Microfinance at work in the poor corners of Ecuador
Part 1 of a 2 part series on Oikocredit’s recent study tour in Ecuador
I am back from Ecuador where I took part in the latest study tour organized by Oikocredit international. What an experience it has been to see first-hand what microfinance allows disadvantaged people to do. It was not an easy trip, we had little sleep, no time for a few drinks, never a beach in sight, and of course, all the expenses were ours. But it was real and so instructing.
Oikocredit international is a worldwide cooperative and social investor active in Africa, Asia, Latin America and Central & Eastern Europe where it finances institutions involved in microcredit and agriculture. We spent entire days with cocoa and coffee growers and we learned how microfinance was improving life in their community and helping them produce the top quality organic beans for our favorite beverages. But that will be for another day. For now, I will say a few words on how microfinance concretely reduces poverty.
The funds gathered by Oikocredit come from individuals who invest, knowing their money will be put to good use. When I was told I could be part of the tour, I did not hesitate one minute. I asked for 10 days off, checked the validity of my passport and bought my airplane ticket and a new suitcase.
Plans changed with earthquake
Of course the earthquake that struck the country last April made me hesitate. As reported by the media, the devastation was indeed great. Over 600 people lost their lives, many are still unaccounted for, and houses and infrastructures instantly became ruins on the 16th of April. To those unfamiliar with the region, the whole country seemed under duress. Thanks to its extensive network of partners, Oikocredit officials were quick to assess the situation and take the decision to go on with the mission.
The earthquake had been particularly severe in two coastal provinces so some plans had to be modified and visits cancelled. In terms of physical damages, the rest of the country, including Quito and Guayaquil, respectively the capital and the largest city in Ecuador, were largely unscathed. That is not to say that no microfinance beneficiaries were touched, in fact several were impacted, and the microfinance institutions supported by Oikocredit are sparing no effort to help them financially.
Those lenders partnering with Oikocredit international are either banks or foundations. We had the chance to meet with the managing teams of Banco D-MIRO and a non-profit association called FACES who explained, with figures to support what they were saying, what they were doing with the hundreds of thousands of US dollars they were borrowing from Oikocredit international.
That money is a large chunk of the capital held by the bank and the FACES foundation and they are lending it to hundreds of small borrowers who otherwise would not have access to the ‘regular credit’ offered by commercial banks. Simply put, they are too poor and they are not in a position to offer the guarantees required. What they have in common is a spouse or friends willing to co-sign the loan, a particular knowhow and eagerness to make a decent living out of it.
Small loans have big impact
For example, we met in the outskirts of Guayaquil a couple in their mid-fifties (Vincente and Elena) who were making chicken or vegetarian empanadas with a crust made of plantains. Prior to getting their first credit from Banco D-MIRO, they were working a small plantains plantation whose revenues had to be supplemented by the income earned by Vincente. He was taxiing people in his car until he had an accident which resulted in a total loss of the car. They could not afford to buy another and had to abandon the plantation. It was about that time that they heard of Banco D-MIRO microloans. They knew what to do with plantains and that they could sell their empanadas in their neighborhood. So they took out a loan that allowed them to purchase a fridge, an oven and a professional grade grinder. Today, as they are paying back their fourth microloan with interest, they are left with enough income not only to send their three daughters to school, properly fed and dressed, but also to make slight improvements to their house.
When we met these street vendors in their home, they had just got rid of the wooden ladder they were using to reach their bedroom and replaced it with a small cement staircase. A wooden floating floor for their ‘commercial kitchen’ was next on their list. During our visit, we were interrupted by the three girls coming back from school.
We have met other small borrowers, a mechanic, a plasterer, a dressmaker - all entrepreneurs working at home, making a decent living and sometimes creating jobs for others. They looked happy, and so were we, becoming aware of the difference our investment was making.
Part 2: Improving lives and communities through co-operative action and organic certification