Nicaragua teaches a lesson in the power of microloans | The independent


As we drive through the streets of Managua in August, the realities of life for citizens of Central America’s poorest country are glaring.

Housing in Nicaragua’s capital is a sprawling slum. The mostly unpaved dirt streets don’t even have names. For most people, transportation means standing in the back of a truck, holding onto makeshift scaffolding with 15 other people, or hanging from the open back door of an overcrowded bus.

In 1972, an earthquake destroyed 90% of the city and killed 11,000 people. The only sign of investment is a driveway of 6 tall metallic yellow “trees” built two years ago.

I’m here to meet Rupert Scofield, Founder and CEO of Finca (Foundation for International Community Assistance), one of the world’s largest charity banks with 1.8 million customers in 23 countries. Finca is a pioneer in microfinance – small loans, usually a few hundred dollars, to people who would otherwise not have access to capital – and I visit some of these clients to see what effect this has on their lives. .

It was in Central America that the idea of ​​microfinance first came to Mr. Scofield. Working for the US Peace Corps, helping farmers in the Guatemalan highlands, he saw the effect that even small loans could have on a community. Giving a small group of farmers the money to buy bags of fertilizer immediately improved the impoverished soil and had a dramatic impact on their harvest.

It is as necessary today in Nicaragua as it was then. According to Finca, 81 percent of the population does not have a proper bank account and 41 percent live below the poverty line. Nowadays, most people who take out a finca loan are already micro-entrepreneurs, with the loans allowing them to make their business profitable – buying wholesale rather than retail, for example.

In the town of Jinotepe, about an hour’s drive south of Managua, we meet some of these clients with Mr. Scofield. A foot taller than most, this gentle-mannered 66-year-old New Yorker who listens to Neil Young and considers himself, in his own words, one of the “crazy people of the Sixties”, he trains us to through a crowded market where it is successively greeted by merchants selling cowboy boots or second-hand clothes.

We stop and chat with Juana Cano, a soup seller whose business thrives on the money she borrowed from Finca, which allowed her to build a small house.

In the two days I spend with Mr. Scofield, I meet at least 15 clients with similar stories. Among them, Julia and her daughter Isabel, who get up at 4 am and work until 5 pm to make and sell tortillas for the neighborhood; profits from the business enabled Julia to buy a car.

Juana Cano, a soup seller whose business thrives on the money she borrowed from Finca, which allowed her to build a small house

(Oz Koca)

Then there’s Evana, who borrowed $ 200 to buy and sell cosmetics from home, using the profits to pay for her law school. I also meet Dona Julia Lilliam Ramirez, who runs a grocery store. A client of Finca for 19 years, she used her first loan to buy cleaning products in Managua to resell them in neighboring villages. She now uses the proceeds of her business to feed poor children in the neighborhood. “Gracias a dios, gracias a dios primero, y Rupert segundo,” she said when we met. “Thank you to God, thank you to God first and Rupert then.”

But microfinance has its detractors. Finca has been in Nicaragua since 1992, and although it clearly makes a difference in the lives of people on a small scale, the underlying issues of poverty in the country are hardly addressed. Academic studies in recent years have also come to the conclusion that there is no evidence that microfinance has had an impact on poverty in the world.

I ask Mr. Scofield what he thinks about it and he gives a typically passionate response: “We have 50,000 clients. [in Nicaragua] and more every day… If it is true that there is no impact on financial income, why are the poorest people on the planet, whose time is very precious – we spoke to these women tortillas , for heaven’s sake, they get up at 4 a.m. and work until 5 p.m. – why would they do that if it didn’t impact their income?

In addition, according to him, microfinance can play an important social role, even going so far as to fight terrorism. “I heard someone say the other day, ‘Let’s be clear, we’re not going to fight terrorism by helping the poor with microfinance.’ Well guess what, we are, and that’s the only way we’re going to do it.

“We ignore at our peril the social ills of countries like Pakistan and Afghanistan where youth unemployment is high and people can entrust their children to a madrassa and a radical imam or else they risk dying. hunger. … So how do we fight this? We need to give the family an alternative, perhaps an opportunity to access microfinance – the ability to start and run their own business.

“It won’t be the only solution… but business, conducted responsibly and as a social enterprise, is the solution to many major ills in the world, including poverty and terrorism. “

It would be fair to say that most of the people I meet benefit from microfinance in one way or another. But they don’t really have an impact on the economy of the country as a whole. One exception, however, is Nelson Lopez, who runs a small citrus farm on an acre of land on the outskirts of Jinotepe. A strong, stocky man of around 40, he employs four people, one of whom is busy watering row after row of citrus and avocado plants neatly wrapped in black plastic.

He has a two-year loan with Finca. He borrowed $ 10,000 and repays about $ 3,700 every six months, although the figure decreases as the interest is paid off. Mr. Lopez owns his land but has used the money to buy everything we see: land, fertilizer, labor, insecticide. Of his 60,000 plants, he estimates that selling 50,000 of them will pay off his loan, with the remaining 10,000 giving him a profit of $ 8,000.

Mr Scofield explains that farm loans like this are new to Finca. “He has other choices, and if we didn’t treat him well he wouldn’t stay with Finca, but he also had the experience of another commercial bank, where he tried to get a loan of 13 $ 000 for a truck. They turned it down. He got angry and said, “If a rich person had come here to try to get a loan for a car, you would have given it to him immediately and he would kick her out of the car. lot “- and he stormed off. Basically, banks don’t fund small producers like him, and that’s why that’s a great opportunity for us. Mr Lopez adds,” Without farmers, he wouldn’t. There is no food. These oranges, tangerines, they do not arrive at the table. He considers that the growth of small landowners like him is crucial for the development of his country.

Back in Managua, I sit down with Mr. Scofield at a barbecue for his staff. We are talking about the Sandinista government of the country and that era consumed by vicious civil wars between leftist guerrillas and counterrevolutionary Contras, not only in Nicaragua but across much of Central America.

It’s a subject he knows well. After helping Guatemalan farmers, he traveled to El Salvador to work for the American Institute for Free Labor Development on the country’s land reforms. He explains that Salvadoran landowners did not appreciate having their plantations expropriated and funding death squads to kidnap and assassinate anyone associated with them. It was dangerous work and her boss, Mike Hammer, was murdered. It could easily have been Mr. Scofield. It’s emotional stuff. He risked his life to help the poor and it is hard to doubt his sincerity, yesterday and today.

He knows that Nicaragua’s problems cannot be solved by entrepreneurship alone. He needs appropriate institutional reform, and he doubts it. It turns out that those metal-yellow trees that line Bolivar Avenue are called “Arboles della vida” – trees of life, supposedly symbols of growth and prosperity. They are estimated by some to have cost as much as $ 20,000 each.

Tomorrow, Mr. Scofield leaves for Honduras to see how Finca’s operations are going, and a few days later he will be in Mexico. I wonder if, 45 years after working with these Guatemalan farmers, he still has the commitment he had then. “The payoff is to see as many people as possible climb that ladder,” he says. “What really keeps me going is a day like today, meeting people like Nelson.”

Only time will tell if Nelson will be able to export his tropical plants or if Evana has become a lawyer. But without banks like Finca – and with a government more interested in mystical yellow trees than people – they wouldn’t have stood a chance.


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