Small loans, big returns for Guatemalan women

from AJC

Atlanta-based CARE helps fuel economic success

By JEREMY SCHWARTZ
The Atlanta Journal-Constitution

Cienega Grande, Guatemala — Eight years ago, when no one would give a poor, indigenous woman with no education a loan, Doris Yaneth Tax became a pioneer.

The Atlanta-based nonprofit CARE came to town and offered Tax (pronounced "tash") and a handful of her villagers a small loan to start a business. She remembers being nervous — $100 seemed like a lot of money to pay back.

But eight years later, Tax has left her rented hut and job as housekeeper. Her family has its own home, a patch of land to grow corn and she runs a profitable business making blouses and bracelets.

Perhaps most importantly, Tax's oldest daughter is about to graduate from sixth grade, once unheard of for a girl in the indigenous communities of Guatemala's poverty-stricken highlands. CARE is one of several organizations providing microcredits to indigenous women in Guatemala and one of thousands providing tiny loans throughout the Third World. In Guatemala, where 70 percent of the country lives in poverty, the demand for microloans is far outpacing supply.

According to a government study, only 20 percent of residents who want a loan have access to one. The idea behind microcredit is relatively simple: Lacking access to traditional banks, the world's poor often need just a small boost to start a profitable business weaving, raising livestock or opening a small store.

Since debuting in Bangladesh more than 40 years ago, microloans have been hailed as the solution to poverty from Asia to Latin America. CARE currently has 3,000 borrowers in rural Guatemala, with loans totaling about $1 million.

CARE operates microcredit programs in 39 countries worldwide, including Ecuador, El Salvador and Peru. But despite the apparent success of microcredits — nearly 100 million were doled out worldwide in 2004 and the idea's founder won the Nobel Peace Prize last year — critics have emerged.

They complain, chiefly, that microcredits don't do enough to change the structures and inequalities that keep people poor, and that while microcredits may have led to individual success stories, they have not led the masses into the middle class. Others worry that governments will slash funding in regions where microloans are prevalent or that microcredit organizations don't provide borrowers with the tools to make their businesses profitable, creating a recipe for failure.

No promise, no loan
The CARE program in Guatemala seeks to address some of those concerns with what is a revolutionary aspect, at least by Guatemalan standards: In order to receive the loans, mothers must pledge to keep their daughters in school at least through sixth grade.

"The idea is not just to give out loans, but to create the conditions so that these women can move forward in their lives," said Amilcar Miron Corado, CARE representative in the region.

Many of the women in the CARE program in Cienega Grande dream of their daughters turning into professionals who then come back to help the community.

"We never had the opportunity to study," said Rosa Margarita Yac Vasquez, the mother of nine children, including an 8-year-old daughter in fourth grade. "I never went to school because there wasn't enough to even buy notebooks. Now the community will prosper because we will have professional women here."

Situated on the side of a mountain and connected to the highway by a bumpy dirt road, Cienega Grande is made up of about 500 families maintaining a traditional way of life. The women and men wear brightly colored dress and speak the Mayan language K'iche Mam, some exclusively. The cornfields have provided sustenance for generations, but agriculture hasn't kept poverty away.

Pedro Can Vasquez, principal of the local elementary school, said 12 girls will graduate from sixth grade this year. Ten years ago only boys finished, he said.

"People didn't give importance to the girls before," he said. "Before, they were getting married at 15 or 16, there was no future for them. Now the community is supporting the girls."

Tax's sixth-grade daughter, Kimberly, says she wants to become a secretary and dreams of working in an office. She shudders to think what her life would be like without school.

"I would already be working, cleaning houses," Kimberly said. "I would think differently. I wouldn't be reading and writing. I wouldn't have ideas."

The indigenous women of Guatemala face some daunting challenges. The highlands bore the brunt of Guatemala's 36-year civil war, which created many widows. Crippling poverty sent many more husbands fleeing to the United States for work. And long traditions of not educating indigenous women left many unable to read or write and unprepared to enter a modern work force.

But the women in the local CARE group have embarked on all matter of entrepreneurial activity: One runs a small store out of her home; a second woman and her husband have a workshop that produces pants and employs three villagers; a third invested in a greenhouse to grow tomatoes.

Confident women
Like most microcredit programs, the loans get bigger as the women show they can pay them off.

The CARE program is one of the most established in Guatemala, and $100 loans have ballooned into loans of up to $2,000 for some. Those who can't make their payments are eased out of the group.

In all, the Cienega Grande group has a combined savings of nearly $7,000, which it has accumulated over the past eight years. Some, like Tax, have graduated from the program and set out on their own.

The women say that while their economic situation has changed — many have traded renting for owning homes — the microcredit program has also given them confidence to confront the world.

"It's taken away our fear more than anything," said Herlinda Juana Batz, the group's treasurer. "It's helped us know that we can speak up and do other things. At the beginning we were nervous, we thought we would fail, but we've learned over time that we can do this."