quiero, Yo Puedo as a school-based self-efficacy intervention in 1996. With Kellogg Funding, the microenterprise program served 600 rural women, started 17 bancos communal and 300 women-owned businesses, and had a 100% loan repayment rate. It included training 25 “social promoters,” who continue to run the program in Oaxaca, and have added a youth microentprise program that serves Oaxaca, Puebla, and Michoacán.
South of Oaxaca City, Villa de Zaachila is the site of the largest landfill in the state. A project named Mujeres A.V.E. supports solidarity networks for women to help them start and grow microenterprises that support their families and contribute to the community. Organized by the SiKanda Foundation (Oaxaca) and supported by the British Cherie Blair Foundation for Women, among others, Mujeres A.V.E. helped 45 women build the skills to strengthen their businesses and access new markets in its first year of operation (2018).
See for Yourself in Oaxaca!
There’s a new way to learn about Mexican microenterprise – visit one. Independent women micro-entrepreneurs, along with long-standing family businesses, abound in the craft towns around the state capital, Oaxaca de Juárez, and at least a couple of travel companies will arrange a tour for you.
The online Spanish travel company Authenticities (www.authenticitys.com) has a tour specifically focused on the entrepreurial women artisans – weavers, chicken-raisers, flower-growers, tamale-makers, potters – who participate in a micro-finance program to which Authenticities contributes.
Fundación en Via, which itself runs microfinance and microenterprise developments programs (https://www.envia.org/microfinance-tours), takes you to visit microenterprises where the owner is ready for her next En Via loan. The tour takes nearly all day, visits two communities, and gives the owners the chance to show you what they do and explain how previous and upcoming loans have helped build their businesses.