A sewing machine really can make a difference

Ever heard the example about the enterprising woman who used her small loan to buy a sewing machine and was then able to increase her income exponentially? Well, I had heard it too, but it wasn’t until I met Praveentaj – an entrepreneur from the outskirts of Bangalore, India, who has been embroidering various clothing items for 17 years – that I realized that microfinance can indeed work the way the fairytales say.

Through the Dialogue on Business program at Accion, Praveentaj was encouraged to increase her services and production as a way to increase her revenue and income. So, she decided to invest in a sewing machine as well as implement a tailoring component into her business. Quite a change from how she was working before — all by hand!

Meet Dilshod

Dilshod is an entrepreneur from the outskirts of Bangalore, in Karnataka, India who makes Agarbatti. Say What? Agarbatti? Yes, Agarbatti, which is the Hindi word for incense.

It was so fascinating to go behind the scenes and see how something is made that I use nearly every day. And the speed of her hands! My camera could barely focus.

When I visited Dilshod, she was working on the first step of making Agarbatti, which is rolling charcoal powder and an adhesive onto bamboo sticks.  The last two steps are adding the fragrance (Sandalwood, Star Anise, Cedarwood, Patchouli…can’t you just SMELL India already ?!) and packaging the finished Agarbatti, which will be sold to homes, workplaces, and places or worship, in India and around the world.

Juana, age 74, eco-entreprenuer

Pineapples, carrots, tomatoes, fresh-shelled beans—their wares are spread on two cloth-covered tables in front of the municipal building of Obligado, a large town about twenty miles northeast of Encarnación. This group of women, clients of Fundación Paraguaya, established this market two years ago and have run it every Friday and Saturday since. But there is more for sale that just foodstuffs and today the group has invited me to their most recent training and meeting.I sit and listen (or more accurately, watch, as these rural women speak Guaraní among themselves) as loan officer Gladys leads them in a training on encouraging their children to save. One of the women has to leave early, but as she is going, she comes close by my left shoulder to show me her purse.

The exterior is soda bottle plastic laid flat, through which you see the main decoration, a large, orange fabric flower, backed by a lining of embroidered, lacy fabric. The handles appear to be made of drinking straws. It has the charm of a shadow box, and it’s eco-conscious, too.

“Is this your design?” I ask.

“No, she made it,” the woman answers, pointing to the oldest member of the group, Juana.

As the training ends and Gladys begins to collect signatures for the new cycle of loans, I fall into conversation with Juana de Dios Borda, age 74 and a widow for 16 years. When her loan committee formed, she was well beyond 65, the official upper age limit for a Fundación Paraguaya client. But her fellow borrowers went to bat for her, saying that she was a hardworker and would be an asset to the group. She wanted to join because she likes to work. She would be bored otherwise.

Juana has been making the plastic bags, as well as upcycled plastic kits for toting around a thermos and a guampa for making Paraguay’s favorite summertime drink, terere, for six years. She can make two in a week, and each one uses 10 to 12 soda bottles. They sell for about 35,000 guaraníes (about $7.75) each.

Juana de Dios Borda showing off her innovative bag.

Besides her plastic products and the garden produce that is her reason for participating in the Obligado market, Juana makes embroidered tablecloths and napkins. 

Meet Diana Bernal

The woman in front of the ice cream shop looks slight and shy, but she strides up to greet me with a handshake as I step out of her loan officer’s car, announcing, “Hi, I’m Diana, and I’m the secretary of Mujeres Trabajadoras.”Diana is 29 years old, a single mother of a two-year-old daughter. Until her pregnancy, she was a psychology student. In fact, she says, “Since I was interning in a hospital anyway, I worked right up until the last day.”

Her daughter’s birth put Diana’s studies and work on hold, and she spent the first year in her apartment in central Encarnación taking care of her baby. “But I was bored, and I hated being so shut in. And I was spending money needlessly.”

A year ago, Diana moved back in with her parents and, with help from a loan from Fundación Paraguaya, opened up an ice cream shop next to her mother’s bookstore in a neighborhood on the edge Encarnación, a small and tranquil but fast-growing city that has seen big changes in recent years due to the completion of the Yacyretá hydroelectric dam some 50 miles downstream on the Río Paraná. Although Diana is not among them, many of Fundación Paraguaya’s clients here were displaced by flooding due to the rising waters behind the dam.

When our meeting with her loan committee, held in her mother’s bookstore, is over, Diana leads me to her shop, where she cheerfully scoops out and weighs generous portions of ice cream for me and other customers. With true entrepreneurial spirit, Diana used her social network to find a source of ice cream that was tasty but also inexpensive enough to sell at prices that would sell outside of the city center. It was a smart move; business seems brisk.

Diana and her daughter in her ice cream shop.

“I plan to finish my degree when my daughter goes to school in a few years, but it’s so good to have something to do in the meantime, and to earn some money. And it’s really good to spend this time not just with my daughter, but with my family, too.”

Something’s cooking

I had the pleasure to meet again with the staff of the Swadhaar Meghwadi branch. You may remember that I already reported here how busy they get during collection week. Well this time around, the purpose of the visit was to meet a few clients to get a better idea of their experience with Swadhaar.

After the last logistical details got straightened up – I was initially meant to meet clients who do not speak English with a loan officer who doesn’t either, which would have made for a much less interesting post! – off we went. It was still raining pretty hard, after the worst monsoon episode I had seen happening just the night before, and the alleys of the slum were slippery with, well, all kinds of stuff.

The monsoon is weak this year, or so I am told…

The first stop was at a tiffin caterer, Rupali. Tiffins are prepared meals delivered to office workers by dabbawalas. The idea is simple: if you work far away from home, you can get all your meals delivered directly from your house or from a caterer to your workplace. The system has existed for over a century and remains a fast growing business, expanding as office jobs do in tentacular Mumbai. It relies on an army of dabbawalas commuting around, delivering the meals and collecting the empty boxes. About 200,000 tiffins are delivered every day, several times a day, and a mistake is made for each 6 million deliveries (supposedly).Rupali lives and work in a one-room home, where she prepares 4 meals a day for her 70 clients. As we arrive, lunch is cooking and the room is filled with the heavy smell of spices.

Rupali is now is her third loan cycle with Swadhaar, together with two neighbors. After four years of activity, she is an accomplished businesswoman and has two dabbawallas working for her. The printing of business cards got her new markets, like the 35 employees of a nearby call center. She uses her loans as working capital for her growing trade: every two weeks, she receives delivery of all the ingredients she needs for her cooking. Her small place is packed with onions, tomatoes and ladyfingers. Benefits are reinvested in the business, as her family of four is lucky enough to be able to rely on her husband’s salary for household and school expenses.

Rupali shows off her cooking in tiffin boxes.

We left Rupali and her stewing gobi to go and meet Sunita, the chapati maker. Chapatis are round flat wheat breads that are commonly served with Indian meals. Just like tiffins, they are an institution.

Microfinance in the ‘Real Mexico’

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:

Bertha Gopar (center) has been a Compartamos client in Oaxaca since 1993. She now shares the group with her daughters and granddaughters (pictured) and even has a great-granddaughter who will join the group soon.

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 Teresa Hernandez and her husband, Benjamin Cruz, pose in front of one of their industrial ovens. They use these ovens to produce 100,000 loaves of bread a day.

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.

A Sweeter Side of Microfinance

Normally I don’t like reading microfinance stories about the proverbial, impoverished woman who is able to change her life with a simple microloan. These stories often give too much credit to the loan, and underplay the skills it requires to both run a small business and pull yourself up, out of poverty. In my opinion, anyone who can do either is a truly exceptional person. This week, I was fortunate enough to meet with six such Compartamos clients from Puebla, Mexico, and I wanted to share their inspiring stories with you.

In the rough neighborhood of Magnolias, Tentaciones bakery stands out with walls painted in three different shades of purple. In fact, both the bakery and the cakes inside of it seem more in line with what’s sold on 5^th Avenue in New York City than anything I’ve seen in Mexico. All of this is thanks to Elizabeth Carral and her spunky daughter Lorena Bonilla.

Elizabeth joined a Compartamos loan group about a year and a half ago with the idea of opening up a bakery. Since Lorena was not having much luck finding a job after getting a college degree in industrial engineering, she decided to help her mom with the endeavor. In order to get started, they used their first loan to buy an oven and, with each loan cycle, continue adding to their business. In a few weeks, they plan to buy a truck, which will allow them to make deliveries more easily.

Lorena Bonilla used her microloans to buy equipment like this industrial mixer for their bakery, Tentaciones

A Paraguayan Microentrepreneur Goes Global

Meet Sirleide Bomfin Martins. She is sitting at her desk, order forms and receipts covering nearly the entire surface area, discussing the inventory shipment scheduled to arrive from China later this week. She guesses it’s passing through the zona franca, Chilean trade zone, right now and should arrive within the next day or two. We joke that perhaps we should be chatting in English instead of Spanish to prepare her for her upcoming business trip to Shanghai.

Sirleide, posing with her four employees, certainly looks the part of a rising star.

Contrary to what the scene may suggest, Sirleide is not a high-powered business tycoon. She is a microentrepreneur.

I visited Sirleide today in San Lorenzo, a town on the outskirts of Asunción. Her shop, which sells a variety of sewing machines, is nestled among fruit stands, general stores and clothing booths on one of the busy main streets of the city center. Upon entering, it isn’t immediately obvious that the shop is any different than those that surround it. Bare furnishings and peeling paint on the walls belie the impressive reality of this humble business: it may just be the most globalized small enterprise in town.

Client Needs–A Typical Small Business Owner’s Voice

On July 19^th, I visited Mr. Sun, the shop owner of a Children’s Wear Shop in Bayan No.4 General Merchandise Market. He is currently our urban individual loan client and his business is in good condition. The interview is based on the questionnaire designed by Karen Lewin, ACCION’s consultant for saving and marketing for Bayan VTB.

He really appreciates Bayan Rongxing VTB’s support in his business. “Without the capital from its loan, I could not grow my business so smoothly. It is extremely difficult to borrow money from other big four state-owned banks and it is also more expensive to borrow from informal channels.”

Now he has four shops within the market building all selling children’s wear, with eight employees. The shop in which we conducted interview is about 100 square meters. He proudly introduces his scale of business to me, “if all his clothes in inventory are listed in a row, it can stretch to 2 kilometer”. Moreover, apart from the apartment he is living now in Bayan, he has an apartment in Dalian City, which is the south of Liaoning Province.

I also asked about banks and services he uses and his experience about them. Apart from his gratitude for Rongxing VTB’s financing help, he also speaks highly of VTB’s excellent service attitudes. He would borrow more from VTB is possible since he is eager to expand his investment in real estate.

 

My loan bred eight stores

BAYAN, CHINA- After a sumptuous lunch at our loan officer’s family-owned restaurant, we took a three minutes walk to Mrs. Sun’s home. Mrs. Sun was one of the five happy female clients we interviewed in the morning, who was so enthusiastic to introduce to us how the loans she received from Rongxin Village and Township Bank (VTB) had enabled her to build eight stores outside her home and gradually helped her family to get better.

Mrs. Sun in front of her stores

At the turn of a major corner, a row of stores with colorful name boards and clear white paint were eye-catchy on this dusty country road. A fruit and vegetable “supermarket”, a Sichuan hotpot store, an Anhui noodle shop, a makeup and beauty shop, and even a veterinary clinic. “These are the stores that Mrs. Sun leased out” as our loan officer introduced to us, “it is at great location, all the traffic entering the town need to pass here.”