U.S. Aid Helps Peru's Small Businesses


Perched on the side of a rocky hill so dry it looks like a moonscape, Ida Ossco's house is nothing more than straw matting with brown paper walls, a corrugated roof and a dirt floor.

It sits with a few others like an outpost on the edge of the last inhabitable part of this poor Lima barrio.

The rest of the hill is too steep to build on.

Below is the vast sprawl of the city's shantytowns.

But this precarious shack is home to industrial entrepreneurs in precious metal products with international financial backing.

Ossco and her husband, Reynaldo Negra, got a $500 loan through the humanitarian group CARE to expand their business making silver jewelry with traditional Peruvian designs.

The program to encourage "micro enterprises" is financed by U.S. aid dollars.

Although a pittance by U.S. standards, the loan allowed the couple to buy materials and their own tools so they could increase production and sales to local souvenir shops. Now they dream of building a secure, brick workshop and of diversifying into direct sales.

As the U.S. Congress cuts back on foreign aid spending, it is deciding Ossco's future and that of thousands of poor Peruvians benefiting from U.S.-taxpayer dollars funneled through charitable groups.

The Peruvian government finances some of the loans, but it has scant resources of its own and depends partly on U.S. backing. European and other foreign donors also are pulling back to concentrate on added demands from eastern Europe.

Ossco and her husband have few options in Peru's class-stratified society.

They could not consider getting a normal bank loan.

"The banks have too many requirements," said Ossco, 31. "Besides, they want to work with those who have machinery. We don't work with machinery. Everything is by hand."

What they do have is ambition, willingness to work and good business sense, which impressed CARE.

"There is such an enterprising spirit here," said Kim Johnston, CARE's deputy director in Peru. "There are so many people here with such a desire to work, and if you just give them a boost they take off."

The micro-enterprise project is one of several that CARE runs to give poor Peruvians a helping hand, using U.S. Agency for International Development funds.

CARE officials say they use U.S. money to help some of the 50% of Peruvians who live in chronic poverty and the 20% in extreme poverty without sufficient food.

AID funds also go to improve health care for rural children, support more than 2,300 soup kitchens in urban slums, help feed subsistence farmers in the impoverished highlands and provide small-business loans for low-income women.

CARE is particularly concerned about the loan program. Women selected through local soup kitchens are offered loans of $50 to $100 to start home businesses like producing and selling candy or clothes.

The money comes with training to ensure that the women embark on viable ventures and learn how to handle their finances.

"This in a small way helps the household," said Maria Huaman, a mother of three who lives in a straw hovel in a barrio not far from Ossco's.

Huaman, whose husband works as a part-time laborer, used her $100 loan to begin making women's shoes with crocheted uppers. They earn her the equivalent of $14 to $21 a week.

The program has helped more than 8,000 women, who on average have increased their family incomes by more than 200%, CARE officials say.

Sandy Laumark, director of CARE operations in Peru, said helping the women helps society as a whole.

"They tend to pour money earned back into their families' education, health and well-being more than men do," Laumark said.

CARE officials hope U.S. cutbacks do not torpedo the development projects.

"We need a few more years in order to not lose the gains that have already been made," Johnston said.

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