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Behind the scenes of a solidarity group

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One by one, the women are entering the patio. Some have brought their children who are quiet at first but soon start to run around, playing and laughing innocently. There’s a dog wandering around as well, dragging along its leash, apparently not belonging to anyone. Silvana is grabbing some extra chairs since we’re expecting more guests. There will have to be at least 15 women or else the meeting cannot take place. The sun is shining with brutal force on my pale Dutch skin. The banana I brought as an emergency snack is practically melting. I thought it was supposed to be winter in Paraguay?

Picture 1

Still without any worries

How much time have you been with the comité? is what I ask the women next to me after introducing myself. Just a few months. Ok, and if I may ask, what do you use the loan for? To pay off my other loans. But how do you pay off this loan then? My husband will help me with this.

This makes so little sense to me that I’m afraid to pose any follow-up questions without crossing a line. In my mind I’m wondering if she is aware that the loan from Fundación Paraguaya is supposed to be used for productive purposes only. And does she even know that when she’s not able to pay back the loan, the other women have to collectively pay it for her? After all, this is a solidarity group (See my previous blog entry).

Purpose of the meeting

After Silvana goes looking for the missing members of the group (they are all living in the same community), and a quorum of 15 is finally reached, the meeting can begin even though we are missing one or two people. Silvana is the Tesorera (“treasurer”), responsible for bookkeeping, collecting the weekly payments, and making the payment to the financial institution on time. She has been part of this comité for 4-5 years, since the very beginning. A substantial part of the women have been proud members for some years now but the composition changes constantly. Today there are also two new members and some have dropped out after the last loan cycle.

The comité has successfully paid off its previous 16-week loan and is now applying for a new one. Therefore, the purpose of this meeting is for the Asesoras to explain to the members of the comité how the credit process works, what are their obligations towards the Fundación and towards each other, what are the benefits of having a loan with the Fundación, to register their personal details (ID, phone number, signature) and to answer any questions the members might have.

 

 Signing documents to apply for a new loan

Signing documents to apply for a new loan

Q&A

A regional coordinator of the Asesoras who also joined us for the meeting starts by asking around, one by one, how long they have been with the comité and what they will be using the loan for. A lot of them are in ‘commerce’, selling either food or second-hand clothing. The woman who told me she will use the money to pay off another loan is saying she is selling some things here and there. I’m wisely keeping my mouth shut…

The coordinator is doing a talk about Fundación Paraguay and the Poverty Stoplight (future topic, stay tuned!) and is testing the group by asking them questions on what they already know. “What is one of the most important things in order to keep this group successful?” “Communication,” whispers one of the women. “If you don’t know why the other is unable to pay, you can’t look for a solution together”.

It feels a bit like the women are taking an exam. But I guess it’s important that the new members know what they’re signing up for. Some have clearly heard the story before and are distracted by their children and phones. The women regain their focus once the subject changes from “why it is important to pay back the loan” to the benefits. Especially during the talk on basic medical coverage (that comes with the loan), the women are all ears.

All in all, I was positively surprised about the interaction the group was showing. Although a bit timid at first, they started to ask a lot of questions towards the end. For example, Claudia, one of the new ladies, was asking an excellent question about a data sharing clause before she signed anything. The Asesoras on the other hand tried to be transparent and stressed the importance of acting as a group, on-time repayment behavior  and training possibilities.

And what better way to close of the visit with a group picture!

All smiles!

All smiles!


The daily struggle

Earlier this week I visited a woman who was running a “we sell everything” kind of shop, from clothes to candy and from beauty items to beer.  Her recent choices made me think she’s very entrepreneurial. She moved her shop to a neighborhood with playgrounds and canchas (football grounds) which has higher sales potential. All those boys in their puberty playing football, they gotta eat, right? Additionally, she acts as an agent for the mobile operators, which means people can come to her store to top up their balance. It will take some time before the small commissions per transaction will cover the fairly high initial investment but she knew that already. The actual idea is for clients to visit her store for the top-up and in the meantime make a purchase or two. Regardless if it works or not, I think this is the kind of entrepreneurial spirit that the Fundación would like to see in its clients.

The woman is part of a comité and is presented as a success story. Nevertheless, she admits there is still the daily “lucha” (struggle) to make ends meet. And why is she still in a comité? Wouldn’t it be a success if she graduates to an individual loan with a longer term and better (interest rate) conditions?

Also in the solidarity group I was discussing before, members like Silvana took a lot of pride in being with the comité for many years. But let’s be realistic here. If you have been through approximately 15 loan cycles in 5 years and you’re still not able (or not being pushed enough?) to apply for an individual loan to further grow your business, did you actually leave poverty behind?

I don’t have the answer to this specific case. Maybe Silvana is stuck in that famous vicious circle of poverty we all talk about. Maybe she’s happy with how things are going, and feels comfortable being in a group with fellow community members. Maybe we should look at other dimensions of poverty beyond just income. I mean, what if she improved her living situation in the last five years, for example? Perhaps, instead of reinvesting part of the income in her business, it is helping her kids through college.

Food for thought.

dennis
Dennis van Erp is working out of Asunción, Paraguay, where he’s collaborating with Accion partner Fundación Paraguaya on developing a business plan for their microlending program.

 

2 thoughts on “Behind the scenes of a solidarity group

  1. Great post, Dennis. You are asking the right questions. I’m not directly involved with loan business but working with FINCA in Tanzania I’ve also been wondering how important the mission to end poverty still is.

  2. Many thanks Dominik! Working at a global MFI network like Finca must be raising interesting questions as well.
    With my next story I hope to show that Fundación Paraguaya is committed to lift people/families out of poverty, in line with its mission.

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