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Flag of Guatemala  , Western Highlands,
Monday, November 11, 2013

Panajachel is a small but pretty touristy town- but touristy with good reason. It sits on the shore of lake Atitlan, a vast lake surrounded on all sides by looming, active volcanoes. It's a pretty stunning sight, even after all the glorious landscapes we've already witnessed.
But our time here wasn't about the view. We spent the next three days driving around the surrounding villages and meeting micro finance clients from across the area, a truly eye-opening experience taking us to places we would never otherwise have been.
For those of you not so familiar with the concept of micro finance, it is all about providing small, manageable loans to those people the banks won't serve, enabling them to grow their businesses and lift themselves out of poverty. At least that's the idea. The impact of micro finance is still hotly debated, partly because increasingly bigger players are coming in to the field with pure profit maximisation in mind, partly because there are many badly run do-good outfits that don't really know what they are doing, and partly because it takes time for benefits to be realised and they are damn hard to measure. 
Thankfully FINCA are very well respected across the world and very professional on the ground from all we could see. And we were left in no doubt about the impact.
The most fascinating thing was the insight into how these loans are organised. The vast majority of loans are to "collectives" - groups of women who jointly take out loans and are jointly responsible for paying them back. We saw an initial commitment meeting, with around 15 women crammed into one room alongside us, the kids and a FINCA representative where the women were reminded all about how the loan works, what responsibilities it entailed for the group and what the consequences might be if they asked for too much.  This was already the second meeting of the group, but with one or two new members interested in joining.  The whole thing took place in a mixture of Spanish and the local Quiche, with English translation in our ears and the FINCA rep using picture story boards to illustrate her points (many of the group were illiterate).  The prospective new members of the group were subject to very searching questions from the others- didn't you just buy a TV on credit? Does that mean you wouldn't be able to repay this loan? Or that you'll just use this loan for more goods and not invest in the business? As the group are collectivity responsible for the loan they have to be very careful who they let in. A friendly chat with the bank manager it is not.
The next day we returned to the group, where they meet finally to collectively agree the loan they would take and who would get what from that total. This involved each woman presenting their business case for their loan amount and being questioned by the others. All the while the FINCA rep let's this happen, just facilitating never deciding. Within the set parameters that is the job of the group and the self elected president and treasurer. It's a lot to go through for the equivalent of about 200 in most cases over a 6 month period.
But it is this group approach that makes the whole thing work. Cheaper to administer for FINCA, a spread of risk, huge peer pressure to pay on time (on another day we saw a payment meeting where the only man in the group had not paid. The women covered him but only after he had promised to pay them back the next day and gone to get his land title deeds to hand over until he did. Now that's girl power.) It allows them to make these totally unsecured loans and still get an  outstanding 98% repayment rate. And for the women, there is not just peer pressure but a great sense of solidarity among them. It is also startling how many of them cite the group as a reason for increased confidence, not only in business but in being more politically active in their communities. We'd love to find proper studies on this aspect because it seems to us one of the most potentially significant impacts of these loans if it were to take place on a mass scale.
But what of other benefits? Well, not going to loan sharks with high interest, no insurance in case of emergency and no legal validity is not a bad start.  But business growth is the ultimate goal. We meet Juan (one of the few men) who has a chicken farming business. The loan got him started and enabled him to return from a terrible, exploited existence as an illegal immigrant in the US to run a family business in his home country. This made him proud, but also meant he was there for his wife and kids, and had something to pass on to his kids. They may not yet have been much better off financially than when he was in the US, but what price dignity?
We met Isabella, a weaver with six kids. She had grown her business to the point where her earnings outstripped those of her husband and she was able to build a breeze block house to protect her family from mud slides, as well as send her children to school again after some years away.  Most remarkably, her and her husband had taken the conscious decision not to have any more kids. Sounds crazy with six kids already, but that level of  family planning almost never happens here we were told.
We also meet Maria, who had grown her traditional weaving business to the point of employing 25 local people
These are wonderful stories, and the impact is obvious when you talk to these people. However, it is also clear it is no panacea.  It will still take many years for many impacts to hit home, and despite these successes these people still live in very clear poverty. It is easy at times, with the warmth and energy of the people and families we met, to think 'they may be poor, but they are happy'. And then you realise that the woman you thought was 45 was 29, and that one entire family of FINCA clients yards from Maria's house were killed last year in an all too common mudslide. It is an extremely hard life. 
We remain convinced, however that business and enterprise and powerful tools in fighting poverty and giving the poor, particular women, a real voice in a place like this. They aren't enough on their own, but micro finance has a real role to play. And we'll also think twice about haggling too hard at the next market stall for that extra 50p off the price.
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Mumjo on

Gosh that is so moving. What an amazing insight you will never forget it.
I want to go and work there !

Wilf on

wilf on November 24, 2013

Quite apart from the excitement of the landscape and the people and the intensely woven carpets I am so proud that you went there to experience the heart of people struggling on. In the 70ties I read the very moving reports of Rigoberta fighting for union rights in the midst of terrible cruelties from land owners against farmers on their fincas. I joint a group of activists against these cruelties and had a film project in mind. Later I included stories from there In my religious teaching in The German School in the 80ties. Now to see you being there on a mission that I so fully support is marvelous and fulfilling.

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