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Map of Chiapas State, Mexico
The following photos are those which were included in the Appendix of my final paper. Buenos dias a tod@s,
Well, this will be my final blog of this great adventure. Yesterday I printed my final paper and tomorrow I will do my presentation to the group.
I will arrive back in Seattle on Wed May 23 in the evening. I'm going to relax for about a week and then I'll start my summer internship with Farestart (www.farestart.org). I'll be living with my friend Meredith in Greenwood. Looking forward to a sunny seattle summer- lots of hiking, reading, working at farestart, and enjoying time with friends and family.
I want to thank all of you for being so supportive of and interested in my travels this year. Your comments and emails have made me smile and be grateful to have such a wonderful circle of friends, family, and aquaintances. This blog has allowed me to feel connected with all of you, and make the transition between cultures (both the coming and going) that much smoother.
This year has been quite an amazing journey for me. Mexico has been a truly amazing experience in such a different way than Argentina. I'm so grateful that I have had this opportunity at this point in
my life. It has been such a breath of fresh air to leave the university-style learning for a year and learn in a more experiential way. These experiences have changed my perspective of the world and will continue to affect my life decisions. Thank you all for your support and I am excited to see some of you very soon!
Con todo mi amor,
Maggie
P.S. I have copied my final paper into this blog for all those who are interested. If you would prefer to have the Word document format (footnotes, bibliography, and a little easier to read) please don't hesitate to send me an email because I would LOVE to send it to you. I welcome any comments or questions. mpettit@scrippscollege.edu
ECONOMÍA SOLIDARIA: THE PAST, PRESENT, AND FUTURE OF THE MICROCREDIT PROGRAM OF EDUCACIÓN PARA LA PAZ (EDUPAZ)
Maggie Pettit
Scripps College
School for International Training, Spring 2007
Mexico: Grassroots Development & Social Change
Project Advisor: Javier Inda, Coordinator of Economía Solidaria, Edupaz
Academic Director: J. Antonio Canseco
May 18, 2007
Comitán de Dominguéz, Chiapas, México
I. INTRODUCTION
As Gustavo Esteva neared the end of his
lecture on “Development” and opened up the floor for questions, I felt this to be a perfect moment to ask for his scholarly comments on my future Independent Study Project. Noting the sudden silence of the group, I seized the opportunity, blurting out, “What is your opinion of microcredit?” and subsequently rephrasing that question three more times out of nervousness.
Gustavo Esteva sighed deeply before beginning to recount his personal experience with the matter. Armed with my pen and notebook I jotted down his arguments:
1) The main problem with microcredit is individualization and the consequent destruction of the communal spirit; 2) microcredit institutions are just another mechanism to pull people into the market economy system while rooting capitalism into their hearts and minds; 3) the moral pressure and addiction to credit causes clients to end up poorer than they were before the loan; and, as his closing statement, 4) microcredit is truly terrible.
At the end of that barrage of powerful statements, I thanked him for his insight, and sat there attempting to digest what I had just heard. That final word burned in the front of my mind - “terrible.” I felt embarrassed for having asked the
question in the first place, as if I had offended his intelligence. In that moment my research proposal seemed obsolete; how could I possibly study the effects of microcredit on quality of life after hearing Gustavo Esteva’s negative verdict on the matter? After all, he spoke from experience, his arguments relating directly to the failure of a microcredit program established in 1976 as part of his own non-governmental organization (NGO).
But after processing these thoughts and emotions, I began to feel even more motivated than before to research the topic; Gustavo Esteva’s critique would serve as a constant questioning of microcredit while I would also keep my mind open to the possible benefits of these types of programs.
After some searching, I encountered the perfect organization, Educación para la paz (Edupaz), with which to carry out my Independent Study Project. The organization has an area of work called Economía Solidaria , which in essence is a microcredit program for small groups and cooperatives in the region. Javier Inda, Coordinator of Economía Solidaria, and José García, Coordinator of Edupaz, were already so critical of the microcredit program and its effects, to the point that Javier Inda once stated “I
don’t believe we are very confident of what we do.” But this is not to say that their program was failing. They expressed the many challenges that the program faced, both from the perspective of the clients and the organization, but also emphasized the continuing need and recent success of the microcredit projects. That being said, I altered my research proposal once again to include the following, more specific question: “what are the past, present, and future challenges faced by the Economía Solidaria program, from the perspective of the clients and staff, and how are those challenges resolved?”
This question along with many related questions will be answered in the following pages. The information will be presented first in its general context and then through a chronologically-organized analysis of the past, present, and future of the Economía Solidaria program of Edupaz.
II. METHODOLOGY
The greatest advantage of my research was the opportunity to live and work in the Edupaz office. The office building includes a fair trade street-side store, meeting rooms, work area with computers, and living area with full kitchen, bathroom and bedrooms. The convenience of living in the Edupaz building allowed me to be continuously involved
in the day-to-day activities of the organization. Not only was I able to observe how the organization functions in the office setting, but the mere fact of constantly being in the office created more opportunities for field research with Edupaz outside the office. The Edupaz staff accepted my research proposal in a very welcoming and open-minded manner, allowing me to feel very comfortable throughout the field study process. In addition, access to the small office library as well as Edupaz documents also served me in my research of secondary sources.
My main method of research was performing interviews with the Economía Solidaria staff and their clients. After completing seventeen formal interviews, I felt that the research had reached a point of comprehensiveness because the new interviewees began to reiterate many of the themes stated by previous participants. As some of the interviews were performed in a group format (two or more people), I was able to interview 23 Economía Solidaria clients in total from five locations in Chiapas, Mexico: Tziscao (3), Comitán (4), Carranza (4), Miguel Hidalgo (2), and Buena Vista Pachán (10). Four of these clients were group representatives and the clients overall participated in fourteen separate Economía
Solidaria projects. Fourteen of the interviewees were women and four of those women were the managers of their own Economía Solidaria projects (in other words, they did not participate in the program as a couple with their husband). In terms of the Economía Solidaria staff, I completed four interviews with the coordinator, Javier Inda, two of which José Garcia, Coordinator of Edupaz, also joined. Due in part to my previous experience conducting interviews in Spanish (through a university course), I did not encounter any major difficulties with this aspect of the research.
The first seven interviews were recorded with an audio device while for the following eight I took detailed notes. Ideally, I would have liked to record all of the interviews because I believe there is less chance of error in interpretation when the interview is recorded. But due to the fact that each recording transcription was taking me several hours to complete and also the fact that the research period was limited to three weeks, I decided to perform the remaining interviews without a recording device, to save time and energy. The first two client interviews were completed utilizing an interview guide of twelve questions, while two
additional questions were added for the remaining nine client interviews. None of the clients chose to remain anonymous. The interviews with Javier Inda and José García were informal in the sense that only a very rough interview guide was prepared and the interview was allowed to flow in the direction that seemed most appropriate. Each interview was transcribed and typed for later analysis. I took a photograph of each client, who gave me permission, to include in the appendix as I believe it is valuable to put a face to each individual’s words and ideas.
All of the contacts with clients were attained via Edupaz. In the towns of Comitán, Carranza, Miguel Hidalgo and Buena Vista Pachán, I was introduced to the clients in person by Javier Inda. In Tziscao, I contacted the clients myself and was not accompanied by Edupaz. I was able to join Javier Inda and José García during their Economía Solidaria meetings with groups in Carranza, Miguel Hidalgo and Buena Vista Pachán. Those experiences allowed me to complete several observations of the Economía Solidaria staff’s interaction with their clients.
Another part of my research was to visit the local credit institutions in Comitán to
gather information regarding their services and requirements. This idea grew out of a theme apparent in the interviews with the staff and clients: the comparison between the services of Edupaz and other credit institutions. Over the period of two days I visited the following institutions: Banco Azteca, Santender, Banorte, Bancomer - BBVA, Banamex, Caja Popular Don Bosco, and Compartamos. I spoke with a representative at each of the institutions, asking for more information regarding the requirements, payments, fines, and total costs of obtaining a credit with their institution. If the representative asked me who the information was for, I would say that I was researching the matter for several Mexican acquaintances. I did not record these interviews but I did write down the pertinent data and collect pamphlets to format a table comparing the information to the policies of Economía Solidaria Edupaz and the Grameen Bank.
In terms of the difficulties and weaknesses of my research, I can honestly say that they are few. One issue which presented itself on several occasions was the confusion that I was an employee of Edupaz. This distinction was very important to make clear to both encourage the honesty of the client and
to clarify that I did not have any influence over the policies or decisions of Edupaz. I explained my research and my independence from Edupaz at the beginning of each interview, but many interviewees continued to ask clarification questions and, despite the explanation, a few continued to address me as part of Edupaz. This could have affected my research in the sense that those who remained confused may have been less honest in their responses to my questions, although I believe that very few would fall into this category.
Another difficulty related to the group interviews. One or two personalities dominated the discussion in the group interviews and would often respond first to my questions. The issue arose that the other members of the group would often simply agree with the person who responded first, creating a lack of diversity in their responses. At times it was difficult to perceive if the less vocal participant was truly in agreement and did not have anything to add, or if that person would have responded more freely and contributed a very different perspective in a separate interview setting. Ideally, I would have preferred to interview each member individually for these reasons,
but due to issues of time, logistics and courtesy, if the interviewees were already present as a group I interviewed them as a group.
Lastly, although I was involved in the majority of Economía Solidaria activities, I was not allowed to participate in all of their activities due to issues of confidentiality and appropriateness. For example, in one instance José García informed me that he would be going to visit a potential Economía Solidaria group to discuss their policies, but when I asked him if I could join him to observe, he said that it would not be appropriate because he himself needed to gain the confidence and respect of this very new group. In addition, it would have been very interesting to observe the weekly meeting between the three Edupaz staff members, but I felt it would be inappropriate to ask without previous invitation due to issues of confidentiality and “overextending my welcome” with the organization. Overall, I found these difficulties to be minimal and they do not present a significant weakness in my research.
III. CONTEXT: CURING THE SICKNESS
“When there is a great volume of emigrants it means that there is a great misery in
the family or in the community. It is a symptom of poverty, scarcity of resources.” Chiapas presents the symptoms of a sickness called poverty. Within the last ten years the condition has worsened due to a foreign virus that has embedded itself within the society. This virus is called globalization and manifests itself in neoliberal policies such as the North American Free Trade Agreement. According to Edupaz, these policies:
open the doors to imported products in an unequal competition that causes the prices of products from the countryside to fall...consequently emigration rises constantly with a negative impact on families, communities and culture... grows every day and although it may help the survival of the family, it does not generate a change in the situation of the countryside.
Emigration to a city or to the United States is seen as the instant cure for poverty but it is not a long-term solution. Locally, poverty will persist due to the general problem of unemployment in Chiapas. And the few jobs that remain available will be poorly paid. Francisco Erecta Álvarez, who works in the city of Comitán, explains that ‘here, the biggest beats up the littlest. We barely have any help.
I enter in the morning and leave in the afternoon. I make $60 pesos a day. ’
But what is the long-term cure to this illness? At least for Edupaz, the cure can come from the impoverished themselves. With a will to improve their situation and with a little support from Edupaz, they themselves can create their own productive project. By resolving their own situation of poverty, dignity is preserved and sustainability is more probable.
IV. THE PAST: THE BIRTH OF EDUPAZ & ECONOMÍA SOLIDARIA
As its name conveys, Educación para la paz was established in 1998 as a means to peacefully resolve conflict through education. Following the Zapatista uprising of 1994, political divisions deepened within Chiapas communities. Violence intensified both between community members and at the hands of the repressive military. Founder of Edupaz, Maria Elena Tinoco, approached these issues with an eye to resolving them at the community level. Social networks began to form with members of the 42 surrounding communities and meetings were held to begin the dialogue for creative solutions to these conflicts. From these gatherings, the three areas of Edupaz were born: Economía Solidaria, Alternative Health, and Agroecology & Territory Rights. As a concrete response to the women’s right to work and as a means to maintain unity, “12 cooperatives were born, in their majority women, and with them initiated the area of Economía Solidaria.” These cooperatives ranged in focus from small stores to animal-raising projects and some were funded by microcredit loans from Edupaz. As a response to the massive repression in the municipality of Tierra y Libertad, the area of Alternative Health was created to provide psycho-spiritual support for the oppressed and their families. In 2002, after participating in the II Meeting of the Convergence of the People’s Movements of the Americas (COMPA), Edupaz committed itself to the defense of land rights. This moment, along with the formation two years later of the Chiapanecan Front Against Dams of the Southern Border (FCHCRFS), created the area of Agroecology and Territorial Rights within Edupaz. The current coordinators of each area are as follows: Agroecology & Territorial Rights (Gustavo Castro), Alternative Health (Maria Elena Tinoco), Economía Solidaria (Javier Inda), and General Coordinator of Edupaz (José García).
From its inception, the organization has focused its efforts on working with the indigenous and peasants of the border region in Chiapas, with the general objectives of: “helping to reestablish the social fabric for unity and reconciliation; working for complete human rights and in defense of the environment; supporting diverse forms of organized labor, accompanying them in their journey as a people fomenting respect for their culture and their autonomy.”
A. ECONOMÍA SOLIDARIA: PHASE ONE
‘It’s still balance; sometimes the money does not end up with the people that need it and Edupaz has given to those people.’ After the success of the “pilot project” of women’s cooperatives, Edupaz felt it necessary to continue with the area of Economía Solidaria. The program began extending loans to those in need, regardless of client’s declared use of the funds. Thus, the program began with what is called microfinancing, a method which “includes microcredit but is more broad in that it considers other types of loans which are not necessarily connected with productive projects but rather connected with the necessities of the clients (personal, academic, emergency, sickness, to liquidate previous debts, acquire appliances or remodel a house).” Small loans were provided to groups of clients in the municipalities of La Trintaria, Las Margaritas, Independencia, Maravilla Tenejapa, Ocosingo, and Comitán, encompassing groups of the ethnicities of Tzeltal, Tzozil, Tojolabal, Chuj, Kanjobal and Mestizo (See Part A & B of Appendix for map). The initial proposal was to have monthly group meetings with the objective of both receiving the loan payments and holding group discussions. The discussions would consist of analyzing the socio-political reality of México accompanied by the participation of a technician who would give workshops on alternative technologies (agroecological farming methods, dry latrines, worm compost, solar cooking, biodigestors, etc). But the success of the entire Economía Solidaria model was soon put into question by Javier Inda and José Garcia, arriving as new staff members in 2004.
B. PHASE TWO
Entering Edupaz with the Economía Solidaria program well established, Javier Inda and José García began to identify dysfunctional aspects of the model, namely the group discussions and the payment crisis of the microfinance loans. But it took nearly a year before changes were proposed and implemented because, as Javier Inda says, “you’re not going to change things the moment you arrive, rather you are going to observe and understand first.” In terms of the group discussions, there was little interest or commitment of the loan groups, and as Javier Inda explains: “In the beginning the talks were given to the groups every month, but we saw that people did not pay attention because they didn’t have much interest. They wanted the money and for the money they endured the talks as a punishment. So then they were offered to those who wanted to go voluntarily.” But the interest and commitment still could not be generated. For example, twenty people would arrive at the first talk, then no more than eight women would arrive at the second talk, and finally no one or possibly two women would arrive at the following talk. Even though the participants themselves had chosen the dates for the meetings to allow for sufficient time to put the ideas into practice, the technician would ask them if they had implemented any of the alternative methods and everyone would respond that they had not. With such an unenthusiastic response it did not make sense to continue the group discussions. This aspect of the program was suspended in 2005 for these reasons but also under the pressure of growing crisis related to the loans.
The dilemma arose that clients were not paying back their loans, forcing Javier Inda and José Garcia to dedicate their efforts to “visits to recover the credits, motivate people, talk things over with them - which wasted a lot” of time, energy and funds. The causes for this payment crisis were twofold. First to blame was the fact that there are “already many people badly educated in a manner of receiving gifts; the government is educating them by giving them money without any interest whether the people develop the economy of their family or of their group.” This imposed culture of receiving funds from the government with no future obligation (for example, through programs such as Oportunidades and PROCAMPO) made Economía Solidaria’s work very difficult. Many clients assumed the Economía Solidaria program was like any other government program and therefore did not understand the urgent need to pay back the loans so that those funds could be provided to someone else who might need them.
Secondly, since the loans were generally microfinance, the clients had no obligation to invest in productive projects and often used the funds to resolve immediate needs, such as previous debts and medical costs. These expenses were not likely to generate income, therefore complicating their ability to pay back their loan in a timely manner. Javier Inda realized it was time to change the Economía Solidaria model.
C. PHASE THREE
A group in the town of Carranza would act as the first experiment with the new proposals. Twenty-three people in Carranza had formed a group with Economía Solidaria and the majority of them were struggling to make payments on the $1500-peso loans they had used for their immediate needs. But Javier Inda had done his homework and was ready to propose a solution to this crisis. Having recently read Muhammad Yunus’ book Banker to the Poor, Javier Inda was convinced by the idea that “the loans are useful when there is a concrete investment to be able to work and recover the money, to give a boost to those who make a small investment.” Javier Inda, Italian volunteer Rocco Santangelo and Jose García discussed the costs and benefits of proposed change and, although the rest of the staff resisted at first, they eventually convinced them to try the new method in Carranza. Towards the end of 2005, a new group of ten people was formed from members of the older, larger group, and this time each person was required to propose a detailed project and respective budget. Each project that was approved received a loan for the exact amount necessary to buy the materials or services for their project.
And how did the experiment turn out? A success; the new group has moved the funds more quickly by establishing an income via their projects. This allows them to make payments in a timelier manner. As Areli Hernández Jiménez attests, in the first group ‘we did not buy for businesses. We owed some debts and the first loan allowed us to pay them off, also some people had gotten sick . The first credit was more difficult to pay off. On the other hand, in the smaller group helped us to buy these fabrics and the sewing machine.’ Areli Hernández now sells clothing out of her home with a friend of hers; she buys clothing to resell and also buys fabric to sew aprons with her sewing machine. Sometimes she gets a little behind on her payments due to allowing her customers to buy clothing with the promise to pay their bill later, but she is certain of the benefits of the microcredit loan, stating: ‘ has improved; we had never done business before. We learned how to work more; our life changed.’ Areli’s opinion on the new microcredit method is reiterated by Olaf López Hernández who simply says that ‘it’s going much better now.’ After seeing that the concrete project proposal method functioned well, it was established as a norm which exists to this day. This signified the transition from microfinancing to microcredit. In other words, while before they simply “grant credit without importance given to the declared use,” the program now had begun to solely utilize microcredit which consists of small credits granted to create or reinforce self-employment projects and to generate income through economic activities of production, commercialization, or services. Javier Inda believes that “the groups from this year and last year, although a few are a little behind, are going to be more responsible” than those who received loans before the project proposal norm was established.
V. THE PRESENT: CURRENT REALITIES & CHALLENGES
A. MICROCREDIT LOANS OF ECONOMÍA SOLIDARIA
Currently, Economía Solidaria has two types of clients who receive their microcredit loans: small unofficial cooperatives and individual investment groups. All advertising for the program is achieved naturally by word-of-mouth recommendations from past clients. Once someone is interested in a loan, they must form a group with community members who are also interested. The group may choose to work as a cooperative (take out one loan and collaborate on one project) or choose to work individually (each request a loan and invest in individual projects). To answer the question - “why groups?” - Javier Inda would say that “they share solidarity in the sense that together they can do more than they can alone.” The group will have two or three informational meetings with the Economía Solidaria staff to discuss and accept the policies of the program. After accepting the policies, the cooperative or the individuals each submit a detailed project proposal and budget (in writing or orally). Generally, the staff rejects on average 1 in 10 proposals received due to the following reasons: ‘1) the project needs to be explained in greater detail; 2) the client has debts with other groups of our same philosophy (for example, DESMI ); or 3) if it is their first time and they request a lot of money.’ Once approved, a board of directors is elected from within the group, consisting of a president, secretary, and treasurer. Of those three people, a main representative is chosen who “should be someone who is concerned for the other members .” The person should also be responsible, given that this person will receive a lump sum of credit for the entire group and divide it (if necessary) among the members in accordance with the amount approved for their project.
The current payments policies are determined depending on whether the group is a cooperative or individual investment and also whether it is located in the city of Comitán or a community in the countryside. The term limit is ten months for cooperatives and 6 months for individuals. The payment schedule is monthly for the countryside and a choice of weekly or 15-day for the city. This decision was due to the fact that in the countryside “business is a little slower, so it takes longer to recover the credit.” Some cooperatives or individuals may also be permitted to begin their payments when they receive a profit, especially for seasonal projects. The interest rate is 4.5%!m(MISSING)onthly for all loans. For groups within Comitán, the group representative will deliver the payments themselves to the Edupaz office. For the groups in the countryside, the Economía Solidaria staff travels to their community and holds a meeting to collect the payments. These meetings ideally should occur monthly, but in reality they are very irregular.
In addition, the projects will also count with Economía Solidaria’s support of assessment and accompaniment. Assessment is offered in the form of a pertinent technician visiting the project, giving general advice, and possibly organizing a training workshop. For example, for a store an assessment of finances and administration may be performed, or for a pig-raising cooperative a workshop regarding proper care and health issues may be given. As far as accompaniment, this consists of the Economía Solidaria staff visiting the project to “see how their little journey is going; to always be with them so they don’t feel abandoned.”
In summary, the program of Economía Solidaria currently has $60,000 US dollars invested amongst 54 groups representing more than 500 total clients of 22 rural communities and 6 Comitán neighborhoods. Thirty credits were granted in 2006 and seven have been granted in 2007 as of this writing. Preference is given to women clients, who currently represent more than half of the total participants, but many choose to propose a project as a couple.
B. ECONOMÍA SOLIDARIA EDUPAZ VS. OTHER CREDIT INSTITUTIONS
The main reasons clients cited for deciding to take out a loan with Edupaz were the quick response and low number of requirements. Most often there is an urgency connected with the need to escape poverty and the Economía Solidaria program demonstrates their understanding of this reality by providing an efficient approval process. As the president of a coffee cooperative, Isidoro Morales Mauricio appreciates this aspect because urgent loans are necessary to quickly buy his producers’ harvest for processing; he emphasizes the advantage that “after two or three talks, we already have their answer.” Banks and other institutions normally have an extensive process to approve a loan. For example, the Grameen Bank “can take anywhere from a few days to several months to certify a group.” And what happens if that group cannot wait “several months” to resolve their situation?
After creating a chart comparing Economía Solidaria Edupaz to other credit institutions in Comitán, it was absolutely obvious that the category of “Requirements” sets Edupaz apart from the rest. This point was reiterated by several clients stating that other institutions “ask you for a lot of requirements and papers, and if you can’t fulfill the project ends up stalled.” The only requirements of the Economía Solidaria program are that the group members participate in at least two meetings to learn about the policies, that they propose a detailed project and budget, that they are responsible, and that they elect representatives of the group. Every credit institution in Comitán at the very least requires the voter credential and proof of residence; “official” documents which Edupaz sees as unnecessary and especially discriminatory against peasants and indigenous of the countryside that may not possess these types of documents. In this sense, the Economía Solidaria program has provided greater access by keeping low requirements; their clients feel that the program “has been favorable to us because there are moments when one needs credit and we don’t find a doorway.”
Perhaps more important than the differences in the loan processes, is the fact there are fundamental differences between the end goals of Edupaz and the end goals of solely credit institutions. Yes, the Economía Solidaria program works with money, but their end goals are focused directly on the lives of their clients. With its 500 clients, the program may seem minuscule in comparison to the more than 11,000 clients that Alternativa Solidaria in San Cristóbal de las Casas, Chiapas works with, or the two million families the Grameen Bank of Bangladesh has served. But, in fact, the program has no end goal of acquiring thousands upon thousands of clients for two reasons in particular. First, with a manageable number of clients the staff can give more personal attention to each of the lives they are attempting to improve. Secondly, they avoid the bureaucracy of a large organization and preserve their autonomy in decision making. Javier Inda and José García themselves propose their plans and goals for Economía Solidaria after seeing what does and does not work at the community level; whereas larger institutions may simply have to follow commands given by a distant board of directors.
C. CHALLENGES & SOLUTIONS
1. LOW RESOURCES
“We’re self-sustaining,” says José García with a laugh. The sarcasm in José García’s voice fades away as he begins to explain the situation; “Right now we don’t have support from anyone and this makes things a little more difficult for us.” At this point in time Edupaz does not receive any funds from external foundations or organizations, but this was not always the case and things weren’t always as hard as they are today. For two years Edupaz received special funding from the Italian-based organizations of Caritas de Milán and Fundación Cariplo, but this support ended (as planned) in October 2006. Funds amounting to forty thousand pesos were designated specifically to aiding the Economía Solidaria program in granting more microcredits, and another forty thousand was allocated to administrative costs (transportation to communities, office supplies, salaries, etc). With no external support, in February 2007 Edupaz was forced to increase the interest rates from 2.5%!t(MISSING)o 4.5%!m(MISSING)onthly on all new Economía Solidaria loans to cover Edupaz’s administrative costs (also financed in small part by the Alternative Health workshops organized by Maria Elena Tinoco). Although Javier Inda recognizes that the new policy was approved for the survival of the organization, he still has major concerns about what kind of statement it makes about Edupaz: “My preoccupation is that the goals of Edupaz are not commercial. The problem is - what direction are we headed? If we want to be an organization with social interests we have to search for a way to be more moderate” in terms of the costs we are imposing on our clients. Although Javier Inda acknowledges that high interest rates are common throughout México, it is difficult to come to terms with the fact that Economía Solidaria loan payments are now approximately equivalent to those of Banco Santender, Compartamos, Banorte, and Banamex. During my interviews three clients said they thought the Economía Solidaria interest rate was reasonable and six clients voiced difficulties, but three of those six also expressed understanding of Edupaz’s situation.
And this funding crisis affects more than simply the interest rates; other aspects of Economía Solidaria’s work are also complicated by the lack of resources. This year Edupaz must save money in whatever way it can, and for Economía Solidaria that means sacrificing visits to the microcredit groups. For example, visits to groups in the countryside do not necessarily occur monthly (as they used to), technician assessment visits to cooperatives are more spaced out, and visits to groups who are behind on their payments occur every fifteen days. Javier Inda describes the change in activities from his perspective:
Last year we would work Mondays in the office and Tuesday, Wednesday, Thursday were trips to the communities, visiting two, three, four, or sometimes eight groups per trip...Now, you could say that the rhythm of activity has decreased; some groups already come here themselves instead of us going there to their community.
Another cost, this time their own transportation cost, is imposed on the clients due to Edupaz’s lack of resources. The impact of low resources is also felt directly by the staff. They themselves will most likely receive a lower salary this year in addition to being stretched thin by the fact that Edupaz has only three full-time employees with no possibility of hiring more. On a different note, five clients voiced the desire that larger loans be available through Economía Solidaria, but this simply will not be possible because the few funds that exist should be made available to help multiple clients, not just one lump sum to one client.
2. LOGISTICAL DILEMMAS
As we arrive in the community of Miguel Hidalgo all the children come out of their houses and surround our truck. José García gets out of the car to ask them where he can find a certain person. They tell him that many people aren’t in the village right now because they have gone to work in Mexico City for a few months or are out tending to their milpa fields. All the girls are wearing white blouses adorned with fluorescent ribbons, which appears to be the traditional dress for women in this community. José García goes into a house and speaks with a family. When he returns he tells Javier and I that we are all going to wait at the school because he had told the group to meet us there soon. After about forty minutes of waiting, I ask José García how many members are in the group. He says that it is a large group but probably only three or four people will be able to come to the meeting. José García leaves to see why they haven’t arrived yet. He returns ten minutes later and says that only two people would be coming. The others either were out of town or did not want to come because the project wasn’t going well and they didn’t want to talk about it. José García also says that they do not want to be interviewed because the whole group will not be present, “See how the Tojolabals are? They need to make decisions together.” We wait another thirty minutes and they still do not arrive. We start walking towards the home of the man José García had spoken with. As we come up the hill, we see two men walking quickly towards us. José García and Javier Inda greet them, and introduce them to me as members of Cooperativa Jerusalén, the pig-raising project of Miguel Hidalgo. We walk back towards the school together. After setting up a table and some chairs, they begin their conversation.
During this experience alone I was able to identify several logistical dilemmas. First of all, Edupaz does not have a reliable means of communication to prearrange group meetings in remote communities. In Miguel Hidalgo this resulted in about an hour and a half of wasted time and a low attendance rate. This situation also occurred during the visit to Buena Vista Pachán, although Javier Inda said he had attempted to call in advance but the call did not go through. Secondly, there are certain situations where indigenous customs and the microcredit policies conflict. In the case of Miguel Hidalgo, the two members who did arrive explained that the cooperative wasn’t working well because it had been poorly coordinated, and they were considering stopping the project entirely and starting anew. But they also said, ‘The mere truth is not everyone is here and because of that we are going to wait to make an agreement with them’ about what should be done. The community of Miguel Hidalgo speaks Tojolabal and lives the Tojolabal culture; they must always have agreement amongst the entire group in decision-making. Although Edupaz holds a deep respect for indigenous customs, in the case of Miguel Hidalgo a dilemma arose; if the group waited until June 2007 (when the other members would return from Mexico City) their loan would be gaining interest and they would need to buy more pig feed to last them until June. Both of these expenses could be avoided if they simply sold the pigs to immediately to pay off the loan. To emphasize this point, José García and Javier Inda actually returned five days later with the agro-technician. Time will tell if the Tojolabals of Miguel Hidalgo decide to break their customs or not, but one thing is sure: indigenous customs at times present an ethical dilemma for the Economía Solidaria program.
3. LIFE HAPPENS, EDUPAZ UNDERSTANDS
“There are two cases when someone can’t pay; one is for lack of responsibility ... because of a sickness or because the person really can’t pay, in which case the institution shouldn’t charge them. Here, if a person gets sick, that’s where their debt ends.” This quote demonstrates yet another aspect that distinguishes Edupaz’s microcredit program from other credit institutions: Edupaz understands that we are all human. If a client is in a situation where she/he cannot pay, a local credit institution will charge anywhere from $80 to $250 pesos monthly, whereas the staff of Economía Solidaria will simply sit down with that client, listen to her/his problems, and possibly make an agreement about when they will begin paying again. During my interviews, I encountered numerous cases of clients who had fallen behind on their payments due to personal situations. One example is Francisco Erecta Álvarez, a man who had worked in forestry all his life and was granted an Economía Solidaria loan to aid his wood sale business. Last year Francisco Erecta fell from a roof, breaking three ribs and cutting open his chest. Javier Inda and José García would come to visit him as he was healing to see how he was doing and to discuss his possibilities to pay the loan. Francisco Erecta says “they have been very understanding people.” One year after having to leave his forestry work due to his injury, Francisco Erecta has a gardening job and is determined to pay back his loan. Another example is Bellasili Moreno Ramírez and her husband Jesus. The day I interviewed Bellasili Moreno she was still in shock. The previous day her husband Jesus had been robbed in broad daylight in the middle of town. The thieves stole $23000 pesos from her husband but left him unharmed. They were going to use that money to improve the chicken coop for their chicken-raising cooperative and also to make some payments on their loan. But Bellasili is just glad her husband is alive: “I know the money is distressing and it costs a lot to obtain but life costs more.” She is also grateful for the fact that Edupaz “is a good enterprise; it’s not like the others who pressure you. There is more understanding.”
But unfortunately I also witnessed a situation where clients took advantage of this compassion. I had joined Javier Inda and José García on a trip to Carranza to interview clients whilst they collected payments. On our way home I asked Javier how many people had paid and he responded:
Only two out of twenty made any sort of payment; one paid interest and one paid capital with interest. We probably won’t work with this community again because of instances like today; the people spread word if one person isn’t going to pay and they say, “if he isn’t paying, I’m not paying either.”
Although the four clients I interviewed in Carranza had spoken of their projects’ great success, two of them did admit to making late payments from time to time. Perhaps those Carranza clients don’t have sincere reasons for their lateness. Maybe they still do not fully understand that, once received, those payments will be quickly converted into a new loan, for someone who may need that money more than they do.
4. THE ISSUE OF SEASONAL WORK
Another challenge faced by some Economía Solidaria clients is the situation of a project that generates an exclusively seasonal income. In turn, this results in a dilemma for the Economía Solidaria staff in deciding which clients will be allowed a seasonal payment schedule. For example, for the case of Álvaro Hernández Mauricio, President of a Tziscao ecotourism cooperative:
The payments are a little difficult because depends a lot on tourism. If there are tourists visiting, then there will be a little money left over to be able to pay the capital and the interest. We pay the interest monthly. We are paying the capital each vacation season.
Isidoro Morales Mauricio also stated that the loans to his Tziscao coffee cooperative have always been with a seasonal payment schedule. But what about the seasonal projects which are not permitted a seasonal payment schedule? Bellasili Moreno Ramírez of Comitán voiced that the monthly payment schedule made things a little complicated for her chicken-raising cooperative: “We have an agreement with Edupaz to pay monthly. It’s difficult outside of the season...It’s not very advisable to raise chickens in November or December because they get sick.” Another example of seasonal work with a monthly payment schedule is Olaf López Hernández’s project in Carranza. He bought a parcel of land to utilize for growing milpa. Although the project income is dependent on the harvest, Olaf López explains that ‘at times when the harvest is lost the money comes from other jobs; we have never been late .’ Here it seems that Olaf López has found a temporary solution to his payment issues, but it is somewhat troubling that the money he uses for the loan payments is not generated by the project itself. In my opinion, the solution to this issue is to consider the situations on a case by case basis. Economía Solidaria cannot grant flexible payment schedules to all its clients because this would deepen their funding crisis. But they can resolve these situations as they see necessary by listening to the clients’ difficulties throughout Economía Solidaria’s accompaniment of each project.
5. A CONTINUAL LEARNING PROCESS
Javier Inda likes to make the analogy that Economía Solidaria is a school and the staff are its students, but he recognizes that “we are in elementary school; we haven’t made it to high school yet.” Some may see this learning process as a weakness, but I believe the open-mindedness and sincerity of the staff allows them to constantly improve their services, instead of simply sticking with an unsatisfactory status quo in order to appear “stable.” This means acknowledging that it’s okay to make mistakes and it’s ok to fail, as long as one learns how to prevent future failures. One of the key components which makes this process successful is maintaining an open dialogue. For example, when the pig-raising cooperative in Miguel Hidalgo appeared to be failing, Javier Inda made sure to open their meeting by saying, ‘we are here to talk with you about what happened, to see if we can learn something from you so that we don’t run into problems like this with another group.’ During the meeting, experiences and opinions were shared very honestly. As the meeting drew to a close a mutual consensus had been reached amongst those present: Cooperativa Jerusalén would take what they had learned from the project’s failure and decide if they would like to initiate a completely new project, applying their newly attained knowledge. In addition, Economía Solidaria would extend their contract term to July 12, 2007 because the cooperative members had voiced concerns that May 12, 2007 would be too soon to pay off the pig-raising project loan. This meeting demonstrates the exact kind of open dialogue and participatory decision-making that keeps the program dynamic and receptive.
An important lesson that Economía Solidaria is learning right now is how to determine what type of group is best for each project and, on the other side of the coin, what projects are best realized in cooperatives vs. individual investment format. Again, taking the example of Cooperativa Jerusalén of Miguel Hidalgo, this cooperative suffered the loss of one pig and six piglets due to poor coordination and lack of responsibility. Seven cooperative members were assigned to each pig, with seven pigs in total. This plan was ineffective due to the fact that each group of seven people would only be concerned about their pig, and if one of the other pigs looked ill or poorly-fed, they did not pay attention because it wasn’t their responsibility. In addition, the cooperative members did not fulfill their responsibility of attending the assessment workshops with the technician. Some would just come to the first meeting or the second meeting, instead of attending the three-session course, therefore never learning valuable information about how to care for the pigs and piglets. While José García believes that ‘it would have worked better if we had done the individual investment, with two or three pigs for each family, instead of the cooperative,’ Javier Inda thinks that, ‘If they’re not interested in working as a group with this project, they’ll be even less interested in working individually.’ Basically, for the Miguel Hidalgo group it seems as though the project itself and perhaps the organization of the group, was not appropriate. This conclusion becomes even more pertinent when comparing the experience of Miguel Hidalgo to a pig-raising cooperative in Buena Vista Pachán. This group, located less than ten minutes away from Miguel Hidalgo, began the project at approximately the same time, and received the same technician workshops as the other group. But Cooperativa Una mirada más allá was much more successful in their work, ending up with two litters of piglets ready to sell. This cooperative chose to assign two people per day to care for all seven pigs and all the members attended each assessment workshop. In this case, the organization of the group and the project went hand in hand. Now the challenge for Economía Solidaria is to learn from these experiences to be able to identify the ideal group format and project to recommend for future clients according to their characteristics.
But part of this learning process is also recognizing the limits of their work, “We are looking to understand the limits and the potential of this work with the people... we’re talking about a difficult situation at the global level and, therefore, what are we going to effect here with a small microcredit loan?” Casting doubts like these is part of a healthy journey away from the glossy “win-win” image that most organizations project and towards a down-to-earth vision of what an organization can actually realize.
VI. THE FUTURE: CONCLUSIONS & PROJECTIONS
The future Edupaz’s Economía Solidaria program depends on both the staff and the clients’ abilities to collaborate with and understand one another’s objectives. The following are the specific objectives of the Economía Solidaria program:
1) To achieve a higher quality of life; 2) to construct small alternatives to the system; 3) to ensure the continuity and sustainability of the projects; 4) to stimulate an educative process (of theory and practicum training); 5) to stimulate a participatory process (of internal democracy, gender inclusion, delegating responsibilities).
To understand if these objectives will be (or already have been) achieved, one must recognize the issues that surround these objectives while also appreciating the perspective of the clients.
A. TO ACHIEVE A HIGHER QUALITY OF LIFE
A minimum requirement in order to achieve the first objective of Economía Solidaria is agreement between the staff and the clients as to what the term “quality of life” actually means. For Edupaz, the components necessary to define quality of life include “a dignified job that ensures the sustenance of a family, food, housing, education, rest.” When asked how they would define “quality of life” in their own terms, clients responded in various ways:
• “It has a lot to do with our own right to make decisions and what type of life we want to live.”
• “We don’t live in disadvantaged situations like other people who have to immigrate to another country or to a city to be able to sustain their home and their family.”
• “That our family feels well and that we are of good health.”
• “Health is the most important for our family.”
• “We live with what we have and with our health, this is the most necessary.”
• “For me it means to overcome; to get ahead with your family and your housing.”
• ‘It is that my daughter can now continue with her education.’
Perhaps there is a greater emphasis on the theme of “health” in the clients’ definitions, but the elements that Edupaz lists will in turn benefit the health and well-being of a family. Although the Edupaz definition and the definitions of the clients are not worded exactly the same, I believe the clients convey the very essence of Edupaz’s words, signifying a sense of agreement between them. Now the ultimate test is to see if those shared goals will be achieved. In order to determine this, I asked the question: ‘Do you believe your quality of life has changed since receiving the Edupaz loan?’ Of the ten clients who responded to this question, three said that their quality of life had maintained the same and seven said that it had improved. These results indicate that the Economía Solidaria program is achieving their first objective and will continue to do so as long as the needs and the goals of the clients are mutually understood.
B. TO CONSTRUCT SMALL ALTERNATIVES TO THE SYSTEM
Gustavo Esteva would refute this objective, stating that microcredit in fact achieves the exact opposite by pulling people into the system rather than creating alternatives. I would have to disagree with Gustavo Esteva on this point because I believe the majority of Mexicans are already functioning within the system. The reality is that “most countries have no choice; they are forced to increase their integration within and dependence on the international market economy in one way or another.” For example, this international market economy system manifests itself directly in the lives of Mexicans in terms of the prices of goods which they buy and sell, unemployment due to outsourcing or international competition, and, in turn, the need to emigrate to a city or developed country (caused by the prices of goods and unemployment). After nearly every client interview I performed, the interviewee would ask me about the United States, mentioning a relative who had immigrated there. In this case, Economía Solidaria is not creating alternatives to the system, but rather within the system. By providing the means to create sustainable, self-employment projects, Economía Solidaria is constructing an alternative to poverty and migration for its clients.
C. TO ENSURE THE CONTINUITY & SUSTAINABILITY OF PROJECTS
I will agree with Gustavo Esteva on the issue that this sustainability is at risk if an addiction to credit develops, creating a dependency which counteracts the sustainability. Javier Inda states that ‘more than half have asked for a second loan, sometimes to amplify the same projects.’ Through my research, I found this statement to hold true in that of fourteen projects I encountered, seven had used more than one loan, six of those seven used those loans for the same project, and five voiced interest in obtaining another loan. But, does asking for multiple loans actually signify an addiction to credit? Or, does it signify a confidence in the program and an actual need for the funding? In support of the latter reflection, one client stated that he asked for a second loan because ‘it’s easier the second time; we are all human, we learn by doing.’ Isidoro Morales Mauricio acknowledges this issue of sustainability, saying that “we run our own business so that we don’t have to be asking for credit all the time and because there may be one day when they don’t grant you the credit or they don’t have the resources and then how will you be?” Ideally, all clients would think like Don Isidoro, planning their projects to prevent dependency on credit, but this understanding does not often occur naturally for everyone and therefore must require actions on the part of Economía Solidaria. But it appears that no concrete plans have been made to prevent this dependency as Javier Inda casually mentions: ‘I suppose that the individual investment and cooperative groups should have a limit of three years .’ There seems to be more emphasis on case-by-case evaluation in that ‘we need to keep evaluating to see if they know how to walk on their own.’ Since each project may need a different level of support, I do agree that case-by-case evaluation is necessary, but I also believe that an overall plan to prevent dependency is crucial in order to ensure the intended sustainability of the projects.
This issue also relates to Edupaz itself in the sense that a decision needs to be made whether to pursue a self-sustainability plan or continue to sporadically rely on external funding. The alterations of interest rates due to changes in external funding could be detrimental to Economía Solidaria’s relation with their clients in that the clients lose trust in the organization’s policies if they are constantly changing. Since it is not very likely that Edupaz will receive constant support each year from foreign organizations, it would be better for them to pursue a long-term plan of self-sustainability. Although a concrete plan has yet to be drafted, Javier Inda does state that “an objective of Edupaz is to be self-sufficient; we don’t want to be depending on external support. Perhaps more in the future other projects will be developed that permit Edupaz to be self-sustainable.”
D. TO STIMULATE AN EDUCATIVE PROCESS (of theory and practicum training) This objective seems to be put on hold for the time being due to ineffective methods and lack of funding. But the question is not if the group discussions will be reinitiated, rather “how to do them at the interest of the clients.” In my research I found that eight clients voiced a strong desire to reinitiate the group discussions. But many made the distinction of wanting practical workshops rather than discussions of theoretical analysis. Mario Morales commented that a relative had benefited from a worm-farming workshop with Edupaz and stated: “We like it when they talk with us so we can put a few things into practice.” Javier Inda also recognizes this fact, saying that “we saw that when the discourse was only criticism it doesn’t interest them, for example, the talks about the socio-political context. But with the area of agroecology, they aren’t only criticizing but rather offering alternatives.” That being said, I believe that Economía Solidaria should focus solely on incorporating practical workshops into their microcredit group visits (alternative technologies, agroecological methods, administration, etc.) and it is possible that the theoretical learning process will arise naturally during those experiences. In addition, these workshops should not be obligatory, but rather they should be offered to each group and given in accordance with their interests to create a level of commitment that will sustain itself throughout the series of talks.
E. TO STIMULATE A PARTICIPATORY PROCESS (of internal democracy, gender inclusion, delegating responsibilities)
Although the interaction between the staff and clients is already quite participatory in terms of the shared open dialogue, the future plan is to fully transfer the decision-making process, responsibilities and administration into the hands of the clients themselves. The first part of this plan, which will ideally be realized within the next five years, consists of creating zones “to coordinate the groups of the region and delegate responsibilities to representatives of the zone to motivate and supervise the groups.” These representatives would be trained by Edupaz to be able to direct and improve the Economía Solidaria program of their region, assuming the responsibilities of the staff and taking it as their own. The more long-term goal is for each region to manage its own Economía Solidaria community bank, creating local savings accounts and offering loans within their specific region.
Although these plans do not manifest themselves in the present reality, the potential of gender inclusion within this process is already apparent today. For example, when Javier Inda asked Cooperativa Una mirada más allá the questions, ‘What role do the women have in this cooperative?’ and ‘Do they also make decisions with everyone else?’ , a cooperative member responded saying that ‘We all make decisions together. The women also work hard on the project. It is beautiful that everyone is together when it comes time to make decisions.’ Including the women in these processes is something that will need to come from within the community itself; Edupaz can bring their attention to the issue, but it is only the community members themselves who can change their own culture.
The Economía Solidaria program wants their clients to inevitably take control of their destiny. The degree of autonomy that would be attained through forming zones and community banks would allow the clients to be fully self-sustaining, creating their own self-employment alternatives within the system. But it is difficult to predict when or how this process will take place due to the fact that it will depend entirely on the response of the communities themselves and also the fact that these propositions haven’t even been mentioned to the clients yet. My projection is that, yes, this process is entirely possible but it will inevitably present even more challenges than Economía Solidaria has experienced to date. Its success will rely on the ability to face those challenges with a strongly-shared commitment, by all parties, towards the end goal.
F. FINAL THOUGHTS
Challenges. This is the word that always comes to mind when I think of Economía Solidaria’s journey. It would be impossible to name which challenge has been the most difficult because they are all interconnected, both those of the clients and the staff, constantly affecting one another and creating new realities. A main issue has always been, and will always be, how to resolve these challenges in an effective and fair way.
But the fact is that Edupaz took the risk; they decided to find a solution to the situation of poverty so apparent in Chiapas. The risk is that poverty is such a complex problem that a solution may end up doing more harm than good, especially if it is not a comprehensive one. For Economía Solidaria, this risk seems very real in those moments where the setbacks outweigh the successes. But the difference is that Economía Solidaria takes advantage of those moments by learning as much as possible from the situation, allowing their methods to be improved and their hope to be renewed. In Economía Solidaria, I see a program guided by people who are weary from its past, critical of its present, and hopeful for its future.
The Economía Solidaria program has always known that microcredit in itself is not a comprehensive solution. For this reason, the program has tried to incorporate other elements which complement the sustainability process and ensure the effectiveness of microcredit. Granting someone a loan is an important step towards sustainability; as long as the process takes into account the needs and situations of the clients. But the loan is just that, a step towards sustainability. To foster long-term sustainability, the following steps are necessary: 1) there must be discussion and consensus as to why this sustainability is needed; 2) solutions and alternative methods must be offered in accordance with the local culture and reality; and 3) autonomy must be an end goal of this process in order to nurture and preserve the sustainability. The Economía Solidaria program of Edupaz is taking these steps and, in doing so, is providing the means for its clients to become active participants in their own future.
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A story well told
Thanks, Maggie, for sharing your journey with all of us. You have invited us to travel with you and experience life in a world apart from our own - that's always a good thing. Looking forward to seeing your smiling face next week :)