A $140 loan enabled Irma Rojas Ayala to start a business out of her home making and selling doughnuts and tamales in this rural village about an hour and a half northeast of the capital.
Rojas’ earnings have bought her a new washing machine and clothing for her three children. Now, she is thinking beyond her kitchen. The fledgling entrepreneur is studying for a high school diploma and dreams of opening a bakery or full-service restaurant.
“I feel happy. Independent,” said the 30-year-old, who said she was rebuilding her confidence after her estranged husband beat her so savagely when she was pregnant that she lost their fourth child. “My family can see the change in me.”
Rojas obtained her seed capital from Pro Mujer, a small, new microcredit organization in Mexico.
She is one of an estimated 100 million people, mostly women, around the world who have access to microcredit programs that typically provide very small loans, training and peer support to the poor to help them start or expand self-employment projects.
Pro Mujer, the nonprofit group whose name in English means pro-woman, provides entrepreneurship training that teaches borrowers to recognize value in themselves as well as their businesses.
The program also helps bring basic health services such as cervical exams to women who routinely put other family members first.
Pro Mujer in April received a $3.1-million grant from the Bill & Melinda Gates Foundation, which recognized that boosting the skills and earning potential of women, the primary caregivers, is key to breaking the cycle of poverty in developing nations.
“Poor women in Latin America are very much second-class citizens,” Lynne Patterson, co-founder of the organization, said in a telephone interview from Pro Mujer’s headquarters in New York. “We are committed to helping [them] develop their human potential as much as their economic potential.”
A former elementary school teacher in Long Island, Patterson started what would become Pro Mujer in 1990 after moving to Bolivia with her husband, who had been transferred there on business. She found work as a consultant, providing child development training to women who were receiving food aid for their youngsters through a government program.
Patterson said she soon discovered that her clients didn’t want handouts but a way to earn their own money. Most desired self-employment but lacked capital and basic skills such as bookkeeping.
Patterson teamed up with Carmen Velasco, a fellow educator and native Bolivian, to scrape up grant money for loans and entrepreneurial training. And so, Pro Mujer was born.
Today, the organization serves nearly 140,000 clients in Argentina, Bolivia, Mexico, Nicaragua and Peru. It provides them with loans averaging about $150 and bank accounts through other financial institutions so the women can learn the discipline of saving. Mexico’s program began in 2002 and has grown to about 16,000 borrowers and savers.
Sylvia Mathews, a director at the Gates Foundation, said the organization “sees Pro Mujer as a leader in providing financial services to very poor communities.”
“We want to support their work in creating innovative new ways to expand the outreach of those services to underserved populations so that the very poor can improve their own lives,” she said.
Pro Mujer is tiny compared with Mexico’s largest microcredit organization, Compartamos, which last year served more than 400,000 clients. But there is plenty of room in the country of more than 100 million people, the vast majority of whom are excluded from a banking system that caters mainly to the well-to-do.
Lack of credit is one of the greatest drags on Mexico’s development, stunting business growth and formation. Pawnshops are the only financial institution willing to give many low-income Mexicans a loan.
Enter microcredit. Pioneered by the Grameen Bank in Bangladesh in the mid-1970s, microcredit provides loans to the poor to finance income-generating activities rather than consumption. And it rejects the notion that people aren’t creditworthy simply because they don’t have many assets.
Instead of collateral, microcredit organizations typically lend to people based on little more than trust. It does this by putting them into small groups, or “lending circles,” that agree to share the financial burden if one of the members doesn’t pay.
Installments are tiny but borrowers must pay on their loans frequently, often once a week, so that members usually know quickly who is falling behind. New loans become available only when the group’s current obligation is paid in full.
Peer pressure is particularly strong in rural towns such as Teacalco, where gossip spreads quickly when someone isn’t carrying his or her load. Pro Mujer’s default rate in Mexico is about 1.1%, well below the microfinance industry average of 4%.
“Your word is your bond,” said Maria Guadalupe Islas Camargo, coordinator for development services for Pro Mujer. “These women know that their reputations would suffer.”
Yet Islas said it was fellowship rather than fear that brought the Pro Mujer clients of Teacalco together once a week for training and loan repayment. Life in rural Mexico can be isolating, particularly for poor women with lots of children, no transportation and cultural expectations that they should stick close to home and hearth.
On a recent Friday, a group of 33 borrowers calling itself Confetti gathered at a municipal building in Teacalco. Young women with babies tied to their hips with colorful shawls laughed and chatted with middle-aged grandmothers.
Most are vendors, selling food, handicrafts and clothing in area markets. As children darted around the room, the women plucked small bills from coin purses, pockets and brassieres and approached a long wooden table where team leaders were gathered to take the roll, note the loan payments and tally the cash.
The paperwork involved is partly why traditional lending institutions can’t be bothered with such tiny loans, even at annual interest rates that top 70%. And the program’s entrepreneurship training wouldn’t be found in most business school textbooks.
A quick game of charades led by Pro Mujer trainers to break the ice led to a discussion about the struggle for dignity in some clients’ households. Asked to name the types of abuse that can be inflicted by a partner, the women quickly shouted: physical, sexual, emotional, verbal and economic.
Half raised their hands when asked whether they had been subjected to mistreatment by their spouses.
Luisa Martinez Aviles, a tough-talking 40-year-old, laughed dismissively as she told of a husband who refused to buy her a birthday gift and who ordered her from the bedroom when she was ill with a hacking cough so he could get some sleep.
But later, chatting quietly with a visitor away from the group, Martinez fought back tears recalling those slights. She said the most valuable thing to come of her business selling shoe polishes and brushes in a Mexico City market was a renewed sense of self-worth and her husband’s recognition of her value to the family.
“He respects me more now,” said Martinez, who said that on her birthday in November her husband presented her a gold chain.
It doesn’t always work that way. Some women who gain financial independence through Pro Mujer leave their partners, said Javier Vargas Castaneda, general director of the Mexico program. He said some clients initially hide their involvement from their husbands.
“It’s a threat to some of these guys,” he said.
Pro Mujer is using the Gates Foundation grant to develop new products, which for the first time could include loans for housing and agriculture as well as credit to individuals -- not just lending circles.
Although microcredit has helped thousands of women in the developing world improve their lot, some borrowers have no illusions about ascending to the middle class or even escaping poverty. For aging Mexicans in particular, in a country where there is no universal retirement safety net such as the Social Security system in the U.S., their focus is on survival.
Widow Marta Gonzalez Esquivel, 56, used her loan proceeds to start a business peddling slow-baked mutton barbacoa, pork tacos and other meat products in Teacalco. Her companion, an elderly farmer who works only seasonally, helps her butcher the sheep she keeps penned next to the house and slaughter the hogs Gonzalez purchases weekly from a livestock dealer.
On a recent afternoon, a freshly gutted hog carcass dangled from the rafters of the couple’s home as Gonzalez explained how she would use everything but the snout whiskers and the squeal.
Asked whether her life had improved since garnering a Pro Mujer loan, Gonzalez said with a shrug, “We don’t want for anything to eat.”