The Power of 1000 Pesos:

by Veronica Villaseñor

North San Diego County Loan Manager, ACCION San Diego

One thousand pesos – when converted to US Dollars it is $91.36 and will buy one very little in most of the Western world. However, in Sonora, Mexico it can yield such virtues as integrity, trust, empowerment, relatedness, accountability, responsibility, inspiration, affinity and love. It can also build tight-knit communities, empower families, dispel gender bias and disarm prejudice, bigotry and ignorance. It can also launch a new microenterprise for a woman in Northwestern Mexico. Founded in 2000 on Grameen banking principles, which emphasize low-interest loans for the poorest of the poor, Grameen de la Frontera (GDLF) makes loans of 1000 pesos to rural women in Huatabampo and Etchojoa, Mexico. Close to 4,000 women have participated in GDLF's group lending program with about 2,000 loans currently outstanding. Over $1,300,000 in loans has been issued. Default rates are next to nonexistent and hundreds of microentrepreneurs offering services ranging from babysitting to bread baking to meal preparation to cheese making to snack vending have sprung up along the countryside of two of the most rural and impoverished counties in Sonora.

I witnessed the extraordinary during my site visit to GDLF in late March of this year. The genius of this program lies in its simplicity. There are two main eligibility criteria – that borrowers be female and poor. Beyond that, nothing but a verbal commitment is required and no collateral beyond human collateral is needed. That is to say, nothing more than a woman with the resolve to borrow and a sincere promise to repay is necessary. The GDLF staff of "promotóres" scours local countryside communities to identify eligible loan candidates between the ages of 18 and 70 who are asked to form several teams of five and designate a group leader who is accountable for all individual teams.

Once groups are organized, "promotores," who are the loan officers of the organization, arrange a meeting time and make a series of orientation presentations, or "capacitaciones," where lending teams can acquaint themselves, learn about the history and mission of the GDLF, gain an understanding of lending guidelines and processes and create a vision and plan for their individual enterprise. An agreement is made that each woman may borrow 1000 pesos at a fixed, predetermined interest rate over the course of six months. There is a nominal administrative fee. "Promotóres" hold mandatory group meetings every two weeks, where the teams can convene, re-presence themselves to their entrepreneurial vision, share best practices and support one another.

Borrowers also make their payments at these biweekly meetings, and each woman in every group is responsible for ensuring that all loan payments are made; put more simply, it is the collective group responsibility to ensure that each woman's payment is made. In the event that one individual falls short on her payment, her friends must pool their resources and make the payment for her, thereby both taking it upon themselves collect on her debt and empower her to fulfill on her promise to repay. If successful payments are made over six months, women then become eligible to borrow up to 2,000 pesos. Many of the women I interviewed had borrowed from GDLF several times over, and some of them were on their ninth or tenth funding, using each loan to further improve or expand their enterprise.

I met a range of women representing a host of enterprises. Maria de los Angeles Rodriguez Lucero has had her own "panadería," or bread bakery, for over four years, and has had several loans with GDLF. She has converted her back yard into a bakery, complete with an full-size bread oven and a working area. Women from team "Millennio 2000" convene at her home for their biweekly meetings and revere her as a leader though she is not technically this group's head. Refugio Duarte of team "La Ilusión" is on her fourth GDLF loan. Having successfully repaid the 1000 pesos the first time, she now has graduated onto 4000 peso loans. She invested her funds in a cooking machine, which has enabled her to cook meals such as tamales, tostadas and sopes, and deliver them to area businesses. Refugio says the men in her community are not only happy to have meals delivered to them, but that they are also very supportive of GDLF as it means that two incomes are supporting households rather than one. Refugio's teammate and team leader, Amalia Estrella, uses her loans to make and repair clothes.

What impressed and inspired me most about this program was that groups of women, some of whom were well-acquainted and some of whom were merely friends of friends, took on commitments outside of their already rigorous household and familial duties to empower one another in various microenterprise projects. Individual women joined together and took on collective team identities known by names such as "La Ilusion" and "Las Milpas," pooling their human capital and creating strong community where there was none before.

The bonds were strong and the commitment was almost palpable. When one team member of "La Ilusión" was absent and failed to make her payment at the meeting, team members swept in and dug through their purses to cover what was owed. Team Leader Amalia was careful in her leadership and managed the discussion that ensued about this team member, keeping the topic focused on how each member was going to support their teammate and not on any subjects that might be considered gossip. It was decided that several teammates would pay their missing colleague a visit to her home to investigate the situation and see how they could be of service. I was floored by each team member's tact and humility, as well as by their unabashed willingness to support someone who was having a difficult time, despite their own personal financial challenges.

Seeing various aspects of this dynamic organization in action brought several questions to mind, however. What incentives do women, who are traditionally not a major part of the workforce of rural Mexico, have to repay a loan, when households can barely make ends meet? And furthermore, how does a program like GDLF achieve such a range of outcomes by making tiny loans that would barely make a difference in most of the Western world? The answer lies in one concept: relationships. Beyond being indebted to GDLF, borrowers are "comprometida" or committed to one another. As the "promotóres" tell the borrowers, ‘such is not a problem of one, but rather a challenge for all'. Groups learn the importance of integrity, responsibility and honor. "Capacitación," for instance, can only take place if all members of a prospective group of borrowers are present. Borrowers are clearly made aware of the importance of being on time to each meeting, and are required to have prepared their business rationales ahead of time so that each member can be interviewed before GDLF staff and the rest of the group. The GDLF staff is enormously talented in providing technical assistance and support to borrowers, conveying valuable skills and knowledge to the women while always being connected, humble and respectful of their clients. Presentations were never didactic or condescending, but rather an interactive and uniquely-tailored inquiry specific to each audience. Powerful lessons were provided by staff members, who imparted such resounding pearls of wisdom as "Money resolves nothing – attitude and outlook do." The staff was in alignment that while the 1000 pesos are loans, they are much more than that; they are an opportunity to create a life-altering financial, social and community breakthrough for generations.

The impact of this program goes far beyond the individual women or the teams of which they are a part. Individuals experience an expanded sense of value, purpose and contribution, families are empowered both financially and relationally, and communities, economies and villages are strengthened. Hundreds of women are given the tools to transform their relationship to finance and community. Each woman is empowered with the confidence to feel "útil" or productive, while groups of women are imbued with a sense of relatedness, accountability and partnership.

Women take with them renewed skills in communication, organization and business savvy. My interviews with borrowers revealed the dignity and pride they felt not only in being a contributing member of their family but also in being an invaluable part of an investment group whose primary commodities were sweat equity and human capital. GDLF is more than a non-profit service organization; it is a dynamic grassroots endeavor that does not give handout but rather valuable skills and social infrastructure that are translatable and transferable for generations. A mere one thousand pesos are leveraged into a revolution in community, and into an extraordinary breakthrough in what it is to be related, abundantly productive and immeasurably powerful.

About the author:

Ms. Villaseñor is the North San Diego County Loan Manager for ACCION San Diego, a non-profit organization that provides microloans for small business owners. Ms. Villaseñor joined ACCION in January 2005, with an extensive background in public affairs, community relations, finance and lending, and non-profit administration. Veronica is responsible for community outreach and new loan generation, including the nurturing of existing ACCION relationships and the development of new business partnerships. She holds a BA from Princeton University and an MA from Harvard University, both in the field of Public Policy and International Affairs. Veronica speaks English, Spanish and French. For more information about ACCION San Diego, visit www.accionsandiego.org .