Oaxaca is a state often referred to as “The Real Mexico”. Its rich indigenous roots combined with a strong colonial presence do seem to embody the Mexican soul. Or, maybe the “real Mexico” refers to the fact that considerable wealth exists side-by-side with rural poverty. Maybe it’s just because Oaxaca is rumored to be the birthplace of mole. Whatever the reason, this “Real Mexico” was one of the two states where Compartamos co-founders decided to make their first loans to clients in 1990. Over 20 years later, Oaxaca has a thriving microfinance industry serving thousands of clients. This week, I was fortunate enough to visit this fascinating state and talk to some of its people. Here are just some of their stories:
A Real Microfinance Success Story
Maria Teresa Hernandez was in tears as she told us the story of how she came to be involved with Compartamos.
10 years ago, Maria had taken out a loan with another bank. Shortly afterwards, her granddaughter became sick with pneumonia and needed to be hospitalized. With few other options in sight, Maria used her loan money to pay the hospital bills and was unable to generate enough income to pay back her loan. Having defaulted, the credit authorities started to come after her.
“I thought my family would be in ruins,” she said, choking back tears. She told us she thought no one would ever trust her again.
Compartamos decided to go out on a limb and offer Maria a loan of Ps.$3,000 (about $225 USD) to buy ingredients to make and sell bread. She and her husband, Benjamin Cruz, were able to use his mother’s clay oven to produce about 100-200 loaves of bread a day. This was enough to keep the family out of financial ruin and pay back their loans.
Maria and Benjamin soon realized that local schools needed to purchase loaves of bread for the children’s mid-morning sandwich snack. However, their small oven was not sufficient to make the amount of bread needed to provide to schools. So, they went back to Compartamos and signed up for the individual credit plan, Grow Your Business Loan. This credit works more like those given by a traditional bank, with loans of up to Ps. $100,000 (about $7,500 USD) made to and guaranteed by individuals. Continue Reading →