Participants at the Fifth International Microfinance Forum in Caracas. Credit: Estrella Gutiérrez/IPS

By Estrella Gutiérrez
CARACAS, Jul 22 2013 (IPS)

Microfinance is essentially social, but its expansion and evolution towards diversified financial services for those who are excluded from the conventional system has compelled it to develop new codes and practices to reinforce the message that its goal is people – particularly the poor.

The Fifth International Microfinance Forum, held in the Venezuelan capital, studied the enforcement and monitoring of the new Universal Standards for Social Performance Management (USSPM) developed by the sector to ensure that internal practices and relations with clients are consistent with its mission of “changing lives.”

“Providing credit for people at the base of the social pyramid does not necessarily mean you are fulfilling a social mission. That is not enough, reality demands more,” Mario Medina, head of social assets projects for Mibanco in Peru, and one of the speakers at the forum, told IPS.

That extra mile “demands good practices in every activity, from collections and client support to how employees are treated,” said Medina, whose institution is one of the best known in Latin America for its support of microbusinesses, and which grants 90 percent of its loans without collateral.

“It was necessary to emphasise that social outcomes are also part of our income, a result, and that the returns are not only financial,” said Micaela McCandless, coordinator of USSPM activities for Accion, a global organisation that promotes financial inclusion based in Boston, Massachusetts.

McCandless told IPS that “the creation of clear universal standards to monitor social management puts the focus on people and makes all areas of the institution, including the financial area, think about the client, the services he or she needs, and also about employees who are very important within the concept of responsibility.”

The Forum was organised by Bangente, a Venezuelan microcredit organisation that serves people whose poverty level makes them “invisible to commercial institutions and unable to enter them, but who with financial support and training are able to change their lives,” Bangente president Juan Uslar told IPS.

At the Jul. 16 forum, and at later meetings between the international speakers and Venezuelan microcredit operators and clients over the next two days, the microfinance industry exchanged experiences on the introduction of the six Standards, established in 2012.

The Standards were formulated by a consensus of the Social Performance Task Force (SPTF), made up of leaders of all parts of the microfinance sector: donors and multilateral or private investors, technical aid providers, national and regional operators, certification agencies, experts and beneficiaries.

Laura Foose, the director of SPTF, said thanks to the Standards, “microfinance is rebooting,” because “there’s incredible momentum around ensuring that the client is at the centre of our work.”

SPTF was created in 2005 by several international organisations, especially the World Bank’s Consultative Group to Assist the Poor (CGAP), which says 2.5 billion people lack access to affordable financial services, although they are key to overcoming poverty.

The Standards build on the work of previous initiatives, like the Client Protection Principles promoted by the Smart Campaign to define, measure and certify dual social and financial results. The campaign was launched in 2009 by microfinance leaders in countries of the developing South and the industrialised North.

Adela Sagastume, planning and marketing manager for the Guatemalan microfinance organisation Génesis Empresarial, told IPS “we saw warning signs that made us understand that the sector had entered a very complex phase that demanded instruments for everything to remain connected to our heart: social questions, the people, and the excluded.”

Ninety-two percent of Génesis Empresarial’s credits and services are granted in rural areas, 67 percent of them to women and 62 percent to indigenous people, said Sagastume, who was also a speaker at the Forum.

She pointed out that some microfinance institutions have evolved into formal banks, while the capital markets are now the largest financiers, replacing donors.

“We who were born to eradicate poverty, improve living conditions, and generate positive changes in clients and their businesses, families and communities have always been concerned with the social return on investments. But the Standards give us clear concepts and well-defined goals, and that does a great deal to facilitate management,” she said.

Moreover, “it focuses each member of the institution and its clients on the goals: for whom, and why, everything is done. The board, the human resources department, client services, the finance sector, marketing – they all line up with this focus and that helps create a convergence of efforts and purposes,” said Sagastume.

In the new scenario, Medina said, recalibrating indicators on the social aspects of practices and assessments “is essential…What is not measured, is not improved, and only when you begin to measure practices and results do you open a new and wide spectrum of aspects you can improve for people’s benefit,” he said.

His organisation, Mibanco, has gone even further than the assessment of dual social and financial results by incorporating “triple results” in its practices, goals, measurements, monitoring and assessments.

“We include the environmental component in credits and services, for the institution as well as for the clients, because without it there can be no sustainable development,” he said.

McCandless said the Standards are: “define and monitor social goals; ensure board, management and employee commitment to social goals; treat clients responsibly; design products, services, delivery models and channels that meet client needs and preferences; and balance financial and social performance.”

She stressed the importance of the decision to set the Standards for management practices and not for social results. “Experience shows that if an institution focuses on balancing financial and social performance, good financial and social results are achieved,” she said.

She added that there were “so far no comparable data to monitor and define standards for client impact,” although she ventured a guess that in the future such universal data might exist.

The Palestinian village Zaatara at the foot of Herodion. Credit: Pierre Klochendler/IPS.

By Pierre Klochendler
JERUSALEM, Mar 16 2013 (IPS)

If Herod the Great was a controversial figure of his time, 2,000 years on the controversy isn’t about his legacy; it’s about who holds the rights to excavate and preserve his artefacts.

A new exhibition at the Israel Museum which, for the first time, displays the king’s relics, might serve as a great tribute to him, but is also a powerful reminder of how the history of the Holy Land and today’s conflict between Israel and the Palestinians have become intertwined.

On top of a hill “raised to a greater height by the hand of man; rounded off in the shape of a breast,” as Flavius Josephus, Jewish historian of Rome described it, the old monarch had a fortress-palace erected as memorial for himself; and named it after himself – Herodion for Herod.

Herodion, from where the bulk of the exhibition originates, is visible from Jerusalem and dominates the Judaean desert, since 1967 part of the Israeli-occupied West Bank which the Palestinians seek as part of their future state.

Herodion is in Area C, namely 62 percent of the West Bank maintained under full Israeli control since the 1993 Oslo interim peace accords. An Israeli military base protects the site.

The Holy Land changed hands time and again since Herod’s time, but at 758 metres high, the lay of the land looks unchanged – at first glance.

Dotting the surroundings, Israeli settlements and Palestinian villages vie for rights to the land.

Appointed by the Romans, Herod ruled the vassal kingdom of Judaea, part of the Palaestina province of the Roman Empire, for 33 years between 37 and 4 BCE.

“He was a cultural bridge, working on both sides, caught between the exigencies of the Roman Empire and that of Judaism,” says David Mevorah, the exhibition’s curator. “By his people he was regarded as a convert Jew; by Rome as a client king. But Judaea prospered in his time.”

Exquisite tableware from glass and fine and glossy red roman pottery; a statue of Cleopatra, the last pharaoh of Ancient Egypt; a decorated basin, a gift from his patron Emperor Augustus, whose bust is on display; his royal highness’s bath – all were found in situ.

Adorned with stucco and rare frescoes of sacred landscapes and navy battles painted with pigments on plaster, also imported from Herodion is the royal chamber.

The jewel of Herod’s crown, so to speak, is the reconstruction of his mausoleum which sheltered what archaeologists believe is the sarcophagus in which his body was placed. The man surely possessed a taste for the arts – even on his deathbed.  “He was very aware of historic memory,” comments the curator.

Here nowadays, historic memory refers mostly to competitive national quests.

Excavations at Herodion began in 1972 under Israeli archaeologist Ehud Netzer. “No one asked us or consulted us, then or now,” protests Jamal Amro, a Palestinian scholar from Bir Zeit University familiar with the site.

“The Israelis plundered Herodion,” he adds. “Israel uses archaeology to shape history and validate the country’s occupation of the West Bank and East Jerusalem.”

After prolonged exploration, Netzer uncovered Herod’s tomb in 2007. Two years later, he died in tragic circumstances at the site.

It took three more years to move some 30 tonnes of carved masonry from Herodion to the museum. “We actually moved thousands of fragments to our laboratories, working intensively from here on restoration and reconstruction,” says Mevorah.

“We’ve performed quite an important role for world cultural heritage,” says Israel Museum director James Snyder. But the self-complimentary effusion has been short-lived.

Palestinians complain that Israeli archaeological activities in Palestinian territories are illegal. “According to international law, this is a crime,” declares Amro. “Israel must recognise the rights of the Palestinian nation to their historical sites.”

The Israeli government lists Herodion as a national heritage site. Granted full membership of the United Nations Educational, Scientific and Cultural Organisation (UNESCO), the Palestinian Authority now wants to nominate Herodion for recognition as a world heritage site.

“The Oslo Accord makes Israel responsible for custodianship over archaeology in the West Bank until a final settlement is reached,” retorts Snyder.

A ruthless ruler who had the last lineage of the Hasmonean dynasty that ruled before him executed, including high priests, opponents, his beloved second wife and three of his children, Herod was feared by his subjects. In Christianity, he’s ‘Horrid Herod’, thought of as a serial baby killer.

At the museum, he is mostly remembered as a master builder for his colossal projects, including expansion of the Second Temple in Jerusalem revered in Judaism. Centuries later, the Haram al-Sharif or Noble Sanctuary would be edified on its ruins.

For Amro, “Herod and Herodion are important not only to Jews but to Christians and Muslims. We should be in charge.”

“We borrowed the artefacts as authorised loans; we’ll retrocede them once the exhibition wraps by year’s end,” assures Snyder.

The question is where the relics will be returned to, and to whom. “To the authority in charge of archaeology in the West Bank,” clarifies Mevorah. That is, to the ‘Civil Administration’, a well-known euphemism for Israeli military authorities in the West Bank.

“They’ll never give back the artefacts to us, forget it,” protests Amro, not sure himself whether “it” refers to the site and its treasures or to the West Bank.

“When Israel signed the Camp David peace accord with Egypt in 1979 and withdrew from Sinai,” recalls Snyder, “there was a very intelligent division of material: what related to Egyptian heritage was returned to Egypt; what related to Jewish heritage stayed with Israel.”

Would such a model be applicable to Israel and Palestine were peace to be signed between them? “I’m just a museum director, but it was well done,” says Snyder.

Campaigners are seizing on a new internal audit of financial-market lending by the International Finance Corporation (IFC), the World Bank arm that engages in private sector investment, pointing to unusually stark criticism of the institution’s commitment to due diligence.

The report warns that the institution’s oversight mechanisms include no capability to assess whether that lending – which comprises at least 40 percent of IFC portfolios, valued at some 20 billion dollars – is helping or harming local communities and overall development indicators.

In response, on Friday five international watchdog organisations, including Oxfam International and the Center for International Environmental Law, collectively called for “a fundamental overhaul of World Bank lending to financial markets actors”.

“For the first time, we’ve had an official body say this is a fundamentally problematic way of operation, that the IFC is missing the entire point of what these policies are for,” Peter Chowla, coordinator of the U.K.-based Bretton Woods Project (BWP), a watchdog and one of the organisations calling for an overhaul, told IPS. “That puts a far larger onus on the IFC to respond effectively.”

Made public this week, the audit is the result of a year of research by the Compliance Advisor/Ombudsman (CAO), an independent body charged with response to complaints from communities affected by IFC and other World Bank Group projects. The document focuses on the institution’s use of “financial intermediaries” – third-party entities such as banks or microfinance groups that use IFC money to engage in development projects.

According to the CAO, “A large portion of IFC financing is currently channeled to private sector projects in developing countries and emerging markets through third party entities.”

The CAO and other analyses suggest this practice has risen in recent years for the IFC and for other multilateral institutions, public and private.

“The use of financial intermediaries was fairly well hidden over the past decade, but they’ve been used increasingly in recent years as both civil society and governments have become more focused on project transparency,” Stephanie Fried, executive director of the Ulu Foundation, which focuses on international financial flows, told IPS.

“Yet as we see a rise in the use of these opaque bodies, we also see the IFC moving away from due diligence requirements. It’s simpler, after all, and they don’t need to be so accountable.”

Fried calls the new report “shockingly candid”, and notes that its findings will have “tremendous implications for the way that global finance is done.”

Do no harm

The crux of the CAO’s findings is twofold. First, in important commitments further strengthened last year, the IFC’s current stated policy is that its investments will not only “do no harm” but that they will actively “do good”, meaning improve development outcomes.

Second, in projects in which the institution is working through a financial intermediary, the IFC requires that entity to set up a system, known as an ESMS, aimed at ensuring that stringent environmental and social safeguards (“do no harm”) are met. However, while the IFC does make certain that the ESMS is in place, it does not engage in further analysis of the effects of this system on the ground – leaving that responsibility to the intermediary.

The CAO characterises this set-up as a “box-ticking exercise”, and warns that the mere creation of the system could become the end result, rather than enhancing environmental and social safeguards on the ground.

In a formal response, the IFC management does not deny that this is the way the system is currently constituted.

“IFC does not evaluate all information at the sub-client” level, the response reads, referring to project implementers below the financial intermediaries. “We do not consider this necessary or efficient,” as the intent is to have the intermediaries “manage this” through the ESMS.

The response also notes that IFC does “expect our (financial intermediary) partners to maintain all the requisite information about all their sub-clients … and this is evaluated by IFC as part of our on-going supervision process.”

Yet according to the CAO findings, BWP’s Chowla points out, even this system appears to break down fairly often, as in 35 percent of cases the IFC reportedly is unable to verify that its direct partners have implemented these safeguards.

Perhaps most damning in this regard, some 60 percent of “sub-clients” were found to have failed to improve their environment and social practices following IFC investment – which, CAO notes, “is where IFC seeks to really have an impact”.

Other models

According to a statement sent to IPS from the IFC’s Washington headquarters, the institution’s use of financial intermediaries allows it to provide access to finance for millions of individuals and micro, small and medium enterprises that the IFC would otherwise not be able to reach directly.

“IFC focuses on helping our (financial intermediary) clients improve their capacity to assess and manage the environmental and social risks inherent in their own financing activities – in line with IFC’s Sustainability Framework,” the statement says. “As the CAO report noted, nearly all of our clients comply with these standards.”

Armed with the new audit findings, however, campaigners are stepping up criticism of the Sustainability Framework itself. This is particularly important given that the World Bank recently began a widely watched reassessment of its environment and social safeguards, for which some worry that the IFC Sustainably Framework could act as a model.

“The World Bank has made it quite clear that it wants to streamline the safeguards process, to use more country systems to measure compliance,” BWP’s Chowla says.

“But we need to see whether they will take on board the message that using country systems does not mean being ignorant of results – that they still need to be accountable for results.”

Indeed, other due diligence models do exist. Stephanie Fried points particularly to those used by the Asian Development Bank (ADB) and the U.S. Overseas Private Investment Corporation (OPIC).

“Unlike IFC, the ADB and OPIC have insisted on maintaining responsibility for ensuring that things are being done responsibly under their investments, looking not only at the clients to whom they’re giving cash but also at the projects on the ground,” Fried says.

“That’s night and day compared to the IFC. We need to see compliance with the ‘do no harm’ mandate, and it appears that would be a complete redoing of the way in which the IFC is operating at the moment.”

The International Finance Corporation (IFC), the World Bank Group arm that focuses on the private sector, announced Wednesday that it would be backing a new microfinance institution in Myanmar aimed at reaching 200,000 people by 2020.

The move marks the first investment the IFC has ever made in Myanmar, also known as Burma. Although the country joined the IFC in the mid-1950s, it had never received a loan by the time that most international financial institutions pulled out of Myanmar in the late 1980s, citing an increasingly dictatorial government.

Last August, however, following two years of contested pro-democracy reforms in Myanmar, the World Bank re-established an office in Yangon. Now, the Washington-based IFC has struck an agreement, along with several European financial institutions, to back a Cambodian bank’s proposal to create a major new programme to begin providing loans to micro and small businesses in Myanmar.

On the back of the IFC’s two-million-dollar investment, ACLEDA MFI Myanmar (named after its parent, the largest bank in Cambodia) is expected to begin operations by the end of this year. The IFC, which has also helped ACLEDA expand to Laos, says that the programme will be reaching out mostly to small businesses owned by women.

“Our investment in a microfinance institution is a good start to our support for Myanmar’s economic reforms in order to improve access to finance, create more jobs and reduce poverty for its people,” Sergio Pimenta, the IFC’s director for East Asia and the Pacific, said Wednesday in a statement.

According to a 2011 estimate by the United Nations Development Programme, which has been offering microcredit in Myanmar for a decade and a half, demand for loans by rural Myanmarese could be as high as 470 million dollars a year.

A microfinance initiative backed by major Western donors, including the United States, was set up in Myanmar in 2009, and began officially operating in 2011 after the passage of new national legislation formalising the domestic microfinance industry. Called the Livelihoods and Food Security Trust Fund (LIFT), the programme’s latest annual report says that it has already assisted 1.1 million people, around two percent of the population.

While the LIFT programme is overseen by the United Nations and exists largely to funnel donor monies in particular directions, the IFC sees the aim of the new ACLEDA initiative as being to pave the way for other international private-sector microfinance organisations.

“Through ACLEDA MFI Myanmar, IFC will help scale up the country’s microfinance industry and increase access to financial services for both the urban and rural poor,” Pimenta says. “This will help convince other players that affordable microfinance services can be delivered effectively in Myanmar.”

Responsible delivery

Microfinance remains a relatively young industry, having been created around two decades ago and having seen significant expansion only over more recent years. During that period, many of the world’s largest financial institutions have become involved in microfinance, offering banking services and small loans to impoverished individuals, communities and business owners.

According to many estimates, there are currently around 200 million users of microfinance programmes around the world – and upwards of another two billion that continue to lack access to financial services.

Proponents say such programmes allow applicants otherwise deemed uncreditworthy by most banks to participate more freely in the market economy, particularly helping women to set up or expand small businesses and, more generally, increasing financial inclusion.

But critics maintain that despite its successes, microfinance is little more than a way for multinational financial institutions to gain access to communities otherwise generally out of reach. They warn that for-profit programmes have a spotty record in furthering development or tamping down poverty levels, and at times have done more harm than good.

Given a notably rickety financial regulatory system, such dangers seem particularly apparent in Myanmar.

Microfinance leaders are clearly aware of this record. In a taped conversation posted by the IFC this month on microfinance and “responsible delivery”, Doris Kohn, a top official with the German banking group KfW (together with the IFC, the world’s largest microfinance partner), stated that microfinance is no “silver bullet” for development.

“There have been some bad experiences, but any industry experiences those, and there are some not-so-responsible players, but all in all this should not cloud the fact that there have been enormous achievements,” Kohn said. “We have seen some overheated markets and some … competition leading to over-indebted clients, so I do believe that regulation is needed to prevent that from happening.”

In Myanmar, however, financial regulation remains weak, although, pushed by the international community, the government has come out with a series of reforms and new laws aimed at strengthening long-maligned (or non-existent) regulatory authorities. Yet according to a new ranking by Maplecroft, a British risk assessor, the country remains one of the riskiest places to do business, ranked fifth from the bottom in the “extreme risk” category.

The worry for some scholars and activists, then, is that as Myanmar’s microfinance sector opens up, it will attract some of the industry’s more predatory or unscrupulous companies – the type against which KfW’s Kohn was warning.

Still others say that microfinance itself receives more emphasis from development institutions than it deserves.

“Far more important than microfinance is getting proper development banks – or central bank policies that provide similar functions – for medium and large domestic enterprises on a long-term, low-interest subsidised basis, as has been a cornerstone of all countries that have industrialised,” Rick Rowden, a development consultant who has worked in Myanmar, told IPS.

“Microfinance is nice and all, but it has little to do with the fundamentals of industrialisation or long-term development strategy.”

Three members of the Verapaz egg farm cooperative in El Salvador, with one of their daughters. Credit: Edgardo Ayala/IPS

By Thalif Deen
UNITED NATIONS, Nov 26 2012 (IPS)

When the International Year of Cooperatives (IYC) concluded last week, some of the overwhelming success stories highlighted at a two-day interactive session came both from developing and developed countries, including India, Brazil, China, Kenya, Rwanda, Ethiopia, Italy, France and the United States.

As Dame Pauline Green, president of the International Cooperative Alliance, pointed out, two of the largest domestic agricultural food businesses in India – the Indian Farmers Fertilizer Cooperative (IFFCO) and the Gujarat Cooperative Milk Marketing Federation (widely known as Amul) – are both highly successful cooperative business models.

Amul, which is owned by over three million small dairy farmers, mostly women, has helped elevate India as the world’s largest milk producer.

And last month, IFFCO partnered with Coop Federee, a major agricultural cooperative in Canada, to invest in a hefty 1.3-billion-dollar joint transnational cooperative venture for a fertiliser plant in Quebec.

In Brazil, Green said, a clearly defined government policy aimed at helping rural people, through cooperative businesses, has seen a massive reduction in poverty in the rural areas of the sprawling South American nation.

In Kenya, cooperatives account for nearly half of the country’s gross domestic product (GDP), while in Rwanda the cooperative economy has gone from zero to eight percent of GDP over the last 10 years.

“The cooperative model of business could be a valuable tool in building sustainable, grassroots agricultural businesses in Africa,” she added.

In Italy, she pointed out, about 90 percent of the production of parmesan cheese comes from cooperatives, while nearly all of the champagne produced in France is the result of cooperatives.

And in the United States, Ocean Spray, described as one of the world’s largest cranberry producers, registered a 20-percent increase in sales last year.

The world’s largest 300 cooperatives, primarily in the insurance and food and agriculture sectors, generated revenues of 1.6 trillion dollars and employed nearly 100 million people worldwide.

Asked if the cooperative model of enterprise may well be one of the answers to the global economic crisis, Green told IPS, “Without doubt the cooperative business model offers a proven solution to this global economic crisis we are mired in.”

She pointed out the important role cooperatives have played in building economic prosperity in Brazil, Russia, India and China (known, along with South Africa, as the emerging new coalition BRICS).

But in troubled regions like the Eurozone, cooperatives have also demonstrated that generally they are more resilient to the downturn than non-cooperative businesses, while cooperative banks are actually protecting against market failure.

“Moreover, we are seeing cooperatives choosing to release surplus capital rather than sack people in difficult markets like Spain,” Green said.

In Spain, the Mondragon workers cooperative has seen its members vote for two years running now to take pay cuts rather than lose people.

“It’s a recognition of the value of human capital in business. All of this in fact means that cooperatives are sustainable businesses and supporting and promoting them will help ensure we can climb out – and stay out of the financial crisis in which so much of the world once again finds itself,” Green said.

In a statement released here, U.N. Secretary-General Ban Ki-moon said there continues to be a hunger for policies and approaches that address social and economic goals that go beyond a one-dimensional bottom line.

As a strong partner in development, Ban said, the cooperative movement works with the United Nations every day to empower people, enhance human dignity and help achieve the Millennium Development Goals (MDGs), which include the reduction of extreme poverty and hunger by 50 percent by 2015.

The theme of 2012 World Food Day, commemorated on Oct. 16, was “Agricultural Cooperatives – key to feeding the world.”

According to U.N. figures, the number of hungry people worldwide has been estimated at nearly 870 million.

Jose Graziano da Silva, director general of the Food and Agriculture Organisation (FAO), said “cooperatives hold a key to feeding the world, but so do governments, civil society and private sector (in order) to achieve food security for all. We all need to work together.”

In its declaration presented to the United Nations, the 2012 International Summit of Cooperatives, held in Quebec City, Canada last month, reinforced “the amazing power or cooperatives”.

Pointing out that the cooperative sector is pervasive, Green told IPS that far from just being restricted to agriculture and farming, cooperatives touch every part of business.

Insurance, banking, health, housing, retail and education are all sectors which have strong cooperative components.

In the UK, she said, schools have become one of the fastest-growing parts of the cooperative economy.

“Renewable energy cooperatives have been springing up all over the globe, and of course media is another area which benefits from the cooperative model because it ensures independent journalism remains viable,” she noted.

In the northern part of Italy, social cooperatives are a significant feature of the regional economy where people with a disability, whom would otherwise be reliant on the state for support, or be part of the long-term unemployed, are starting and successfully running their own cooperatives.

Asked about the future, Green said: “We will of course be working closely with the UN to ensure that cooperatives are a key piece of its proposed 2015 economic agenda, but every indication from this meeting has been that cooperatives are ready and willing to enhance their engagement, and that the U.N. not only wants but needs us too.”

The International Summit brought together close to 2,800 delegates from 91 countries to celebrate the power of cooperatives. Photo Courtesy of Desjardins

By Beatrice Paez
QUEBEC CITY, Canada, Oct 12 2012 (IPS)

The migratory seeds of cooperatives were sown and first thrived in Europe, but have since adapted to the climate of nations worldwide.

Faces from as far as Kenya and the Philippines and as close as the Canadian Arctic and Cuba flocked to Quebec for the opportunity to claim ownership of today’s fledging and diverse movement.

At the International Summit of Cooperatives, held in celebration of the U.N. International Year of Cooperatives, cooperators swapped stories, best practices and cards with the future in mind.

The hope is that this international year will turn into an international decade honouring cooperatives, Dame Pauline Green, the president of the International Cooperative Alliance (ICA), told IPS.

Summit participants gathered to publicise the efforts of the movement and to gain insight into the business challenges for cooperatives ahead.

“The summit was a great opportunity to exchange ideas and innovative practices,” said Monique Leroux, the CEO of Desjardins and the co-host, in a statement.

Going forward, a declaration was adopted by the co-hosts of the conference, Desjardins, ICA and St. Mary’s University to make a stronger case for cooperatives to the public and authorities of governance.

As for their goals in improving the cooperative enterprise, they pledged to harness new tools for communicating their goals to the public and to develop new ways of enhancing communication and consultation with members and management.

For Quebec, the summit was also a chance to pay tribute to Alphonse Desjardins, who initiated the first step to making credit unions an option for French Canadians who would otherwise have been forced to leave the province in pursuit of income opportunities.

The stories that emerged from the global gathering underscored the role that cooperatives have played in making it possible for people to remain rooted in their communities, keeping much needed talent from fleeing.

Mary Nirlungayuk, the corporate services vice president of the Arctic Cooperatives Limited, shared with IPS the story of how cooperatives in the north have created a channel of income for artist collectives and have popped up where others have not always tread – providing cable and construction services to partnering with airline and shipping companies to reduce the cost of transporting the annual inventory of goods.

The grassroots orientation of cooperatives made it viable model of enterprise for First Nations communities, striving to reconcile past traditions with present realities.

“They were created because it was very similar to the Aboriginal, First Nations concept that they would help each other,” Nirlungayuk told IPS. “And if it can work in these remote communities, why can’t it be more successful in other places.”

In Cuba, where the groundwork for a cooperative future is being laid, its delegation of 10 was there to learn from others as well as to demonstrate the weight of the movement within the country.

“We wanted to let the rest of the world see what is going on,” said Wendy Holm, who heads the delegation. “Socialist and capitalist co-ops are slightly different in form… One of the challenges is going to be to give them as much autonomy, while at the same time recognising that you’re (for instance) a farm co-op tasked to produce food for the wider population.”

The versatile construct of cooperatives has made it a blueprint for enterprises in the agriculture, insurance, housing, and retail sectors and among others. In the socialist economy of Cuba, Holm said cooperatives make the most sense in the shift to convert trouble-ridden enterprises away from state management.

The Cuban delegation was “interested in looking at as many cooperative endeavours as they can,” and had even met with a taxi co-op to learn how it could be adapted in Havana, Holm told IPS.

Though smaller than the Cuban delegation, the Philippines, with its modest contingent of four, also sought to make an imprint at the summit.

Youth delegate and speaker, Marie Antoinette Roxas, from the Philippines, was there to share her university, Iligan Institute of Technology’s cooperative initiatives. She told IPS that other youth head programmes that introduce financial literacy to children in elementary schools, as an effort to instill smart financial practices at a young age.

The student-run cooperative is also involved in designing income-generating activities; one project that has taken off has been its partnership with local tailors to make eco-friendly bags that are then sold with interest to its mother co-op, the university’s Multi-Purpose Cooperative.

While there were many opportunities to hear about different initiatives, Simel Esim, the chief of the ILO’s cooperative branch told IPS she wished there had been more opportunity to connect with the people behind them – and had hoped for more dialogue between delegates.

Amidst the challenges of staying relevant and competitive, the biggest one ahead, said Esim, is going to be connecting with and preaching to people beyond the converted.

At the summit closing, Leroux announced Desjardins’ hopes of setting up another international gathering. Perhaps that will be on the agenda at the next summit in 2014.

The Maguey Women's cooperative was the first in Mexico to use solar energy in food production. Credit: Emilio Godoy/IPS

By Beatrice Paez
QUEBEC CITY, Canada, Oct 10 2012 (IPS)

Cooperatives may face an immense challenge in garnering broader public recognition among consumers, but when it comes to chasing growth, they haven’t held back.

They are growing a rate comparable to their corporate competitors, and are outpacing them in the food and agricultural sector, a study released by McKinsey & Company reveals.

Cooperatives are developing at annual rate of 7.9 percent versus free market participants, who lead at 8.7 percent. While food and agricultural co-ops lead as an example, the study revealed that the insurance sector confronts obstacles in gaining access to capital and the right type of legislative environment that responds directly to the model.

The survey of 47 co-ops based in Asia, Europe, North America and the emerging markets upheld the cooperative movement’s self-perceptions about its ability to prioritise the interests of members over short-term financial gains. The results were matched with their analysis of 54 publicly listed companies.

Growth for small companies turned big can mean a break in their resolve to live up to their original standards. But cooperatives occupy a different territory of business, where the window for the measurement of growth is wider than the quarterly report structure that corporations are beholden to, said Juan Buchenau a senior financial sector specialist at the World Bank, at a panel during the Oct. 8-11 International Summit of Cooperatives here.

In the pursuit of a greater share of the market, cooperatives remain rooted in addressing their members’ needs, said Andrew Grant, the managing partner of McKinsey & Co. “If you’re better serving your members, you’re by definition meeting your market share.”

For 96 percent of the co-ops under review, growth was seen as essential to maintaining a diversified range of services. The findings illustrated differences in sources of growth, with co-ops propelled more by acquiring a greater market share, rather than by their entrance into rapidly rising markets with high growth potential.

“They are less nimble at placing their resources into the fastest growing part of their marketplace,” noted Grant at a press briefing. “They are less good at developing new products and services.”

Cooperatives are not unwilling to jump into the new markets, but rather are unable to swiftly release the capital to place their bidding, the McKinsey report stated. The principle of consensus that governs the cooperative model and puts the immediate interests of members first makes it difficult to cross the threshold.

The challenge and concern for cooperatives going forward is how to grow, without succumbing to the same type of responses exercised by other enterprises. For corporations, the pressure of a quarterly timetable means that “projects are thrown off the table” before they have been given a chance to fly, said Buchenau.

There needs to be more long-term patient capital within the free market, said Martin Sabia, the president and CEO of the Caisse in Quebec, at the panel on the economic order.

In identifying the weakness of cooperatives in penetrating emergent markets, the report stressed that cooperatives must play on their “natural strengths,” and build a following through the promotion of members’ needs.

But while this study demonstrates the economic power of cooperatives, Simel Esim, the chief of the International Labour Organisation’s Cooperative Branch, told IPS that it does not provide an accurate picture of how growth is understood within the movement.

“The McKinsey report is looking at traditional growth indicators, it’s not really addressing the co-op model in its uniqueness,” she told IPS. “For instance, co-ops have a longer life span, they employ workers, they have less worker turnover, move less from a local economy, they respond to local problems faster – these are the growth indicators that should be used.”

Instead of looking at the annual growth, she suggested assessing growth within a span of 10 to 20 years.

“We’re more interested in qualitative growth, rather than just numbers,” agreed Gianluca Salvatori, the CEO of Euricse, a research centre focused on cooperatives.

For Salvatori, growth in the qualitative sense means innovation, extending the cooperative experience in new sectors to respond to emerging needs, not merely responding to market indicators.

“The world they are trying to analyse and understand is far more complex,” Salvatori told IPS. “I don’t think growth in size is the main driver we have to implement as a strategy.”

By Beatrice Paez
QUEBEC CITY, Canada, Oct 9 2012 (IPS)

The international rally to take the global cooperative movement to the next level is in full swing at the International Summit of Cooperatives here, which kicked off on Monday.

Dame Pauline Green. Credit: Beatrice Paez

Under the banner “The Amazing Power of Cooperatives”, the summit seeks to demonstrate its contributions in proffering alternative, human-centred solutions for economic development across the world.

The summit marks the first occasion to bring nearly 2,800 cooperative participants from 91 countries into dialogue with one another.

To make their case, the summit’s organisers, Desjardins, Canada’s financial cooperative, and the International Cooperative Alliance (ICA) are letting the numbers do the talking, speaking to the fact that cooperatives sprout where there is a vacuum in services and opportunities in the community.

“With one million organisations, 100 million employees and one billion members we already have a global voice, now we need to make it resonate across the world,” said Monique Leroux, the CEO of Desjardins.

Addressing the crowd gathered at the opening ceremony, Dame Pauline Green, the president of ICA, fondly recalled one of her worldwide tours of cooperatives.

“There were desks squeezed into every corner of the room and the place was buzzing with members waiting to deposit or withdraw money,” says Green about her trip to a credit union on the outskirts of Manila. “Coffee and biscuits were being shared, and they showed me with such pride a seven-story building that they had built with credit union money.”

The building was purposed as a school for 650 local students, funds were also used to create a preschool, where mothers can drop off their children to supplement their family’s income, and a chapel, where members can seek a measure of comfort in times of distress.

This is a portrait of the movement at work, said Green.

But Green noted that while there are many success stories of cooperatives filling in areas neglected by other parts of the economy, cooperatives continue to be sidelined and discriminated in their efforts to reconfigure the direction of global economic policy.

She pointed to the fact that neither the World Bank nor the B20, which advises the G20 group of the world’s biggest economies, has a cooperative economist on their boards.

In his opening remarks, Riccardo Petrella, an Italian economist and political scientist, also discussed of the unwillingness of governments to strive for global economic policies that balance the needs of people with profit.

He went on to speak of the gross inequality that punctuates society and the misplaced values that put accumulation ahead of the equitable distribution of wealth.

Green has been bringing the case of cooperatives to various international and governmental bodies and stakeholders around the world, from Beijing to Washington.

“Our argument has been that cooperative businesses want to see a more diversified global economy,” said Green. “The world needs a global economy that puts people at the heart of decision-making and not just the red-blooded pursuit of economic development at any cost.”

With over eight years of experience on the ICA board, Green has made it her ambition to make the cooperative model the blueprint to guide global institutions in their policy decision-making.

IPS spoke with Green to discuss the challenges the cooperatives face in today’s economic climate.

Q: Cooperatives are active in all corners of the globe, but in what regions does the movement need to gain a firm grounding?

A: There’s a huge raft of energy that needs to go into countries involved in the Arab Spring. What we want to do is to engage through social media. We want to attract them at the grassroots level, on things like cooperative housing, things like professional cooperatives. Those people, when they came out on the streets in the Arab Spring, weren’t just looking for political freedom, they were looking for economic fairness.

By 2050, we won’t have enough productive land in the world to feed the estimated nine billion population. (Of) the remaining land that is available to increase production, 73 percent or 80 percent of it is in Africa. The issue becomes how do we energise African small holders, how do we make it in a way that the benefits are given back to peasant farmers.

Our fear is that nothing will happen and we’ll just see the multinationals buying up the small holders and they’ll get a tiny shot in the arm, which will last for a short while.

Q: What are the key priorities of the ICA?

A: The key thing for us is that the global economy does not recognise our sort of business. Our serious initiative for this year is try to impact the global economy. A billion people around the world are not starry-eyed idealists, they’re realists.

We believe we can open some of the doors for our businesses big and small, and demonstrate their worth to governments.

Q: Not all enterprises are immune to corruption. Do cooperatives have a unique approach to dealing with or mitigating corruption?

A: The strength of the cooperative movement is its accountability to its members. Its ordinary members are on the board of cooperatives, driving the direction and holding management accountable. More than often, these things are discovered through the process of an ordinary person who will ask the awkward questions. You have a totally diverse set of people with different skills.

Excerpt:

Emmanuel Kargbo, a 26-year-old farmer, pushes a motorised soil tiller recently given to his farming cooperative. Before he was trained to use it, it would take him more than twice as long to do it by hand. Credit: Damon Van der Linde/IPS

By Beatrice Paez
TORONTO, Canada, Oct 8 2012 (IPS)

Youth worldwide are facing limited job prospects in the traditional channels of employment, and in the midst of the job crunch, cooperatives are seeking ways to connect with this untapped pool of talent.

It begins with reserving a seat for young, future cooperative leaders this Oct. 8 to 12 at the International Summit of Cooperatives in Quebec City. About 150 youth from across the globe have been invited to represent their respective cooperative organisations.

It’s an opportunity for them to network with their peers and learn from their cooperative elders, said Stephanie Guico, the coordinator of the Future Leaders programe at the conference. While there will be special panels and events designed around them, the young leaders, from the ages 20-35, will be expected to bring their own contributions.

“I hope they’re going to bring a youth voice, innovative ideas, new perspectives. I hope they won’t censor themselves,” Guico told IPS. “There’s a lot to be gained from listening to youth who are more in touch with integration into the virtual area and ways of collaborating and communicating that are new.”

“I think there’s a generation now that has grown up with a certain type of cooperation through social media,” said Charles Gould, executive director of the International Cooperative Association, a non-governmental organisation that strives to shape global policy on behalf of cooperatives.

“It ought to make them more receptive to the cooperative model but they haven’t heard about it as a business model,” he told IPS.

No one knows more about creating connections through social media to answer a need than social entrepreneur Dev Aujla, who will be addressing the young leaders.

Aujla, founder of DreamNow, a charitable organisation in the business of turning ideas into social goods, collaborated with Rolling Stone Magazine’s “climate hero” Billy Parrish, a climate change activist, to write a book.

Parrish and Aujla’s paths crossed online, as Facebook friends who had never met but who shared similar principles, and dedicated their lives to mobilising youth to address their community’s issues. Their book “Making Good” serves as a game plan for youth interested in pursuing careers as social entrepreneurs.

The non-linear career path often comes with the territory if you become a social entrepreneur, and while it can be daunting, it is becoming an attractive option for those wanting a job that pays well enough and is rooted in serving the community, said Aujla.

And for those interested, the cooperative model can provide a base of support, because it doesn’t require a lot of a capital, and he said, with cooperatives “you can take any industry you can imagine and reinvent in a way that does good.”

The cooperative model speaks in the language that today’s generation has been reared on, through exposure to the dialogue on climate change and other environmental issues, “this whole generation knows they want to do something good and are just being turned on the idea,” adds Aujla.

But while youth have more access to information to educate themselves on the issues of today, the cooperative model isn’t all that familiar because it’s not always included in academic curriculum, said Guico, who completed a Bachelor’s Degree in International Development.

Social media can aid the cooperative movement in its efforts to connect with youth, but more education about how they can offer an alternative route for employment is needed.

“Realistically, it’s going to take a different presentation of the model and a better explanation of it,” said Gould.

It took doing her own research and meeting the right people for Guico to find her way into the cooperative movement. The same goes for others around her. “Most people stumbled upon the movement, which said something about how good the cooperative movement is doing at promoting itself and communicating its identity.”

Part of the issue Guico finds is that cooperatives operate in a more discreet manner than corporations. “We would have to impose ourselves before there’s a perception of our importance,” she said.

Another reason cooperatives are not on the minds of many youth is that schools do not delve deeply, if at all into what the model offers, Guico notes. “Most educational institutions are geared towards the capitalist model, anything that it is too complex, they tend to simplify or minimise it.”

Without the decision to explore cooperatives on her own, Guico might have continued to presume that cooperatives are only in the trade of making crafts and operating as small-scale agricultural enterprises, as she was led to believe.

In Canada, St. Mary’s University in Halifax offers a Master’s programme designed around the cooperative enterprise. The university is sponsoring Imagine 2012, a joint event of the summit, on cooperative economics that precedes it.

But the online programme, which gathers people from around the world, is targeted at cooperators entrenched in the movement. Most students have been working in the industry for 15 to 20 years and are seeking to learn new management tools and connect with other industry leaders.

“If people were only learning about it in the ways that are more typical to how (we’re) learning, I think our sector would be much further ahead,” said Karen Miner, the managing director of the Cooperative and Credit Union Management programme at St. Mary’s.

“We would be much better educated about the sector and even on ourselves. We have a large number of managers of co-ops that come from the traditional business background, myself included,” Miner told IPS.

Laure Waridel, an ecosociologist who will also be speaking to youth at the summit, also finds that not enough value is given to the social economy in university courses, particularly in management.

Waridel, who taught a course at McGill University in Montreal, sought to incorporate some lessons on social entrepreneurship in her lectures by inviting guest speakers working in the social economy to her lectures.

The cooperative model, which prides itself in embracing democratic and participatory values, where youth can help influence and shape the future of cooperatives, has a lot of room for growth and new members, Waridel said.

“The message to future leaders is that we need to prepare a transition for another economy,” she told IPS. “It’s very clear that the dominant model in which we are now is unsustainable.”

Cooperative members at the APROHFI wholesale centre in Honduras select the best potatoes to sell to supermarkets. Credit: Thelma Mejía/IPS

By Beatrice Paez
TORONTO, Canada, Oct 5 2012 (IPS)

The banner year for the global cooperative movement is winding down into its last months, but its leaders have echoed a resounding message: cooperatives, a values-based business model, can usher a transition to a more socially responsible economy.

This message will be at core of the International Summit of Cooperatives, a gathering of more than 2,000 participants active in the cooperative movement, to take place in Québec City from Oct. 8 to 12.

With 2012 designated by the U.N. as the International Year of Cooperatives, Monique Leroux, the CEO of Desjardins, the largest cooperative financial group in Canada, thought it was time to bring her dream of launching a summit into action.

“We want to use the summit as an opportunity to make sure the world in general, and governments have a better understanding of the cooperative movement,” said Leroux. “We need to do a better job in promoting who we are.”

Desjardins partnered with the International Alliance of Cooperatives, a non-governmental organisation that advocates on behalf cooperatives, to create a venue where new networks and solutions to propel the movement forward can be forged.

The shift to a new paradigm for the economy is now underway, and the time is ripe for cooperatives to demonstrate their value because there is an upswell of disenchantment with the economy as it stands, said Charles Gould, the executive director of IAC.

Cooperatives tend to arise in response to an unaddressed need in the community. The core values that underpin the cooperative model – self-help, democracy, equality, equity and solidarity – guide the way decisions are reached, Gould added.

The values bear the implication that the interests of the communities served will be factored into any business calculation. In the face of the financial crisis, the cooperative model proved its resilience, because by design the board is accountable to all its members, said Leroux. The one-member, one vote rule means that the interests of the largest shareholders do not trump the rest.

“It’s a more sustainable model, it doesn’t take unknown risks because it’s not trying to maximise profit,” said Gould.

“We believe that by 2020, by the end of this decade, it’s conceivable that the cooperative can be the fastest growing form of enterprise in the world,” he told IPS. “We’ve been asking cooperatives and our members what would have to change for that to happen.”

Gould identified several areas that will help build momentum for the movement, and bolster its profile as a viable alternative to the classic setup of a corporation.

For one, cooperatives need new forms of capital to grow that are aligned with their values and design. The summit marks an opportunity for Desjardins and its partners to share their innovations in creating new financial products, credit services designed to reflect the context of the community served, said France Michaud, the communications supervisor at Developpement International Desjardins (DID).

Aside from raising capital, cooperatives also have to do a better job at promoting and invoking their identity, making the model and the values it stands for known to the public, Gould noted. Brands like Ocean Spray and Sunkist are household names but are not always tagged as examples of cooperatives.

There are several misleading perceptions about cooperatives that downplay their importance in the economy, said Stephanie Guico, the programme coordinator of the Future Leaders Program at the summit. One is the view that they belong to the past, another that they are mainly poor people’s organisations.

Poverty alleviation is central to the mandate of many cooperatives, but people often don’t realise they are businesses concerned about their sustainability, Guico added.

For the cooperative model to thrive, the legislative and regulatory landscape has to adjust itself. “There are many countries where the general business regime is designed around the corporate construct, because it has been such a dominant model,” Gould told IPS. “We have to make sure we’re not subject to restrictions that were imposed to prevent problems other business forms are subject to.”

Gould noted that the governments of China and Iran are expressing interest in the cooperative model, and that these countries are on his list to watch for growth. “Some of these countries recognise the need to diversify from state-owned enterprises and see how the global economy has changed,” he said. “But don’t want to move to capitalist models…and are intrigued that the cooperative model could be a way of getting people to step up in a self-help way.”

In Quebec, the groundwork for an alternative economy is being sown through a collection of seemingly small efforts led by members of the global cooperative movement, said Laure Waridel, an eco-sociologist, who has been invited to speak at the summit.

She cited one local organic farm as an example, because it has opted to subsist with the help of its customers, who are willing to pay an advance for its share of the harvest.

Waridel, also recognised as a pioneer who helped bring the fair trade movement to Canada, has been studying the efforts of people in the countryside of Québec to create a sustainable livelihood.

“What I’m interested in is to find the connecting dots between many initiatives in Québec that are seen as marginal,” she told IPS. “You put them together, you see that there is a proposal for another economy.”

Arely Domínguez, right, and other members of El Guapo at the inauguration of the bankomunales exhibit. Credit: Estrella Gutiérrez/IPS

By Estrella Gutiérrez
CARACAS, Oct 2 2012 (IPS)

“We were used to losing, so a group of us said to ourselves: let’s lose something here,” said Carmen Caravallo, describing the start of a “bankomunal”, a self-managed microfinance fund based on investment, in her rural community in eastern Venezuela.

Ten years later, Caravallo and the other members of the bankomunal in Llanada de Puerto Santo, in the state of Sucre, “are getting used to winning,” she told IPS. “Now we are a family, and we have learned to be responsible; we have improved our lives with money that belongs to us, and strange as it may seem, we feel we are very much in charge,” she added.

Bankomunales, present in 14 countries on four continents, are the brainchild of Venezuelan social entrepreneur Salomón Raydán, who demonstrated that the poor can be self-financed, after Muhammad Yunus of Bangladesh, the father of microcredit, had shown that they could be financed.

The 54-year-old Caravallo, who is in mourning after the recent death of one of her three children, said the road has been “slow, hard and paved with mistrust.” But after three years “people began to make a profit, and saw that we were reliable and responsible.”

In her community of 1,000 people, in one of the poorest states in the country, she is treasurer of the local bankomunal, which began with 20 members and now has 107 as well as “a long waiting list to join.”

Similar experiences have been repeated in 180 bankomunales throughout Venezuela, which have a combined total of 25,465 members who contributed a minimum of 2.30 dollars to become both investors and clients.

Raydán, a philosopher and sociologist by training, told IPS the idea was born 15 years ago, out of his experiences as an adviser for small farmer financial assistance programmes and from what he learned about the way of life of poor rural communities.

Poverty is defined by the irregularity of income, more than the lack of it, he said. “Insecure and fluctuating resources do not allow the poor to face spending that is needed for survival, and so poverty takes root,” said Raydán, the head of the Foundation for Rural Finance (FUNDEFIR).

“Eighty percent of poor people in the world have access to credit through informal systems,” mostly self-managed in their communities, he said.

“But these sources are insecure and they do not add value for their users. They need to be adapted to offer more transparency, training, security and efficiency, so they become more formal, although that doesn’t mean they need to be regulated according to the rules of the state that has excluded them,” said Raydán.

These mutual credit associations began to operate in 1997, granting multiple and variable loans, in contrast with traditional systems that make rotating loans of fixed amounts, which are widespread in poor areas of the developing South.

Furthermore, “their members are not just savers, but investors; they are active, not passive,” he emphasised.

“Only 2.5 percent of the poor population of the world has access to banking services, and microcredit systems serve 105 million people, while the demand for microfinance is two billion people,” he said.

Venezuelan microinvestors acquire a certificate of assets worth 2.30 dollars. No one can acquire more than 15 percent of the total assets, members of different bankomunales who have arrived in Caracas for a photo exhibit about the system tell IPS enthusiastically.

Members are the leading lights of the show launched in September in a gallery in the capital city, where powerful images are shown of open-air meetings or gatherings in borrowed spaces – meetings of credit committees and activities involving the granting or payment of loans.

There are also images of members on cultivated land in both rural and urban areas, grocery stores set up in homes, other small shops, home renovations, sewing or repair workshops, and minifactories producing different products. Other members are depicted next to children wearing new school uniforms, or holding up new kitchen utensils.

Credits are granted for “any legal purpose,” in general to be repaid in three to 18 months, with interest decided by each organisation. Loan amounts vary: a new association may only lend up to 100 dollars, while a more established one may have a ceiling of 2,000 dollars.

All decisions are made at well-attended meetings, and the credit committee gives its decision on each request within 24 hours. “We know each other and we know everyone’s payment capacity; we work on trust,” said Arely Domínguez, head of the bankomunal in El Guapo, a village that was reborn from tragedy.

In December 1999 a flood burst the dam near the village, located 125 kilometres from Caracas, in the north-central state of Miranda. The low-lying land in El Guapo, home to some 3,000 people, was flooded.

FUNDEFIR was one of the organisations to come to their aid, and a year later Domínguez and 34 others founded their bankomunal, which now has 117 members and makes an average of 10 loans a week, totalling 6,000 dollars.

First of all, like everyone else involved in the initiative, they received training and advice from FUNDEFIR. “We learned how to balance our accounts, write budgets, do audits, assess risks and use computers,” said Domínguez, a 49-year-old schoolteacher with two daughters.

Up to August, bankomunales had granted 275,631 credits to 84,884 people, for a total 3.6 million dollars at the official exchange rate.

In El Guapo, the bankomunal operates in the building of a cultural association, but most of the associations meet in members’ houses. Officers are elected at general meetings and work on an honorary basis.

The vast majority of members are women, but the number of men is increasing. One-third of loans are requested for consumption, one-third for enterprises and one-third for emergencies, especially health problems.

Every loan is backed up to at least 40 percent by certificates of assets of the member and his or her sponsors, “to be in the safe zone,” a mantra repeated by the members. “There are hardly ever any problems, but on the second default, they are out,” Caravallo said.

Profits are calculated monthly and distributed to the members annually. “One of the principles of bankomunales is distribution rather than accumulation,” said Raydán. “The profits have little economic importance, but a great deal of educational importance.”

It is “a financial education programme, not a microfinance programme, and the profits help generate a sense of entrepreneurship,” he said.

The model has spread to Bolivia, Brazil, Chile, Colombia, Dominican Republic, Haiti, Peru, Germany, Spain, Hungary, Portugal, Senegal and Indonesia.

The Spanish version, Comunidades Autofinanciadas, won the 2009 prize for the best microfinance programme in Europe, while FUNDEFIR’s system was voted in 2010 one of the 25 social projects in the world most likely to be globalised, by Ashoka Globaliser, an international foundation that promotes social enterprise.

FUNDEFIR has financial support from Total Oil and Gas Venezuela, a subsidiary of the transnational French oil corporation Total, which works in the east of the country.

Diana Vilera, the sustainable development manager, told IPS the company “seeks to promote projects that are a tool for people to be lifted out of poverty.”

“Oil companies take a lot out of the planet and the environment, and we have a duty to contribute whatever we can, beyond the business angle,” she said.

After decades of grinding poverty under successive military dictatorships, Myanmar’s rice farmers have a chance at a better future through rural reforms ushered in by the country’s quasi-civilian government. Microfinance is at the root of it.

The guarantees of small, low-interest loans to this least developed country’s debt-ridden farmers turn a page in the ledger of rural credit, which had virtually dried up within the small agriculture banking system during the 50 years of military rule, forcing farmers to borrow from money lenders at usurious interest rates.

Small loans ranging from 60 to 600 dollars are being offered to the agriculture sector by organisations like the Livelihood and Food Security Trust Fund (LIFT), a Western donor-backed microfinance initiative facilitated by the introduction last November of a microfinance law in Myanmar (also known as Burma).

LIFT donors, including Denmark, the European Community, the Netherlands, New Zealand, Sweden, Switzerland and Britain, contribute to livelihoods and food security for achieving the United Nations Millennium Development Goal of eradicating extreme poverty and hunger.

LIFT has stated strategy of  sustainably increasing food availability and incomes of two million targeted beneficiaries.

Small loans, much in need during the current ‘monsoon paddy’ season, are already  providing relief to farmers who must spend 100 to 150 dollars to produce one acre of paddy, says Andrew Kirkwood, LIFT’s fund director. “With affordable credit, more farmers will be able to afford to cultivate all of their land.”

“The new microfinance law has raised hopes that poor people will soon be able to get affordable credit, which is one of the keys to reducing poverty in the country,” he told IPS. “Access to credit from recognised lenders is extremely limited in Myanmar.”

The assistance from one of the 50 local and foreign organsiations that have been granted microfinance licences stands in contrast to the meagre options farmers faced during military rule when the only official source of rural credit – the Myanmar Agriculture Development Bank (MADB) – was, till 2010, offering eight dollars per acre to farmers.

With commercial banks in Myanmar banned from giving loans to farmers, the limited offerings of the MADB only catered to about a third of the farming population. The void was filled by the money lenders who charged interest rates as high as 20 percent per month.

A recent United Nations statement says that the promise of these new low-cost loans, with interest capped at 2.5 percent a month, has seen the demand for microcredit in rural areas inch close to 470 million dollars and that this could balloon to an estimated two billion dollars with growing demand for smaller loans.

This small change of fortunes for farmers in the rice-growing stretches such as the Irrawaddy Delta is part of a broader economic agenda that President Thein Sein has been pushing since last year. The reforms include the creation of a rural development and poverty alleviation central committee, whose objectives range from improving agriculture production to providing rural credit.

“The governmnt’s commitment to reform has led to the development or the revision of at least 25 new laws since (last year’s) first parliamentary session,” says Jenny Swe Swe Myint, policy coordinator for the Myanmar office of Oxfam, the British development agency. “In March, two land laws, the farmland law and vacant, fallow and virgin management law were approved as part of the land rights reform.”

“These laws would benefit the two-thirds of the population relying on agriculture for their livelihoods,” she said in an IPS interview. “However, there are still major gaps in both laws which could have serious negative impacts on farmers.”

The Thein Sein administration’s strategy is sound.  Agriculture accounts for 36 percent of the gross domestic product, employs the majority of the workforce and provides 25 -30 percent of exports by value, according to a new study by the Asian Development Bank.

“The opportunity to expand farm output, both at the extensive margin (more land under cultivation) and the intensive margin (increased productivity) remains enormous,” the Manila-based financial institution revealed in ‘Myanmar in Transition: Opportunities and Challenges’, released in mid-August.

“With its good weather, abundant water resources, and large rural population (about 60 million people) Myanmar could harvest this ‘low hanging fruit’ as a source of growth in the near term and further develop a vibrant export sector in farm products.”

Currently, according to the regional lender, only 18 percent of the country’s total land area of 68 million ha is cultivated and of which 18.5 percent is irrigated for crops ranging from rice, beans, sesame seed to vegetables. Rice coverage dominates the agriculture land, estimated at close to eight million ha.

“The success of the government’s reforms will be tested in the rural areas,” says Sean Turnell, a Myanmar expert at the Sydney-based Macquarie University. “It is so obvious an area of reform and part of that should require strengthening the rural financial sector.”

“The benefits will be profound, given the extent of rural poverty,” the economist who has authored ‘Fiery Dragons: Banks, Moneylenders and Microfinance in Burma’, told IPS. “It is here where the government can really demonstrate that the new economic change is meant to benefit the people and build a broader reform constituency.”

Laboni (left) checks product quality at her lingerie unit. Credit: Naimul Haq/IPS

By Naimul Haq
DHAKA, Aug 15 2012 (IPS)

Laboni Vhoumik’s lingerie manufacturing unit in the Gopai village of Noakhali district, about 180 km outside the capital, is a forceful argument in favour of the Grameen Bank microcredit model that fosters female entrepreneurship and also relies on it.

But the Grameen Bank is itself under threat of creeping government control sparking  a storm of protests by entities ranging from women’s rights groups to the state department of the United States.

Vhoumik, 36, started out in 2003 with nothing to commend her except tailoring skills. Today, she runs a production unit which employs 12 women and supplies quality undergarments to several major retailers in Noakhali and the adjacent districts.

Joining a local non-government organisation (NGO), Noakhali Rural Development Services (NRDS), helped Vhoumik to borrow Taka 4000 (then about 45 dollars) to buy her first sewing machine.

“We counsel and offer free training to promote such small entrepreneurships. The idea is to ensure that the borrowed money is properly utilized,” Mohammad Kaiser Alam, NRDS microcredit programme coordinator, told IPS.

Vhoumik now earns about 238 dollars a month, which is considered handsome in her village. She also has large savings and recently paid for some major repairing of her home.

Her group of 65 members discusses social and family problems as well as members’ progress with their business or problems or outstanding loans.

Members rarely default as the group is responsible as guarantor for the loans.

But this simple business model that has worked to lift thousands of Bangladeshi women out of poverty is now under threat because one of its pioneers, the Grameen Bank, is undergoing changes at the helm that will allow greater government control.

The government owns three percent of Grameen Bank, but by suitably changing the ‘Grameen Bank Ordinance’ the new state-appointed chairman will be able to appoint its chief executive officer.

“This represents a de facto imposition of government control of the bank; in other words, the poor women, who are also its owners, are being deprived of their right to manage their own bank and are being made powerless,”  says a statement issued by 60 of Bangladesh’s leading civil society representatives.

“Grameen Bank is unique in the world for being owned by impoverished women. Representatives of the 8.4 million women borrowers sit on the board of the bank and have participated over the years in its decision making, unlike any other bank in the world,” the statement said.

Shireen Huq, one of the signatories to the statement, told IPS “there is no reason to believe that the changes (to Grameen Bank) are being made with good intent.”

Huq, a leading women’s rights activist and founder of the NGO ‘Naripokkho’, said the proposed amendment to the Grameen Bank’s constitution gives the chairman of the board the authority to form a three-member selection committee. “In other words, the majority board members will be in effect disenfranchised.

“The government’s appointment of a person known for his animosity towards Prof. Muhammad Yunus (Grameen Bank’s founder) as the chairman did not bode well for the institution,” Huq told IPS.

A press statement on Aug. 5 by Patrick Ventrell, acting deputy U.S. state department spokesman, said Washington was “deeply concerned about recent actions the government of Bangladesh has taken to give the government-appointed chairman of the Grameen Bank Board control over the selection of the bank’s new managing director.”

“This move would diminish the role the largely female borrower-shareholders play in shaping the direction of an institution that has made a difference to millions of impoverished women in Bangladesh, and indeed around the world,” the statement said.

“We are concerned that the latest actions by the government could threaten the future of the bank which was founded by Nobel peace prize laureate Prof.  Muhammad Yunus,” Ventrell said.

The plan by the government to increase its role in Grameen Bank has sparked a furious debate in Bangladesh that has pitted economists who favour microcredit as a development tool against those who believe that it is not effective enough.

Prof. Abul Barkat, who head the economics department at Dhaka University’s  told IPS that microcredit reaches only small portion of the poor people. “Hardcore poor who need most attention remain out of the reach of such services and who are considered having no potential of repaying loans.”

“Out of Bangaldesh’s 150 million population, 98.9 million are poor, 47 million are middle class and 4.1 million are rich people. Out of the 98.9 million, 50 percent form the hardcore poor and remain in the lower bottom. Microcredit only reaches the upper half of the poor who are the potential target group of the NGOs,” the economist explained.

According to Barkat economically the upper half of the poor (49.4 million) who get microcredit facilities “bounce in their own orbit” and they “neither come out of poverty nor slide down to the hardcore poor group.”

Qazi Kholiquzzaman Ahmad, another noted economist, told IPS that he has rarely seen poor people getting significant benefit from microcredit programmes. “One of my own studies shows only seven percent of the borrowers actually coming out of poverty from microcredit.”

Ahmad, who currently chairs Palli Karma-Sahayak Foundation or PKSF, said his 2008 study showed that fewer than ten percent of the total 23 million borrowers in the country actually came out of poverty. “This means that microcredit programmes are not always sustainable in poverty alleviation.”

But, the PKSF itself was launched by the government in 1990 to build on the success of private players and now has over 250 partner organisations (small NGOs) and has 8.6 million borrowers.

Mohammad Hasan Ali, founder and executive director of Pally Bikash Kendra, an NGO that operates microcredit programmes in the northwestern districts, told IPS that the steady growth in borrowings and repayments showed the robustness of the model.

“Surely the poor are borrowing because they are getting some benefit in one way or another,” Ali said.

What is important, most economists agree, is that the small borrowings made through NGOs have  eliminated traditional village moneylenders who charged usuriously high rates of interest and increased the debt burden of the poor.

The real success of microcredit, economists say, lies in the fact that it integrates other programmes like health and hygiene, education, water and sanitation, social safety, legal aid, human rights and other basic issues with the lending process.

S. M. Ali Aslam, executive director of ADAMS, an NGO operating in the southwestern districts, told IPS, “There is no doubt that the NGOs took the leadership in providing financial security to the poor when the  state failed to offer any secure economic programme.”

Aslam added that that foreign donors continue to support microcredit programmes in Bangladesh “because they work.”

For several decades, microcredit presented itself as a magical and benign financial tool for the poorest people in the world, who were otherwise completely excluded from conventional commercial banking services, to secure easy access to loans in order to set up their own businesses and live a dignified life.

Such was the hype surrounding the concept of microfinance that in 2006 its leading practitioners, the Bangladeshi economist Muhammad Yunus and his Grameen bank, received the Nobel Peace prize for, as the Nobel Foundation in Stockholm put it, “their efforts through microcredit to create economic and social development from below.”

Such prestige quickly lured activists, investors, and tycoons like Bill Gates, George Soros, Bono, William and Hillary Clinton and even the Queen of Spain, to fund and endorse microfinance projects around the world.

Now, new evidence suggests that even microcredit was not protected from the greed that characterises modern international finance.

Two recent studies show that microfinance was simply another profit making scheme for global private finance corporations, such as the Deutsche Bank, Citigroup, and Standard Chartered, who started pouring money into microcredit initiatives.

In his book, ‘Confessions of a Microfinance Heretic’, released Jul. 9, former investment banker Hugh Sinclair claims that such banks and funds use microcredit, through local operators, to charge usurious interest rates – of up to 200 percent – on even the smallest loans.

Sinclair said in an interview that microfinance has been “hijacked by profiteers”. According to Sinclair’s interpretation of the microfinance business, “neither (is) the entire sector evil, nor (is) the basic model fatally flawed.” Still, he argued that most of the financial sector involved in the business does not care about microcredit’s actual impact on poverty reduction.

By his own account, Sinclair worked with several microfinance institutions and funds in countries such as Mexico, Mongolia, Nigeria, and Mozambique.

“I couldn’t help but notice that even with a booming 70 billion-dollar industry on their side, the poor didn’t seem any better off in practice,” he told IPS. “Exorbitant interest rates led borrowers into never-ending debt spirals, and aggressive collection practices resulted in cases of forced prostitution, child labour, suicide, and nationwide revolts against the microfinance community.”

European Investment Bank under fire

Similar criticism constitutes the backbone of yet another study, focused on the European Investment Bank (EIB)’s approach to microfinance in developing countries.

The study, by Italian economist Valerio Carboni, was published last June by Counter Balance, a European coalition of development and environmental non-governmental organisations, formed in 2007 specifically to challenge the EIB.

“Microcredit originally was meant to help the poor to escape the poverty cycle,” Carboni recalls in his report. Microcredit “was designed to short circuit the poverty trap that condemned poor people excluded from the banking system to rely on usury loans or accept slavish working conditions.”

Hence, Carboni concludes microfinance addressed primarily the needs of micro entrepreneurs and vulnerable people.

Western governments, through their financial agencies, have for the last three decades been pouring funds into local microfinance initiatives in emerging markets, and helped to turn the original niche sector into a multi-billion-dollar business.

It was in this context that the EIB started its own microfinance activities. Carboni pointed out that though the EIB’s microfinance portfolio still represents a very small fraction of its total budget, it has been growingly steadily through the years.

“Since the EIB’s first operations in Morocco, back in 2003, the average deal size has been increasing constantly and is now expected to hit 10-50 million dollars,” Carboni told IPS. According to the EIB’s own figures, the bank has, since 2003, committed some 881 million euros to microfinance activities, in nearly 50 countries.

“Nowadays microfinance encompasses a wide range of financial services, from micro-insurance to mobile banking, and seems to have lost its original vocation: instead of helping the poorest the question has been turned upside down and it is now how to make money out of them,” Carboni added.

Due to these changes, microfinance is no longer contributing to self-reliant development processes based on domestic resource mobilisation and local institution building, but has instead become “in some cases a significant blockage for the development of the poorest by dragging them into speculative market dynamics and generating a renewed dependency on international financing and actors”.

Carboni’s primary critiques of microfinance in general, and of the EIB’s activities in the sector in particular, are that there is a general lack of strategy and vision. “The EIB just follows the markets,” Carboni said.

He also lamented the fact that in countries with limited capital markets, “the EIB is simply involved in investment projects, rather than in reaching out to the poor.” Furthermore, he said, “the accountability chains are long and obscure, and the management of portfolio is insufficient.”

Sinclair called attention to the lack of regulation on microfinance. “The ultimate investors are not in practice protected by any meaningful regulation, have a limited idea of what their funds are being used for and rely entirely on the funds to reassure them,” Sinclair writes in his book.

While none of the private financial corporations questioned by Sinclair’s book have reacted, the EIB issued a statement in which it “recognise(d) the challenges posed by the lack of standardised social performance measurements used by both microfinance investors and donors”.

But the EIB added that, as an active member of the Social Performance Task Force (SPTF), it has contributed to the establishment of the Universal Standards for Social Performance Management.

The SPTF, a coalition of over 1,000 academics, agencies, donors, investors, and others active in international microfinance founded in 2005, formulated a common social performance framework and an action plan to improve the industry’s social performance.

The SPTF defines social performance as the effective translation of a microfinance organisation’s mission into practice in line with commonly accepted social values.

The EIB also recalled that it has endorsed the Client Protection Principles in microfinance, which are incorporated in all microfinance contracts to encourage improved social responsibility and have helped improve best-practices across the microfinance industry.

(END)

In a country with a disastrous record for microfinancing, a religious organisation has done well enough to claim this year’s Ashden award for initiatives in providing loans to poor farmers.

The Ashden award – which carries 40,000 British pounds (62,238 dollars) in prize money – is given for sustainable energy initiatives in Britain and the developing world by the Ashden Trust that is run by the Sainsbury family, founders of a supermarket chain and other businesses.

The success of the awardee, the Shri Kshethra Dharmasthala Rural Development Project (SKDRDP), is linked to the fact that it also administers the ancient and well-endowed Manjunatha Temple in Dharmasthala town, set in the high Western Ghats of southern Karnataka state.

The temple’s hereditary head priest, Veerendra Heggade, who also heads SKDRDP, is revered by devotees as well as borrowers. “It is this reverence that spurs loanees to pay back their loans,” explains L.H. Manjunath, the project’s executive director.

“We are secular with many Muslims and Christians in our fold, and Manjunatha is a symbol of the poor, not just of Hindus,” Manjunath hastens to add.

SKDRDP’s microfinance operations, begun in 2000, now have a turnover of   800 million dollars. Some 1.8 million families from 5,000 villages in Karnataka are covered through a decentralised system that is run by a staff of about 7,000.

Manjunath, who earlier headed a commercial national bank, said SKDRDP noticed that handing out charity did not bring improvement in people’s lives.  “So we changed our policy in 1990 and began giving out small loans for specific livelihood and development purposes.”

SKDRDP started by forming small, ‘joint liability groups’ of five farmers each.  A rotary system was devised where each member performed a day’s free labour on another member’s lands.

“This galvanised development,” says Manjunath. Farmers were also persuaded to save 20 cents weekly that went into a common fund.

By 1995, the organisation had begun involving women’s self-help groups and today two-thirds of its clientele consists of women.

A 4,500-strong band of rural youth forms part of SKDRDP’s network  spread over 16 districts in Karnataka, that grades loan eligibility, guides  repayment and maintains grassroots contacts with clients.

Heggade stands guarantor for loans taken from national banks, which SKDRDP disburses to clients, keeping a four percent profit margin and his high status comes in handy for negotiating the best interest rates.

Factors such as such as a lending bank’s unmet targets are taken into account and in one case, says Manjunath, a leading national bank lent money at 6.9 percent when the going rate was approximately 12 percent.

SKDRDP lends at between nine and 18 percent interest, but keeps both interest rate and payback timings flexible.

Approximately 20,000 loans have gone towards renewable systems of lighting and fuel needs, benefitting some 82,500 people.

A bank account with a deposit of two months’ repayment amount as taken from clients a buffer against repayment default and this is mandatory before the first cheque is disbursed.

“Building the payback capacity of the borrower is our strong point,” says Manjunath.

SKDRDP’s success contrasts with the record in India of borrowers, mostly marginal farmers in the rural areas, getting caught in debt traps and being driven to suicide in droves.

In neighbouring Andhra Pradesh, the state government was forced to legislate in the state assembly in October 2010, banning the collection of repayments by goons hired by MFIs, leading to the virtual collapse of the system.

“To my mind, microcredit cannot really alleviate poverty,” says Aloysius Fernandez a pioneer of microfinance in India and former head of MYRADA, a reputed non-government organisation (NGO).

Fernandez, now chief of the financial services of the government’s National Bank for Agriculture and Rural Development, says distributing credit to the poor and extracting capital from the ‘bottom of the pyramid’ is the wrong way to go.

“I have seen this work where there are support services, but not otherwise,” Fernandez says emphatically. “The national banking system with its standard measures for loans cannot be applied to poor communities who need customisation.

“If you ask me whether agriculture has improved for people through microcredit, I will say ‘yes’, but I have not seen poverty alleviation as such.”

India is predominantly agricultural and more than 70 percent of the country’s 1.2 billion people are dependent on farming for a living.

“The question is whether an NGO should function as a banking institution, or be doing rural upliftment work,” says Somnath Naik of Nagarika Seva Trust that has record of good work in the region.

Manjunath responds to that by saying SKDRDP’s microcredit works successfully because of the ‘hand-holding’ and capacity-building measures that it undertakes.

India’s apex reserve bank has outlined the rural sector’s near exclusion from banking services, and has, as a matter of policy, been encouraging rural agents to come forward to fill this gap in rural development. “We are in tune with this policy,” Manjunath said.

At Gakoromone Market in Meru, in Kenya’s Eastern Province, Ruth Muriuki arrives in a pickup full of tomatoes and cabbages despite the scarcity of rainfall in the area, thanks to the greenhouse technology she uses on her farm – and microcredit.

Ruth Muriuki in the greenhouse she built with the help of a microloan. Credit:Isaiah Esipisu/IPS

“A bundle of ten tomatoes which would cost Sh40 (50 cents of a dollar) three months ago is now going for double the price. But we have no choice,” said David Njogu, a vegetable dealer at the open-air market. Muriuki is selling a big sugarloaf cabbage, which would have cost 50 cents three months ago, at 1.50 dollars.

A spot check in the country shows that prices of horticultural produce have shot up in the past three months following the failure of short rains, which were expected to come between October and December last year.

However, farmers who use the greenhouse technology do not need rainfall for their crops to grow.

In the greenhouses, generally made of glass or transparent plastic roof and walls, temperature and humidity can be controlled, making it possible for farmers to grow crops year-round.

Like Muriuki, Sarah Chebet from Nandi hills in the Rift Valley Province describes her two-year experience with greenhouse farming as “a dream come true.”

“I bought my greenhouse through credit offered by a local microfinance institution. Through the project within the past two years, I have been able to buy a maize milling machine, I have put up a retail shop, I have bought two dairy cows, and I have bought a stock of 400 kilograms of maize, which I intend to sell once the prices shoot up,” said the 28-year-old mother of one.

From a single greenhouse, she picks an average of four crates of tomatoes per weekly harvest, which fetches her about 100 dollars per week.

Nandi hills is one of the dry regions in the country, where rainfall is not guaranteed throughout the year.

“Our boy is still young, that is why we are investing in businesses, so that I can stabilise my level of income ahead of him joining school,” said Chebet. Her husband is in charge of other farm projects on their five-acre piece of land.

According to Silas Tuwei, the Integrated Project Officer at Amiran Kenya Ltd., the company has sold more than 2,300 greenhouses throughout the country in the past two years. “Most of them were bought through microfinance institutions targeting women, youth, and learning institutions,” he said. “On average, almost half of the greenhouses are owned by women.”

Amiran, one of the biggest horticultural companies in Kenya, specialises in construction of greenhouses as part of its business. However, other farmers depend on individual builders who know how to make greenhouses.

“In order to reach out to as many farmers as possible, we have signed an agreement with three finance institutions: the Kenya Women Finance Trust, Equity Bank, and the Co-operative Bank of Kenya,” said Tuwei.

At the same time, the CIC Insurance Company now has a policy to cover the hardware component of professionally constructed greenhouses in Kenya, in case they catch fire, are blown down by heavy winds, or are destroyed by any other natural calamity.

“I have discovered that greenhouse farming and general farming through irrigation is the way to go because rain-fed agriculture has failed me many times, especially in the recent past. The rains are no- longer reliable,” said Muriuki, a 64-year-old mother of seven.

In Meru area, she recalls, “Rainfall always came on Mar. 15 every year. There was no doubt about this. But in the past few years, the situation has changed. There is no guarantee that it will rain on Mar. 15 as it was the case in my youthful days.”

But on barely one acre of land in Karimagachiije village, 15 kilometres outside of Meru town, Muriuki is able to produce at least a ton of vegetables every week through greenhouse farming.

She sells the produce to different markets in Eastern and Central Kenya, earning enough to pay college fees for her two youngest daughters in different universities in the country. “This was my first opportunity to pay school fees. Before I started this project, it was solely my husband’s responsibility,” she said.

However, like Chebet, she was not in a position to raise the required amount of money to set up the horticultural project.

“Three years ago, I approached the Kenya Women Finance Trust, where I borrowed Sh300000 (3,750 dollars) as the capital for my farming project,” said Muriuki.

The Trust is dedicated specifically to empowering Kenyan girls and women through lending facilities. The loans are mostly given through self-help groups, where shares of the group members are used as security for loans borrowed by any of the members, because many poor women do not own property that they can use as collateral.

So far, the microfinance institution is financing close to 500,000 low-income Kenyan women to run different small-scale entrepreneurships not limited to agribusiness.

“In my greenhouse, I use a drip irrigation system, where water is released through pipes strategically buried in the soil with an opening at the foot of every plant. This maximises the use of the little available water, because the drip system does not allow runoff or deep percolation,” she explained. In Kenya, the average cost of building a greenhouse ranges between 1,250 dollars and 3,125 dollars, depending on where one is buying the materials, the quality of the materials and the size of the structure.

“In my entire life, I was not able to raise the amount of money that could be used to put up such a project. But thanks to microfinance institutions which have the interests of women at heart, I have become an independent entrepreneur in my old age,” said Muriuki. (END)

Occupy activists from Wall Street to San Francisco’s financial district have dramatised their anger with big financial institutions by blocking JP Morgan Chase Bank doorways, dancing atop Wells Fargo counters, pitching a tent in a Bank of America lobby, hanging banners across Citibank windows, and accompanying the actions with the now-familiar chant “Banks got bailed out, we got sold out.”

Protesters chained themselves to the door of the Wells Fargo Bank in San Francisco's financial district. Credit: Judith Scherr/IPS

The Occupy Movement condemns the banks’ role in predatory lending and the foreclosure crisis, the high-interest student loans they say enriches the bankers and impoverishes college students, bank investments in private prisons and more.

But protesting isn’t enough for Occupy San Francisco activist Brian McKeown. He says a bank should be a transparent institution whose mission is to help people. And so, with like-minded partners, McKeown is putting together a plan for the People’s Reserve Credit Union (PRCU). Occupy San Francisco is encouraging the venture.

In the next few weeks, McKeown says he’ll be ready to submit the PRCU’s application for a charter to the California Department of Financial Institutions.

“The country’s been devastated economically because of greed and government malfeasance,” McKeown said in a recent interview at the downtown San Francisco Public Library. “I don’t think it’s hard for folks who are educated to understand that the banks have ripped us off.”

The PRCU will be patterned on the Grameen Bank in Bangladesh, where McKeown spent three months studying microfinance. Its interest rates will be low and loans will go mostly to people who couldn’t otherwise qualify for loans at banks or even at most credit unions. However, they won’t be targeted to people who cannot pay them back.

Borrowers will be required to attend classes in business and personal finance and will have mentors to help their businesses succeed and to enhance their ability to pay back the loan. The PRCU will work with San Francisco State’s Community Service Learning Project to provide the education component, McKeown said.

San Francisco entrepreneur Tim Mayer, who is advising McKeown, said the bank will offer the same services other banks do. “But there will be a different consciousness,” he said. The PRCU board “will not focus on shareholder profits,” he said, but will be “concerned with the welfare of those they are servicing.”

“I’d rather support 12 taco stands than one Taco Bell,” McKeown quipped.

To apply for the charter, McKeown needs to have his board of directors in place – he said he does, but is not yet ready to reveal their names. (Selection of the board will be preliminary and subject to an eventual election by PRCU members.)

McKeown needs to present a business plan and show that he has adequate capitalisation to get chartered. He said they already have some wealthy backers and a fundraising concert is in the works.

The road ahead for the new credit union will not necessarily be easy, cautioned Rafael Morales, public affairs and west coast programme officer at the National Federation of Community Development Credit Unions.

“There’s generally a high rate of failure for most start ups,” said Morales, who has had preliminary meetings with McKeown. He said usually the NFCDCU recommends that a credit union begin with operating capital of one to two million dollars to carry it through several years.

“The first couple of years are unprofitable,” Morales said. “The more working capital, the higher chance of success.”

Others say it can be done for less. Warren Langley, former president and CEO of the Pacific Exchange in San Francisco – and a supporter of the Occupy Movement – told IPS he thought a credit union could be established with 100,000 to 200,000 dollars.

McKeown said he plans to capitalise the bank at 250,000 to 500,000 dollars for the first year, keeping expenses at a minimum with bank officials working at low or deferred salaries and some without compensation. Mayer acknowledged, however, that it will be a challenge to find a CEO for the PRCU that has the requisite experience, shares the PRCU philosophy and will work for low wages.

A startup credit union also needs “a committed, capable organising committee”, Morales said, noting that McKeown’s group is very strong in this area.

The Occupy Movement is a “big tent” that includes libertarians, Democrats and communists. McKeown may part ways ideologically with those among his fellow Occupiers who reject capitalism.

“I’m a capitalist,” he said.

The problem, as he sees it, “is in the way capitalism is run. When my business fails, it doesn’t get protected. No one comes and bails me out. Why are we bailing out the businesses – financial institutions – – that are supposed to be the most conservative in the world?” He said if the system were working, the big banks would have failed.

“When we had that 800-billion-dollar bank bailout….they took the money and allowed the mortgages to fail,” he said. “Now all of a sudden Wall Street is making profits again, like it was before. It’s a jobless recovery. People have a right to be pissed off. Access to capital and credit made this country great.” He intends to make that access possible through the PRCU.

Of course, one new small credit union won’t make big changes in a system that’s not working. Langley, the former Pacific Stock Exchange CEO, noted, however, that the PRCU could solve the problem for its members.

“And if everybody, then does more of those [credit unions], it would certainly help,” he said. “It provides people alternatives.”

Amateurism, high prices, mismanagement, and a limited product range have discouraged Inderjeet Rajcoomarsingh, the former chairman of the Mauritius Agricultural Cooperative Federation, from shopping at cooperative stores.

Mauritians are abandoning shopping at dirty and disorganised cooperatives in favour of shopping malls. Credit: Nasseem Ackbarally/IPS

Instead you can find Rajcoomarsingh, who was a cooperative member for 34 years, pushing a trolley full of goods at The Bagatelle, a new shopping mall that is presently the craze in Mauritius.

Many Mauritians, mostly the youth here, say they have never heard of cooperative stores or the principles of consumer cooperatives. In theory consumers’ cooperative are meant to provide quality goods and services at the lowest price. But in practice, their goods and services are priced at market rates or higher.

“Today, a cooperative is just a name. There is no value and no principle. I don’t see that people’s lifestyles have improved so much in Mauritius by shopping at cooperative stores,” Rajcoomarsingh told IPS.

Cooperative stores did well here until the 1990s when the robust economic development of the island paved the way for supermarkets and, later, hypermarkets. Now, shopping malls have sprung up all over the island like mushrooms after the rains.

Several new shopping malls are set to open this year, putting another nail in the coffin of cooperative stores in this International Year of Cooperatives. IPS visited the Advance Coop Society, at Plaine des Papayes in northern Mauritius.

Here the store was disorganised, products were not properly displayed and the prices of goods were higher than that of the same goods on sale in local malls. And there is no such thing as a business returns policy or even customer care.

It is probably why Abdel Khodabockus, a teacher who lives near a cooperative store, has not entered one in years. “It is long time back since I have entered a cooperative store,” Khodabockus said.

And 21-year-old Mariam, who does not want to be identified, has never stepped foot in one. “Since my childhood, my parents took me to supermarkets for shopping and I have got used to it. It’s modern and clean…and we get all the products we need under a single roof. I don’t care for a cooperative shop because I do not know what it is all about,” she told IPS.

This does not surprise Dawood Mootoojakhan, who was once a member of a now defunct cooperative store at Plaine-Verte in the country’s capital.

“There is not a single good cooperative store in Mauritius. People who think the opposite are lying. I have personally witnessed cash and goods shortages in our cooperative shop, but who cares? That’s how our cooperative store went bankrupt some years back,” he told IPS.

That and a lack of progress from cooperative stores is one of the reasons for their failure.

“Cooperative stores remained stagnant when the island was developing fast. They did not modernise and develop further their operations to satisfy the demands of the population whose income and lifestyles were improving under the economic miracle of the 90s. The arrival of supermarkets accelerated this decline,” said Suttyhudeo Tengur, secretary of the Camp Thorel Multi-Purpose Cooperative Society Ltd, which owns a cooperative shop at Camp Thorel, a village in eastern Mauritius. He added that the Camp Thorel cooperative is doing well.

In just one decade, from 1990 to 2000, the number of cooperative stores fell from 95 to 30. Today, only three are operational. Tengur blamed the Mauritius Consumer Cooperative Federation (MCCF) for the downfall of cooperative stores.

“This organisation was supposed to set up a central warehouse and import large volumes of goods to sell to the stores at better prices. It abandoned this activity long ago, preferring to buy from the private sector and sell to the consumers. Because the MCCF has failed in its mission, many cooperative stores have closed down,” he said.

Yogendrasing Sreepaul, MCCF chief executive officer, agreed that the consumer cooperative sector has failed in Mauritius but he denied that it was because of his organisation.

“Co-operators who manage these stores are uneducated, they have no vision and will to modernise their shops and keep pace with development. They themselves have pushed consumers into the arms of super- and hypermarkets and shopping malls,” he said.

Sreepaul said cooperative stores are no competition for private business, as they do not have competent and visionary people.

“They do not have such qualities. Most importantly, how do you compete with a business in which millions of rupees have been invested with your 10-rupee share in a cooperative store?” he asked.

Other challenges that cooperatives in Mauritius face, according to a member of the Mauritius Cooperative Union, include a lack of capital, archaic management, no strategic planning, poor leadership, and low productivity, among others.

The MCCF is trying to save some of the cooperative stores by taking over their management and converting them into Fair Price Shops and trying to compete with the supermarkets. Seven such shops have been opened in 2011. Here goods are sold at reasonable prices.

“Shopping malls are selling at 35 to 40 percent mark ups. Why can’t our stores import their own goods and sell at 20 to 25 percent mark up? This can be done,” Tengur said.

Both Tengur and Sreepaul blame the Ministry of Cooperatives for having let down consumer cooperatives. Both said public officials have not done their jobs of inspection and supervision properly.

Minister of Cooperatives Jim Seetaram disagreed. “I do not find any cooperative society closing down in my books. Instead, our audit shows they are performing well,” he told IPS.

He said consumer cooperative stores suffer from a lack of visibility.

“Many people are not aware of them. The youth should be encouraged to get involved into the movement,” he said.

However, Seetaram said that while consumer cooperatives were not successful, the cooperative movement was doing well in other sectors in Mauritius. He said 40 percent of sugar and as much as 70 percent of fresh produce produced in the country was from cooperative societies. The cooperative movement contributes to about two percent of the country’s GDP.

Thomas Dlakama has experienced what he calls “January disease” all his working life. This phenomenon afflicts millions in Zimbabwe, and its symptoms include an empty purse, rising blood pressure among irascible breadwinners, and a general inexplicable hope of manna from heaven.

Ordinary folks have become targets of microcredit, as an antidote to January disease. Credit: Ignatius Banda/IPS

It strikes during the first month of the year, and for Dlakama, it has become an unwelcome ritual where his finances are depleted after the festive season and he has to start thinking about his children’s school fees, his own budget as a poorly paid civil servant, bills and everything in between.

January “is a terrible time of the year, and it has become a tradition for me to start borrowing money soon after New Year’s Day,” Dlakama says about January disease and his lifelong relationship with microfinance.

He is one of many poorly paid workers who find themselves making a beeline to microfinance institutions in Bulawayo, where workers such as civil servants make up the bulk of clients despite concerns about poor regulation, which has bred unscrupulous microlenders.

“The money-lenders are taking advantage of our poverty by demanding ridiculous interest rates,” Dlakama complained.

Microfinance institutions charge interest rates of between 30 and 40 percent, while backyard money-lenders who do not demand collateral can charge up to 50 percent interest.

Microfinance saw a resurgence after Zimbabwe suspended the use of its currency as legal tender in 2009 – the Zimbabwe dollar was replaced by foreign currencies like the euro, the U.S. dollar, the pound, the South African rand, and the Zambian kwacha – to put an end to hyperinflation.

Low salaries force Dlakama and other workers to seek out microloans to cushion themselves against economic hardships.

But despite being promoted by both government and development agencies as a critical player in developing countries where millions have poor incomes, the microfinance sector in Zimbabwe has been criticised for creating debt traps for the poor by charging high interest rates.

Microfinance institutions (MFIs) issue their loans according to the monthly salary of the client. And in a country where there are glaring disparities between incomes and the cost of the consumer food basket, they have become fertile ground for bogus operators to thrive, analysts here say.

The Consumer Council of Zimbabwe (CCZ) says an average family of six requires more than 500 U.S. dollars per month to meet basic needs, including utility bills, while the Zimbabwe Congress of Trade Unions (ZCTU) reports that some of its members earn as little as 100 dollars per month.

Civil servants such as teachers, who have become the prime clients of MFIs, which target them because of their steady salaries, earn a little over 300 dollars per month.

“I know January disease too well,” says Jennifer Darirai, a secondary school teacher.

“I have four kids all of whom attend boarding school, and with my salary I cannot afford to meet all these obligations and have to turn to microfinance lenders, but rather reluctantly. What can I do?” she told IPS.

It is this desperation that has led to the sprouting of MFIs across the country. And while the Ministry of Finance noted that there were 37 legally registered microfinance institutions in late 2010, industry officials say the number could well be into the hundreds, as many are operating from backyard offices without licences.

Microfinance policy is governed under the Financial Laws Amendment Act, which requires that non- banking financial institutions be registered.

“There are too many microfinance organisations sprouting up and taking advantage of people’s poverty; what we need is stricter monitoring,” said Garfield Murombedzi, a senior microfinance adviser with a local bank.

“We are seeing it too often – people coming to seek bank loans to pay off debts elsewhere. Something is obviously wrong somewhere,” Murombedzi said.

“But we still cannot keep track, as even operators whose licences expired continue to do business as usual, while at the same time others are operating without bothering with registration,” he added.

Since the country’s independence in 1980, microfinance has been viewed as a source of easy money, and has failed to shake off criticism that it has forced low-income earners into perpetual debt.

Sam Dube, who runs a microfinance institution in Bulawayo, says calls for stricter monitoring are justified, but that they present the operations of the entire industry as “profiteering.”

“We understand concerns being raised by some people, but I believe this has largely been because of unscrupulous lenders,” Dube said.

“Some of us are qualified bankers and know the industry regulations well. But these people who are giving us a bad name and charging exorbitant interest rates, taking people’s property without justification, are operating outside our mandate,” Dube said.

“We are a properly regulated industry, but like any other, you are bound to find con artists among us,” he told IPS.

The Zimbabwe Association of Microfinance Institutions says members who flout regulations risk being deregistered.

But Murombedzi said cash-strapped people often fail to check whether or not these institutions are registered or are charging the recommended interest rates.

“I think that is the issue that is important here: many sectors in Zimbabwe are demanding self-regulation, but people flout their own rules; surely a higher authority must move in,” Murombedzi said, referring to the poor monitoring of microfinance.

The Ministry of Finance has in the past warned against unregistered financial institutions, with some banks even being shut down at the peak of the country’s economic chaos in 2008. But with poor incomes existing side-by-side with poor monitoring mechanisms, unscrupulous microfinance institutions are likely to be around for a long time to come.

By Mantoe Phakathi
MBABANE, Dec 30 2011 (IPS)

While the Swazi economy is teetering on the brink of collapse, the government is banking on the future by providing funds to help young people set up businesses.

Futhi Mngomezulu operating her embroidery machine. Credit: Mantoe Phakathi/IPS

After realising that the country is failing to attract adequate foreign direct investment, last year the government established the Youth Empowerment Fund (YEF) to give seed money to young unemployed people to start businesses.

“Young people constitute more than half of the unemployed and government was trying to get them off the streets while they put bread on the table,” said director of youth affairs Bheki Thwala.

Although the government was already facing a severe fiscal strain following the 60 percent drop in revenue from the Southern African Customs Union (SACU), which used to finance more than 60 percent of the Swazi budget until changes to the bloc’s revenue formula, it did put aside some 1.250 million dollars for the youth fund.

Loans from the fund carry a 10 percent interest rate, while no collateral is required from the beneficiaries, who are between the ages of 18 and 35.

“It’s a development fund aimed at addressing unemployment among the youth,” said Thwala.

Futhi Mngomezulu, 29, and her 27-year-old sister Gcebile are among a group of close to 600 young entrepreneurs who have received loans from the government to start a business.

Futhi is a qualified IT specialist while Gcebile is an electrician. But neither could find employment in their areas of expertise. As a result, they decided to start a company that specialises in designing and making emblems for school uniforms.

“But the biggest challenge was raising the money to buy the embroidery machine which cost 65,000 SZL (8,050 dollars),” said Futhi. “We were only able to raise up to 25,000 SZL (3,100 dollars) with the help of our mother.”

Fortunately, a year later, the government invited applications from young people hoping to establish businesses.

The two sisters are taking schools in the capital city and surrounding areas by storm, offering designing and embroidery services. Their company, FGM Embroidery Services, received some 6,200 dollars from YEF, which they used to buy the embroidery machine from South Africa.

“We responded to the high demand for these services after realising that there were only two companies providing them,” said Futhi, adding that the market was overwhelming for the existing suppliers.

Before receiving the money from the organisation that has partnered with the government to disburse the funds, Imbita Women’s Finance Trust (IWFT), they were trained in entrepreneurship and business management. “We know how to keep our books, and the basics of running a business,” said Futhi.

Although the orders keep coming, being young meant that they had to work hard to convince the clientele that they could deliver, operating in an industry where deadlines can either make or break you.

“If you fail to finish the job in time, people will take their work elsewhere the next time,” said Futhi. “It means one has to work late, especially during the peak season like January.”

Engaging an agency like IWFT to administer the fund has been a great success, said Thwala. IWFT is tasked with screening the applicants, disbursing the funds, and monitoring and evaluating their performance.

“For the first group of beneficiaries we disbursed 5.8 million SZL (718,000 dollars) to 590 people last year in August,” said Thwala. “We saved about 4 million SZL (495,000 dollars) for this year (2011/2012) because of the fiscal crisis.”

This year only 152 people benefited from a total of 250,000 dollars because the ministry did not have a budget for the fund as government hit rock bottom, struggling to pay salaries, supplies and social grants or cash transfers.

An individual beneficiary is entitled to receive between 63 and 2,475 dollars; a company gets between 630 and 6,200 dollars; while an association receives a maximum of 12,500 dollars.

The training, coupled with a great deal of enthusiasm and hard work, has gone a long way towards securing a higher repayment rate, said IWFT director Sibongile Shongwe, although the challenge is ensuring the growth of the enterprises.

“Young people have a vision in business, but it takes a lot of nurturing and forward planning to take an enterprise to a higher level,” said Shongwe.

However, the biggest challenge in running YEF is that some beneficiaries are not truly interested in becoming businesspeople, but are merely unemployed. As soon as a job opportunity knocks on their door, some beneficiaries abandon their projects.

Others in the meantime have pursued their education outside the country after getting scholarships, leaving their businesses hanging.

“That affects the repayment rate, because these people end up not servicing their debts,” said Shongwe. “And there are also cases of people who won’t pay simply because this is government money.”

As a result, the government is working on a policy to try and bring defaulters to book because, she said, this is supposed to be a revolving fund so that more people can benefit from it.

However, in cases where the projects are hit by natural disasters like a storm, IWFT, after carrying out an evaluation, does offer refinancing to get the business back on track.

“We also advise projects that are susceptible to natural disasters, such as gardens and breeding chickens, to take insurance,” said Shongwe.

She said there are many success stories like Futhi’s where young people are working hard to make their businesses go. Although it’s still early days for Futhi to start counting the profits, the young entrepreneur said the business is on the right track.

Excerpt:

By Travis Lupick
BLANTYRE, Dec 16 2011 (IPS)

On an elegant veranda adorned with a red carpet, Malawi’s Vice President Joyce Banda recalls how her childhood friend Chrissie Mtokoma was always top of their class and how she struggled to beat her. But now decades later Banda is a likely contender for the country’s presidency in 2014, while Mtokoma lives in poverty.

Malawi's Vice President Joyce Banda recalls how her childhood friend was always top of their class and how she struggled to beat her. Credit: Katie C. Lin/IPS

“She went to school in the village and I went to school in the town,” begins the highest-ranking woman in Malawi politics. “I would get home Friday evening and Chrissie would be waiting for me by the roadside.”

Banda tells parallel narratives contrasting her own upbringing with that of Mtokoma’s. “In the village school, Chrissie was first in her class, all the way to standard six (grade eight),” she tells IPS. “I was always number two or three, always fighting to beat her. But I couldn’t.”

Later, both girls were accepted into prestigious secondary schools. But after just three months, Mtokoma was forced to drop out.

“Chrissie’s uncle couldn’t pay for a second semester,” Banda says. “That was it for Chrissie. She went back to the village and into a vicious cycle of poverty, ignorance, early marriage, and then early motherhood. By the time I finished school, she had maybe five children. And today, Chrissie is where I left her.”

Banda maintains she was only able to stay in school thanks to the middle-class income her father earned working as a policeman. “So I went on, finished, and now I am vice president of this land,” she tells IPS. “Chrissie, she is locked up in the village, in poverty. And that makes me angry. Why am I here and she is not?”

As Banda entered adulthood, these childhood memories drew her attention to the benefits of education, and especially economic empowerment, to which she has dedicated much of her life.

In recent years, Malawian women have made significant gains in their struggle for full gender equality. Women are increasingly represented in national politics, for example. Malawi’s May 2009 federal election saw the proportion of female Members of Parliament rise from 14 percent to 22. And though a minority, it is not difficult to find women’s names among the ranks of corporate board members.

Yet women in Malawi remain disproportionately affected by poverty. In 2004, the National Statistics Office found that while only 25 percent of the country’s households were headed by women, they accounted for 58.4 percent of the country’s poorest homes. Moreover, women in Malawi remain significantly under-represented in areas of economic decision-making.

Banda and other leading women argue that the key to addressing these problems is to put more of the country’s money in the hands of its mothers.

Seodi White, national coordinator for Women and Law in Southern Africa, recalls her involvement in the country’s first marches for women, which were held in the late 1990s. More than a decade later, she argues that there is still much work to be done.

Even small amounts of money can create life-changing opportunities for the country’s most disadvantaged women, White says. She describes the results of an experiment her organisation led in a village in Mangochi District. Women were given roughly 110 dollars and left to do with it as they wished.

“We found out that these are not idle hands,” White says.

One woman made sweets out of sugar and sold them to nearby schools. Another baked and sold small cakes. And a third invested in a tobacco operation. The women made enough to keep their small businesses going, and invested excess earnings in purchases that benefited their families; blankets for their children, iron sheets to improve a dwelling’s thatched roof, and household items such as salt and sugar that previously were only provided by their husbands.

“This kind of power can create a level of decision-making at the family and community level that can have cascading effects on the country,” White emphasises.

She points to studies by financial institutions such as Bangladesh’s Grameen Bank, which, time and again, have shown that women are significantly more likely than men to invest in areas that alleviate poverty such as health, education, and business improvement.

“Women are trained to care for others,” she reasons. “Very few women would just use money for their own personal gain.”

At the side of the road in Blantyre, a group of women selling scraps of plastic discuss what they wish for their businesses. At the top of everyone’s list is an investment or small loan.

Cecelia Goba, 40, and Ellen Mawuwa, 35, say that they would use funds to import and resell goods from neighbouring countries such as Mozambique.

“I would buy clothes and shoes outside this country and sell them here,” Mawuwa says. “We have friends in such businesses and they are doing quite fine.”

A number of non-profit organisations are active in Malawi supplying the sort of micro-loans made famous by the Grameen Bank and Nobel Peace Prize winner Muhammad Yunus. And the vice president’s newly-formed People’s Party recently launched an initiative called Orange Achievers, which aims to maximise the economic potential of Malawian women.

But supply cannot meet demand. And as Mary Malunga, executive director for the National Association of Business Women, explains, there are a host of other challenges Malawian women must overcome if they are to excel in the professional world.

“Women need to work 10 times harder than men to prove that any job that a man can do, a woman can do too,” she explains. “Women, due to perceived social and cultural roles, are not respected when they are in leadership positions.”

Malunga, a successful businesswomen herself, offered a few words of advice.

“To get to where I am today, it took what I call the three Ps: patience, perseverance, and prayer,” she says. “You need to persevere through all kinds of challenges and obstacles which, at times, will make you feel like you will never reach your intended destination.”

White echoes Malunga’s remarks. “Determination, determination, determination,” she emphasises, warning that this may mean sacrificing other aspects of one’s life, including having a boyfriend. Falling pregnant may end a young girl’s dreams.

“You might get pregnant, and that would be the end of it,” White explains. “Most girls don’t realise the kinds of difficult decisions that some of us had to make to reach where we are.”

And at the vice president’s compound in Blantyre, Banda reiterates that economic empowerment is the path to education and prosperity. But she stresses that this does not mean anybody should wait for a handout.

“My advice to younger women is that we have a moral obligation to make it,” Banda maintains. “Regardless of what we face, we need to forge ahead, we need to keep going. For us, it is a responsibility that we have in order to push our fellow women forward.”

Excerpt:

By nachoadmin
ATLANTA, Georgia, Dec 14 2011 (IPS)

When Vandy Beth Glenn, a transgender woman formerly known as Mr. Glenn Morrison, told her supervisors at the Georgia state legislature where she served as a legislative editor that she would start coming to work dressed as a woman, she was fired.

In her quest to get her job back and in a major victory for transgender people, Glenn has convinced the federal Eleventh Circuit Court of Appeals to establish transgender people as a protected class under the Equal Protection Clause of the Fourteenth Amendment to the U.S. Constitution.

Glenn, who was born a biological male, was diagnosed with Gender Identity Disorder in 2005 and that same year began transitioning to become a woman.

In 2007, when Glenn – then still known at work as Mr. Morrison – informed her supervisor in the Georgia General Assembly’s Office of Legislative Counsel that she would begin arriving at work dressed as a woman, she was fired by Sewell Brumby, who heads the office.

Brumby later said in depositions that it bothered him because “he was a man dressed as a woman and made up as a woman”.

Brumby also said, “It’s unsettling to think of someone dressed in women’s clothing with male sexual organs inside that clothing.”

Glenn first filed her lawsuit in July 2008 with the help of Lambda Legal, a legal organisation whose mission is “to safeguard and advance the civil rights of lesbians, gay men, bisexuals, transgender people and those with HIV through impact litigation, education and policy work”.

A federal court first granted her a victory in August 2010. The recent ruling by a three-judge panel at the federal appellate level, issued on Dec. 6, 2011, upheld the lower court’s ruling.

The ruling by the Court of Appeals court has even greater weight than the first ruling. Judge Rosemary Barkett wrote the ruling, with Judges Phyllis Kravitch and William Pryor concurring.

At issue in this case was whether the Equal Protection Clause, which grants equal protection on the basis of a number of classes including sex, extends to transgender people.

The court noted that previous courts had ruled that equal protection on the basis of sex meant that employers could not discriminate on the basis of a person’s conformity or nonconformity to expectations of how that person should behave due to his or her sex.

The court cited cases where discrimination had been ruled to have occurred where a woman had been a denied a promotion for acting too “macho” or men have been discriminated against for “wearing jewellery that was considered too effeminate, carrying a serving tray too gracefully, or taking too active a role in child-rearing”.

“A person is defined as transgender precisely because of the perception that his or her behaviour transgresses gender stereotypes,” the court wrote. “Accordingly, discrimination against a transgender individual because of her gender-nonconformity is sex discrimination, whether it’s described as being on the basis of sex or gender.”

“Although the past four years have been both uplifting and frustrating, I have remained optimistic that we’d prevail – and certainly a 3-0 decision from a federal appeals court is quite a compelling statement about the discrimination I endured,” Glenn said in a statement.

“I’m extremely grateful to everyone at Lambda Legal and I hope this decision means no one else will have to go through what I did. I’m very happy!” Glenn said.

“Certainly what the ruling is – to very specifically the transgender community in Georgia and the other states covered by the Eleventh Circuit Court of Appeals – they really seem to have cause to be able to file discrimination suits,” Jeff Graham, executive director of Georgia Equality, told IPS.

“It’s a very significant legal victory, especially for the transgender community. It should be seen as a wake-up call to businesses and government entities,” Graham said.

He noted, however, that it is remains important for the federal government to pass the proposed Employee Non-Discrimination Act to protect employees on the basis of sexual orientation and gender identity, for the State of Georgia to pass similar protections and for individual businesses and agencies to pass internal policies prohibiting discrimination.

“The victory bolsters our argument that these are important protections to put in place,” Graham emphasised.

“It’s a really important, great decision and it helps move us towards employment security for transgender people. It’s further proof that discrimination against transgender people is illegal,” Mara Keisling, who is executive director of the National Centre for Transgender Equality and is also transgender, told IPS.

“Having a court, particularly a conservative court in a conservative circuit, is really a big deal,” Keisling said.

Meanwhile, Glenn is waiting to see whether the State of Georgia will appeal to the full nine-judge appeals panel or even further, to the Supreme Court of the US.

Glenn went back to work, however, on Friday, Dec. 9, pending possible appeal.

Excerpt:

Cooperative members at the APROHFI wholesale centre select the best potatoes to sell to supermarkets. Credit: Thelma Mejía/IPS

By Thelma Mejía
INTIBUCÁ, Honduras, Dec 8 2011 (IPS)

Thanks to the quality and freshness of their produce, indigenous Lenca farmers in western Honduras are regular suppliers of seven supermarket chains. This year they won the National Environmental Prize, in the community initiatives category.

In the mountains of the department (province) of Intibucá at a height of 1,850 metres above sea level, some 101 families live in the villages of Monquecagua, Togopala, Dulce Nombre and Candelaria. These communities are home to the country’s poorest ethnic groups.

Every day the small-scale farmers begin work at dawn, tending their potatoes, carrots, broccoli, lettuce, cabbage, cilantro and other vegetables. Maintaining their ancestral traditions, their plots always include maize and beans, the staple foods of Hondurans.

A little over two years ago, they initiated an agricultural business value chain, and it has transformed their view of their future prospects. They were supported by the Access to Land Programme (PACTA – Programa de Acceso a la Tierra) of the U.N. Food and Agriculture Organisation (FAO), and the state National Agrarian Institute (INA).

They are confident they can overcome poverty, as María Cleofes Méndez, from Togopala, said, proudly showing us round her home on the lower slopes of a mountain, which she has renovated, changing it from a thatched-roof wattle and daub hut to a cosy home with solid walls and a tiled floor.

“The land gave me this, and the technical assistance provided by the PACTA people has allowed us to harvest all year round,” Méndez, a 49-year-old indigenous woman who is the president of her community’s farmers’ cooperative, told IPS.

She said everyone’s work in the community, the work of both men and women, is equally important. “There are no differences, because we all want to fight for better development,” she said.

“Before, we had nothing but poverty. Now you can see the difference: we have improved our houses and we invest our profits in the family, sending our children to school, because it is not enough to just carry on making furrows in the earth with a hoe,” Méndez said proudly.

Héctor García is one of the agricultural technicians working closely with the indigenous community. He, too, is a Lenca, and his wages are paid by the local cooperative. He is very enthusiastic about helping his own people, and even more so about the way the cooperative is using drip irrigation.

He also expressed concern for the environment. Indigenous people “know the value of the land,” García said.

“I like this project, because the farmers are producing without using fuel, and instead using what nature provides, in small natural reservoirs they have built,” said García, who was on a visit to the area when he spoke to IPS.

Adán Bonilla, the regional coordinator of the project for Intibucá, explained that in order to take advantage of local water resources, and learning from a similar project in Brazil, they decided to build small dams and a pumping system that is not reliant on fuel, but uses gravity to distribute the irrigation water.

This system has saved the Lenca farmers more than 40,000 dollars a year, which they used to spend on fuel. “They have learned to optimise both natural and economic resources, for instance in the way they built the dams, which are made with several linings to allow cleaning every two weeks,” Bonilla told IPS,

The water is pumped to storage tanks made of geomembranes – impermeable synthetic liners used with earth or rocks to contain fluids. Afterwards it flows into smaller containers, where it is mixed with fertiliser and is conveyed to the roots of the plants by drip irrigation.

In Monquecagua, Salvadora Domínguez told IPS that it took three months to build the dam. “We worked from Monday to Sunday, come rain or come shine.”

“They have shown us how to clean and maintain the reservoirs, and we have organised in an irrigation board, where every member pays 20 lempiras (nearly one dollar) a month, to keep the pump in good condition,” she said.

In Monquecagua, which means “water mountain” in the Lenca language, the dam is located nearly a kilometre away from the pump. The terrain is inhospitable, covered with thick undergrowth, and the paths are uncomfortably narrow, testifying to the difficulties the indigenous people had to overcome to build their reservoir. There are no vehicles, so everything had to be carried up on foot or muleback, Domínguez said.

But the effort was worth it. Their produce now goes to a wholesale centre belonging to the Intibucá Association of Fruit and Vegetable Producers (APROHFI), and from there to seven large supermarket chains, including a U.S. franchise that operates in Tegucigalpa.

“This has allowed us to avoid relying so much on intermediaries, and we are also offering top quality produce,” she said.

“It hasn’t been easy to get where we are now, but we are proud to know that these supermarkets are turning to us to find out if we are able to supply them with our produce, rather than ordering imported goods,” Domingo Paz, the head of APROHFI, told IPS.

At the wholesale centre, the produce is processed and classified, and then sent on to its destination by refrigerator truck. “We never thought we would come so far. We had a more limited vision, but now our dream is to set up a processing plant, to provide consumers with a more sophisticated product,” said Paz, smiling.

Raúl Alemán, the national supervisor of PACTA/FAO projects, said this network of agricultural businesses is a kind of public-private partnership, with financing coming from the participants as well as strategic partners who believe in this kind of development.

“Now they can get credit from high street and second-tier banks. We facilitated the processes, and we can see how this productive chain has not only changed their lives, but has also ensured food security while protecting the environment and fomenting local development,” Alemán told IPS.

One source of credit is the Foundation for the Development of Honduras (FUNED), a microfinance NGO. In Intibucá its manager, Alex Guzmán, is pleased with the support they have given these indigenous farmers.

The Lenca people of Intibucá won the National Environmental Prize, awarded by the environment ministry and private companies. Part of the prize money, 4,500 dollars, was divided up among the members of the cooperative, part was invested in production, and part went towards creating a small fund for educational scholarships.

* This article was produced with support from FAO.

Co-op members say their eating habits have changed radically since joining. Credit: Warsaw Food Co-operative.

By Claudia Ciobanu
PRAGUE, Dec 1 2011 (IPS)

A small wave of consumer cooperatives is rising in Central and Eastern Europe, attempting to provide food that is locally produced and healthy, and to build conviviality.

Co-op members say their eating habits have changed radically since joining. Credit: Warsaw Food Co-operative.

“Co-operatives always appear when they are needed,” says Torsten Lorenz, a historian studying the European cooperative movement at Charles University in Prague. “The English Rochdale co-operative, considered the starting point of the whole movement, appeared in the mid 19th century because people were starving and they found that cooperation helped them weather hard times. Nowadays it is often young environmentalists and leftists in pursuit of an alternative vision of society who start co-ops.”

“There are different reasons why people joined our cooperative,” says Piotr Trzaskowski, one of the members of Warsaw Food Co-op, created two years ago in the Polish capital. What attracts him among other reasons is “getting clean, ethical food at lower prices than in organic shops, and supporting local farmers.”

Members of the Warsaw co-op organise shopping sessions every two weeks in a squat in the centre of the city. According to Trzaskowki, about 60 people make up the broad co-op network of consumers, with 20 taking part in each shopping round. The group buys from two ecological farms as well as from a large food deposit in the city.

“What we have in place is definitely a consumer-friendly system,” explains Trzaskowski. “It could be good to move towards a system where the focus is on support for the farmers but this would require a change in our philosophy which we are not envisaging yet and which also would be revolutionary in Polish society, even for the farmers themselves.”

The Warsaw Food Co-op seems to have already paved the way for others: another similar co-op already functions in Warsaw and two more in cities Lublin and Lodz, with a couple of other initiatives in the process of taking shape around the country.

And such projects have appeared across the region, from more basic shopping schemes (such as veggie boxes – implying that consumers get periodic deliveries of a limited number of products directly from farmers to set locations, paying upon delivery) which now exist in all countries, from Romania to Slovakia, to the more complex consumer supported agriculture (CSA).

CSA means farmers receive payments at the beginning of the season for the entire period and consumers pledge to take up all the products farmed in this period, thus sharing the risks with producers. Three CSAs function across Hungary, while in the Czech Republic there are five, mostly located in capital Prague, with a new one planned in Brno next year.

Jan Valeška from the organisation Biospotrebitel was involved in setting up the first CSA scheme in Prague over four years ago and currently participates in two groups, one made up of 40 consumers, and another smaller one, where a farmer herself coordinates food distribution for ten people.

Valeška explains that, as much as he would like to use the word cooperative for the schemes he organises, he cannot: for one, existing cooperatives in the Czech Republic, even in the farming sector, “are huge and do not meet solid social and environmental sustainability criteria”; for another, cooperatives are regarded with skepticism in the country because of their use by the Communist Party and a reputation of corruption surrounding some of the first post-socialist co-ops.

“I am primarily interested in promoting sustainable ways of farming because they are environmentally friendly,” Valeška says. “CSAs represent new ways of getting people involved in farming, of linking consumers directly with farmers, of getting them in touch to the passing of seasons.

“People joining CSAs are fed up with supermarket food,” he continues. “We want to know the farmers and understand how the food is produced; we’re not so much interested in food formally labeled as organic, more in local food.” Throughout the year, Valeška and his colleagues go to the supplier farms during ‘pick your own days’ to better understand production and help farmers.

Bulgarians are also working on implementing the CSA model but so far this remains at the planning stage. According to Sava Chankov, member of the one-year-old Sofia-based Hrankoop (one of two such co-ops in the country, the other one being in Plovdiv), farmers themselves find it difficult to put as much trust in consumers as necessitated by this scheme.

Chankov agrees with the other activists that consumer co-ops in Central and Eastern Europe (CEE) are at the moment a project for the middle class because prices are often higher than in supermarkets.

“Many Bulgarians do not care so much about the quality of the food they eat and they are most concerned about prices,” he explains. “I think co-ops will move forward in Bulgaria, but only to some extent because of people’s lack of interest in food issues.”

Nevertheless, Chankov keeps his faith in consumer food co-ops: “For me, it is very important to get clean food and be able to meet and do activities together with people who share the same interests.” He also notes that many Bulgarians, while not involved in collective projects, have relatives in the countryside supplying them with food, or have a small garden themselves. According to Chankov, a larger number of district-based co-ops could be the way forward.

“Compared to three years ago, these initiatives are growing, every year there are more people interested and wanting to start CSAs in their own precincts,” says Valeška. “Even people who don’t practice CSA yet have accepted the idea.”

Trzaskowski too says there is growing interest in co-ops in Poland because it is an attractive, durable form of activism with strong impact on daily life. Even more, he argues, “our cooperative is a political force, not only because we are organised consumers, but also because we are active in other areas too, such as educating people about food politics.”

Excerpt:

Socorro María Olivas shows her crop of good quality beans in Estelí, Nicaragua. Credit: Danilo Valladares/IPS

By Danilo Valladares
MANAGUA, Nov 29 2011 (IPS)

“Using high quality seed, I harvested 20 quintals (one quintal = 100 pounds), while with ordinary seed I only get 10 quintals,” Vilma Rodríguez, a beneficiary of a seed production programme in the northwestern Nicaraguan province of Estelí, told IPS.

Socorro María Olivas shows her crop of good quality beans in Estelí, Nicaragua. Credit: Danilo Valladares/IPS

At the first harvest in May and June she collected 20 quintals, selling 18 to the cooperative at 37 dollars each, paying off her debt and making a profit, and saving two quintals for her own consumption.

“I had no cash to produce crops, but the loan helped me get ahead. Moreover, the cooperative pays me 850 córdobas (37 dollars) per quintal, while the market price is only 600 córdobas (26 dollars). Now I want to plant two more hectares of this seed,” she said.

Small farmers send their beans to the cooperative, which carries out post-harvesting processing: cleaning, drying, testing for moisture content and preparing the seeds for storage.

Inspectors from the government’s seeds office take samples from the different lots for laboratory testing and certification, so that they can be sold, in accordance with the 1998 law and regulations for the production and marketing of seeds.

One quintal of good quality certified bean seed costs 90 dollars nowadays, while a quintal of non-certified seed might cost 40 dollars.

Rodríguez is just one link in the chain of this programme, which is being promoted in six Central American countries by the U.N. Food and Agriculture Organisation (FAO), and which involves cooperatives, associations and government agencies.

The goal is to boost the marketing of high quality seeds, generate income for low-income families, increase production and fight food insecurity in this impoverished region.

In Nicaragua a survey by the International Foundation for the Global Economic Challenge(FIDEG), which carries out applied development research, found that 44.5 percent of the Nicaraguan population of 5.8 million was living below the poverty line in 2010, with poverty levels particularly high in rural areas.

“The project emerged from the global food price inflation crisis in 2008, when the cost of staple foods in Central America soared,” Allan Hruska, a FAO expert on plant protection, told IPS. “Part of the problem was the lack of high quality seeds, because people were using whatever grain was available for seeds, and that led to very low productivity.”

According to the Nicaraguan Institute for Agricultural Technology (INTA), barely 18 to 20 percent of the seeds of staple foods in the country are certified for high quality, on the basis of minimum standards of genetic, physical, physiological and sanitary quality to increase productivity, under the Central American Technical Regulations (RTCA).

FAO identified the need to ensure availability, access and use of high quality seeds by small farmers.

The regional project, “Strengthening Staple Grain Seed Production Policies in support of Family Farming for Food Security in the Member Countries of the Central American Agricultural Council,” financed with close to 12 million dollars by the Spanish Agency for International Development Cooperation (AECID), was launched in late 2009 and will conclude at the end of 2012.

“The main goal is to create and strengthen the capabilities of small businesses with the technical, technological and administrative skills to produce and sell high quality seeds in their communities,” Hruska said.

In Nicaragua, the initiative is being carried out in partnership with small farmers’ cooperatives producing beans, maize and sorghum, in five areas: Las Segovias and Jinotega in the north; Matagalpa in the centre; the North Atlantic region in the northeast; and the South Atlantic region in the southeast of the country.

“The work is focused on promoting the formation of seed companies; training for production and certification of seeds; and bolstering productivity and business development,” Juan Bosco of the FAO-Nicaragua seed programme told IPS.

For now, the project is supporting the creation of five federations of cooperatives, with the intention they should become businesses for the production and marketing of high quality seeds, and be sustainable once the project ends in 2012.

At present, as independent cooperatives, they produce seeds for sale on the local market and for export to countries like Costa Rica and Honduras; however they face many difficulties, including the lack of sales know-how.

“They’re good at producing staple grain seeds, but they’re not good at managing purchases and sales,” said Bosco about some 6,000 seed producers belonging to Nicaraguan cooperatives, 30 percent of whom are women.

Socorro María Olivas, a 57-year-old bean farmer from Estelí, told IPS: “Sometimes the cooperatives do not buy our beans, and the commercial dealers pay very low prices that we have no alternative but to accept.”

Seeds with fake certification put out on the market have also created distrust among farmers.

Aldo Rojas, the head of the seeds and biotechnology programme at INTA, told IPS that “many people, to make a quick profit, bag up ordinary seeds and sell them as certified, and farmers have grown wary.”

Ultimately, using poor quality seed “means less food and less profit, which has social and economic implications,” he said.

The lack of trained inspectors who can certify the product, as well as of regional laboratories to decentralise the certification process, and the lack of opportunities for private certifiers, which would require reform of the seed law, are further problems in the promotion of this industry, according to Rojas.

Another challenge is delivering high quality seed to the poorest farmers, or those who do not belong to cooperatives.

“Our idea is that for every two quintals of beans farmers bring us, we can give them one of high quality seed,” Jairo Videa, a farmer with the Federation of Seed-Producing Cooperatives of the North, located in the provinces of Estelí, Madriz and Nueva Segovia, told IPS.

The “Strengthening staple grain seed production” project aims to produce 9,040 quintals of high quality beans, maize and sorghum seeds this year to increase productivity and availability of staple foods in Nicaragua.

* This article was produced with support from FAO.

Excerpt:

By Inés Benítez
MÁLAGA, Spain, Nov 29 2011 (IPS)

On the first Sunday of every month, Abdoulaye Fall, from Senegal, meets a group of people in Barcelona, to contribute money to a common fund or to take out a loan. This is one of 60 self-financed communities in Spain, an alternative to traditional banking systems that is having a powerful social effect.

“I’ll contribute 20 euros (27 dollars),” says one of the 15 Senegalese members of the Axell (which means “providence” in Wolof, the dominant language in Senegal) self-financing community (SFC). “I’ll put in 100 (133 dollars),” says the person sitting next to him. The accountant writes down the amounts and the treasurer puts the money into a box, from which loans approved by the meeting will be made later.

SFCs are community financial organisations in which members are at once owners of the capital and loan customers, borrowers as well as lenders of credit, with a flat interest rate of one percent in most groups.

Fall told IPS that the communities grant loans to fill small urgent or unforeseen needs, such as a trip, a health emergency or payment of a fine, and they are not devoted to creating businesses.

“One of our most recent loans, for 1,200 euros (1,600 dollars) was to travel to the Sheep Festival in Senegal,” said Fall, who works in a Barcelona restaurant and studies at the university.

Termed “susus” in Venezuela or “tontine” in some countries in Africa, and going by at least 54 other names around the world, self-financed communities are a system of group organising that has always existed in every culture, David Schurjin from Ecuador, an expert with the Association of Self-Financed Communities (ACAF) in Barcelona, told IPS.

ACAF is dedicated to creating groups, supporting them and following them up, and teaching them the methodology. It was founded seven years ago by economics professor Jean Claude Rodríguez-Ferrera, who adapted a model of community finances he had learned in Venezuela, to the Spanish context.

Rodríguez-Ferrera is a member of Ashoka, the largest global network of social entrepreneurs.

Unlike microcredit, the funds for SFCs are contributed by the members themselves, instead of coming from an NGO or a bank, which means that users are empowered to a greater extent, according to Schurjin.

Users also have a greater sense of responsibility for loans, “because the group members are friends, acquaintances or relatives,” he said.

The microcredit system, invented by Bangladeshi economist Muhammad Yunus, is aimed at poor people who have no access to bank loans, and allows them to finance employment projects for the most disadvantaged, especially in developing countries.

Spain has 60 self-financed communities, 50 of them in Barcelona and the rest in the cities of Lleida, Valencia, Pamplona, Seville, Madrid, Santander and the island of Lanzarote.

Most of these SFCs are made up of immigrants, people who are normally excluded from ordinary financial systems.

“Immigrant communities respond best to this model, because they are more accustomed to sharing, or because they have a greater need for credit,” said Schurjin.

Members may ask for loans of up to four times the amount they have contributed, so the greater their contribution, the larger the potential loan. Moreover, they must be backed by one or two other members who will guarantee the loan with their own money in case it is not repaid, so they have to earn trust.

The low interest payments go into the common fund, and the cash is commonly distributed at the end of the year. The return on the loans is usually greater than if it had been placed in a bank or hidden under a mattress.

In addition to meeting small financial needs, these communities have a social impact, because they create a discussion space about needs and concerns and contribute to the users’ financial education.

Fall, who has been in Spain for 11 years and is active in ACAF, says the system has different components: financial, social and educational. “The capital is provided by the people themselves, who have sovereignty over the money and manage it,” he said.

In Schurjin’s view, “after a time we realised that the need was less for credit than for creating a social network.”

According to the expert, a 2009 study found that 75 percent of SFC members were motivated to join because they wanted to belong to the group, rather than because they wanted access to money. In fact, Schurjin said the money was sort of an “excuse” to bring people together, while solving economic problems.

The groups, based on mutual aid, are normally made up of friends, acquaintances and relatives belonging to the same community, and they only accept people that they trust as members.

Schurjin said that SFCs promote saving, because the amount of credit available is proportional to the amount deposited, and the interest is also distributed according to what has been contributed.

“Credit will not lift people out of poverty, but saving will,” said Schurjin, who pointed out that the system prevents overindebtedness, “because if you have no savings capacity, you cannot ask for a loan.”

The severe economic crisis in Spain is prompting some Spaniards to form self-financed communities, overcoming “the social inertia that leads people to rely on banks, institutions over which they have no control,” Schurjin said.

The AnaBella Foundation, in the southern city of Seville, has found the community financing system to be an effective tool for empowering women survivors of gender violence, the head of the foundation that bears her name told IPS.

The non-profit organisation works to help women who are at risk of exclusion because of domestic violence, and a month ago it created the first SFC in the southern region of Andalusia. “The model is a perfect match to the needs of women on their own with low purchasing power, or who have been subjected to domestic abuse,” Bella said.

The foundation’s SFC in Seville is made up of seven women, and according to Bella, in addition to providing flexible access to credit, it creates a “social support network” which helps the women evolve from victims to survivors.

“It’s a tool for building trust, and a way for the group to grow together,” said Bella, who is also a member of Ashoka.

Excerpt:

By Marcela Valente
BUENOS AIRES, Nov 23 2011 (IPS)

Forged in the 2001-2002 social and economic crisis, cooperatives in Argentina are becoming a fast track to women’s participation in what were traditionally regarded as male spheres.

“At first it was difficult for men to accept women as co-workers on building sites, but now that we have joined cooperatives, they are getting used to us being there,” Roxana Jiménez told IPS.

Jiménez is the president of the Federation of Worker Cooperatives in the province of Santiago del Estero, in the northeast of the country, which has more than 800 members. She also belongs to a construction cooperative made up of 10 men and six women.

“Now women’s presence is seen as normal; people have seen that women are fast learners, not only for construction but also electricity, plumbing, laying ceramic tiles and anything else that’s needed,” Jiménez said.

Her cooperative is hired by local governments in the province for infrastructure works, as well as for private sector projects.

Workers’ cooperatives were promoted by the Argentine government in 2003 in response to the soaring levels of poverty and unemployment resulting from the 2001-2002 severe social and economic crisis, which followed three years of recession.

To start with, the state encouraged the formation of 50 cooperatives with 16 members each, to give unemployed people training and jobs. As many of the men who joined them did not know the trades, they learned them alongside women.

Cristián Miño, president of the Florencio Varela Federation of Worker Cooperatives (FECOOTRAUN), was unemployed in 2003. Now he not only has work but leads a movement of 600 members, a “social enterprise” as he calls it.

Miño told IPS that in the 3,000 cooperatives that have come together in the National Confederation of Workers’ Cooperatives (CNCT), between 35 and 40 percent of the members are women, who are playing an increasingly prominent role in the movement.

IPS carried out these interviews at the CNCT’s First National Meeting of Women Cooperativists, held in Buenos Aires Nov. 18-19 to share experiences on gender issues and women’s participation in cooperatives.

According to Miño, there are women-only cooperatives in at least four of the country’s provinces, but most are mixed, even when the type of work has historically been done by men, as in the case of construction.

“At first, men were reluctant to accept women, until they saw the women’s dedication. Now they have begun to include women as a key feature of the cooperatives,” he said.

“Because of the ‘machista’ attitude that so many of us have, we thought women would not be strong enough to do the same work as men, but in time, when we saw women carrying 50 kg bags of cement, we realised that indeed they were,” he said.

Cooperativism received a further boost in 2009 when the Social Development Ministry under centre-left President Cristina Fernández launched Argentina Trabaja (Argentina Works), a plan for forming 60-member cooperatives involving a total of 100,000 people.

The cooperatives work in areas like the textile, restaurant, horticultural, construction materials, food and printing industries, and their members earn a minimum income of 300 dollars a month.

The workers also receive the universal child benefit, amounting to 64 dollars a month for each child under 18 who stays in school, in addition to health care and social security contributions to ensure a future pension.

According to a 2010 study by the ministry, half of the cooperative members are women, and they all previously had difficulty getting jobs. A total of 79 percent had not completed their primary and secondary education, and 77 percent had no trade or job training.

The cooperative movement has also provided job opportunities to sexual minorities traditionally excluded from the labour market, such as transvestites and transsexuals, who were also present at the meeting.

Lohana Berkins, a transvestite, is the head of the Nadia Echazú textile cooperative and school, operated and managed by transvestites and transsexuals. She told IPS that they started a transgender organisation five years ago, and their group now has 60 members. There are also another four cooperatives doing different kinds of work.

“We have trouble getting jobs, but not for the same reasons as people who become unemployed and then can’t get work again. In our case it is because of issues of discrimination and exclusion,” Berkins said.

In 2006 they formed the Nadia Echazú cooperative and applied to the government for training and tools. “We don’t assess our results in economic terms, because that isn’t what is most important to us,” she said.

“What we value is the impact this has on our community, because we transvestites do not see prostitution as proper work; we want to generate debate with the state and society and show that we can have a real job,” she said.

Excerpt:

Peruvian farmer Inocencia Chipana shows her coffee beans outside the cooperative's warehouse. Credit: Milagros Salazar/IPS

By Elizabeth Whitman
UNITED NATIONS, Nov 22 2011 (IPS)

The 925 million people who went hungry in 2010 are just one facet of an ever-worsening food security crisis. Both food producers and consumers face the consequences of price volatility and unsustainable agricultural practices – challenges that leave leaders on local and global levels alike seeking sustainable models for agriculture.

Peruvian farmer Inocencia Chipana shows her coffee beans outside the cooperative's warehouse. Credit: Milagros Salazar/IPS

Belonging to cooperatives offers “an opportunity for farmers to access markets and services that might not be available otherwise”, Brent Hueth, director of the Centre for Cooperatives at the University of Wisconsin, told IPS.

Farmers are not the only ones to benefit from agricultural co-ops. The bargaining power and resource sharing they derive from belonging to co-ops can help reduce poverty and heighten food security for millions, said the U.N. Food and Agriculture Organisation (FAO) in October.

Indeed, the United Nations threw its weight behind the idea of cooperatives as a stable business model for enterprises in many sectors, including health and finance. The international body declared 2012 the International Year of Cooperatives and launched the themed year at the end of October.

Cooperatives can be small, local businesses or multi-million-dollar entities, but they always operate based on the same seven principles, which adhere to the aim of being democratically owned and operated, with each member receiving one vote.

Eight hundred million people around the world are members of cooperatives, which employ 100 million globally. Financial cooperatives, such as credit unions, have been hailed by experts for their resilience in weathering the financial crisis.

Starved for solutions

“The new generation of food cooperatives look to create direct links with their local communities,” Luis Sierra, assistant director at the California Centre for Cooperative Development, told IPS. By shoring up individual efforts, cooperatives are ensuring that “commitments and connections to their own community are a driving force”.

In the past several years, cooperatives have helped to make supporting locally produced and marketed foods into a priority for more consumers, strengthening food supply chains and partnerships between producers, distributors and buyers, Sierra explained.

By strengthening these systems and connections, agricultural cooperatives can help with food insecurity by giving producers the opportunity to more fully “control and be able to effectively market their locally grown products”, said Sierra.

FAO, the International Fund for Agricultural Development (IFAD) and the World Food Programme (WFP) have all stressed that by being part of a larger organisation such as a cooperative, farmers are able to negotiate better terms or lower prices for necessities such as seeds or equipment.

Farmers’ co-ops can also offer small farmers the prospects of securing land rights and better market opportunities.

With land degradation from both climate change and unsustainable agricultural practices, and phenomena such as land grabbing highlighting the growing need for stable agricultural models, cooperatives – where they exist – seem a feasible alternative to address such challenges.

Hitting boundaries

Still, co-ops have their limits. In particular, they cannot always accumulate enough capital to develop infrastructure to, for example, take wheat and turn it into pasta or bread, said Sierra.

“The scale required to make (those processes) economical requires a tremendous amount of investment,” Sierra explained. “Sometimes there’s just not enough members, not enough capital, to make that happen.”

Hueth agreed. “Agricultural cooperatives are often at a disadvantage when it comes to raising capital for cooperative business start-up or expansion,” he said.

The same qualities for which cooperatives can often attract praise – being financed by their members, organised to operate in a way that benefits those same members rather than generates a return on investment – can also hinder those organisations.

Expanding can present obstacles for cooperatives for another reason as well, Hueth noted. “Another challenge that all cooperatives face, as they grow and become more complex, is to maintain a strong board governance structure.”

“Different economic interests among members can sometimes undermine the unity of purpose needed to run a large business successfully,” he added, and business and law schools often have “limited expertise” to help cooperatives successfully manage their businesses.

Excerpt:

Jesus Guerra at the microcredit summit with Soraya Rodríguez, Spain's secretary of state for international co-operation. Credit: Raquel Martinez/IPS

By Raquel Martinez
VALLADOLID, Spain, Nov 18 2011 (IPS)

Jesús Guerra, a volunteer at this week’s Fifth Global Microcredit Summit in this Spanish town, was nonplussed by the expensive gold watch sported by a banker from a developing country.

“When I volunteered to help at the Summit I thought this was different,” Guerra told IPS. “I believed that everybody who worked in microfinance wanted to end social injustices, but here I am listening to a lot of people saying that the goal is to make profits.”

Another volunteer, Susana Balet, was impressed by the dedication of some people working in microcredit. She indicated to IPS a presentation made by Ingrid Munro where the focus stayed on the reality of poverty and the importance of alleviating it.

Munro, who founded in 1999 the Jamii Bora Group, a Nairobi-based microfinance organisation, firmly believes that any family, no matter how hopelessly poor, is capable of emerging out of poverty.

“Human development does not work without people listening to each other, especially those at the bottom of the pyramid,” said Pilar Vereda, in-charge of Institutional Relations of the Fundación Iberomericana de Desarrollo (the Iberoamerican Foundation of Development).

But such a dialogue between the providers and recipients of microcredit was missing even at the Nov. 14-17 Summit with the poor figuring largely in presentations and videos.

“The people at the bottom of the pyramid have not had their own voice at this Summit although the Spanish platform of non-government organisations had proposed better participation by cooperatives or other beneficiaries of microfinance,” Vereda said.

“Finally, their voices were represented through the videos that we produced and broadcast at the Summit,” she said.

Muhammad Yunus, founder of Bangladesh’s Grameen Bank, told IPS that a small group of borrowers is participating in the Summit and has even managed to participate in different events.

“At this big Summit there was only a small group of borrowers because we want to be sure that they are comfortable and for them to avoid this big crowd of people from around the world,” Yunus explained. “But at the annual regional summits there are usually meetings between borrowers and other participants,” he added.

“We have to believe in the potential of people. To be confident that each person knows what microcredit is about. Each person is as capable as anybody in the world because creativity exists in all of us,” Yunus claimed when he inaugurated the Summit.

The truth is that the main goal of the participating experts and institutions was how to get more clients and make more money, and this does not always coincide with the idea of making microfinance a tool to fight poverty.

For example, U-IMCEC, a Senegal-based cooperative represented at the Summit, aims to contribute to improving incomes and the well-being of families and micro entrepreneurs.

Working with 72,000 members, U-IMCEC works by providing access to financial services and creating income-generating activities, especially for the women, poor and vulnerable.

“My institution works in the rural areas surrounding the cities, where the neediest live. We have improved their lives with programmes which allow people to receive remittances from abroad without moving to big cities, where the financial institutions are,” Diao El Hadji Moussa, U-IMCEC deputy director, told IPS.

“It also has a positive effect on the family and micro business because they reduce costs,” he told IPS.

Last year, banks showed great interest in the potential of microcredit, as indicated by numerous Summit participants.

“When corporate banks begin to work in microfinance they have to learn and specialise,” said Alejandro Soriano, senior executive at Banco de Desarrollo de América Latina (CAF).

“They need to understand that this (specialisation) is essential to guarantee sustainability and that microfinance has a high social impact,” Soriano told IPS.

“There are too many examples of banks working with inadequate methodology. When they stop being profitable they drop countries and communities and this causes huge damage to the borrowers, because they do not have any more access to credit,” Soriano added.

CAF is a development bank that promotes a model of sustainable development through credit operations, grants and technical support and offers financial structuring to public and private sector projects in Latin America.

“Sometimes big banks learn from developing countries’ experiences,” said Estela Cañas, researcher at the Central American University.

“This was the case of the Santander bank in El Salvador which invested half a million dollars to learn and spread this knowledge. It was a positive practice,” Cañas told IPS.

At the Summit, there were innovative organisations dedicated to development through self-sustainability: connecting socially responsible individuals with people from emerging countries in need of microcredit.

Angel Aranda, managing director of Amifi, told IPS how peer-to-peer lending works. “Individuals can make social investments from 20 dollars. By partnering with microfinance institutions we establish the connections with the borrowers in emerging countries.

“Social investors can choose a project from our website where the project information is available and they can follow the process of selected micro businesses in emerging countries over time.”

Despite such good practices on the one hand and the problems faced by microfinance institutions on the other, the Summit was still about maintaining a system that maximises profits for some.

Excerpt:

Microcredit can help a woman to have an income. It can, for better or worse, also transform gender equations in the public and private spheres.

Microcredit pioneer Muhammad Yunus at Valladolid. Credit: Raquel Martines/IPS

Making microfinance more meaningful for women in terms of real empowerment occupies much of the deliberations at the Fifth Global Microcredit Summit underway in this Spanish city.

Apparently, not all microcredit institutions (MFIs) are aware of the importance of contributing to a more integral and transforming vision that impacts women’s rights and human development.

Linda Mayoux, international consultant to Hivos and Oxfam Novib’s WEMAN Programme, classifies MFIs into three kinds: those that are minimalist, those that alleviate poverty and those that also provide empowerment avenues.

The first ones works on high rotation, high interest rates and high profitability; the second focuses on the impact that microcredit can have on the reduction of family poverty by providing loans to women.

“But to talk about a woman’s empowerment it is not enough for her to have better access to income and a better life for her family,” Patricia Padilla, manager of Asociación Alternativa para el Desarrollo Integral de las Mujeres (ADIM), told IPS.

It is important to have MFIs that also look at empowerment, the third on Mayoux’s list, Padilla said. With this philosophy, ADIM carries out development business services with gender approach and management of knowledge in Nicaragua.

“To achieve the goal of ending extreme poverty in women, who represent 80 percent of those at the bottom of the pyramid, it is necessary to have educational and training interventions, but other kinds of actions are needed to empower them,” Padilla said.

“After giving the loans, our institution offers training to the borrowers to increase their entrepreneurial and personal identity, their economic and life independence, their use of tools to increase their training skills in basic accounting principles as well as marketing and autonomy,” Padilla said.

“Autonomy leads to self-recognition, and from this point each woman can move towards personal realisation,” she added.

In the household sphere, they also receive the capacity to negotiate, to share incomes with their husbands. “In Nicaragua, women spend most of their incomes on home and children rather than investments on their own projects,” Padilla said.

Negotiation of income is not the only thing needed in the household. “The sexual division of labour in Nicaragua is such that husbands prevent their spouses from going to far away markets because of jealousy, and this affects women’s independence and sexual freedom,” she said.

In Honduras, the cooperative Comixmuld, shows the positive impact in the household that a larger development approach can have on women.

Comixmuld, a credit and savings institution born in the Siquateque market, has 25 years of experience behind it and a current enrolment of 23,000 women members.

“These women are living under the poverty threshold of less than 1.25 dollars per day and 52 percent of them are heads of the family. They are the owners of the cooperatives and they decide what they need most,” Olivia Castellanos, president of Honduran cooperative, pointed out.

To carry out their own projects, members requested time and their petitions were heard by the Fundación Iberoamericana para el Desarrollo, a Spanish NGO. Pilar Vereda, CEO of the foundation, supported the Honduran women in their initiatives to share household work and save time.

“Although, at the beginning, the idea was to focus on the exchanges in the scope of housework, the members of the cooperative decided to start exchanging their products,” Vereda told IPS.

“And now the members of cooperative not only share childcare but also exchange products and crafts of each woman to sell in different markets, and they work on a rotatory system to go to fairs,” Magda López, manager of Comixmuld, said.

“This coordination and exchange results in a wider variety of products offered on the women’s market stands and in a higher income, but especially permits women to have more time as they themselves demanded,” López concluded.

As Isabel Cruz, president of Foro Latinoamericano y del Caribe de Finanzas Rurales (FOROLACFR), indicated, “To achieve rights is not as easy as the access to credit, but one should be able to find a way in which microcredit and rights can progress at the same time.”

“Microcredit has created opportunities for women, but it has also generated effects not as positive in family and social life. It is necessary to go further with more policies in the education, psychology and sociology fields,” Cruz told IPS.

“In Mexico, for example, violence has increased,” Cruz said. “Credit can be a double-edged sword if the context is not kept in mind. Specific gender policy measures need to be in place.”

By Inés Benítez
VALLADOLID, Spain, Nov 15 2011 (IPS)

Poor families are well aware of the devastating effects of unforeseen expenses on their lives. Microinsurance, a recent microfinance tool, has the potential to limit their vulnerability and combat poverty, experts say.

The traditional insurance industry is not very innovative, says Isabel Cruz. Credit: Inés Benítez/IPS

“Microinsurance is a very powerful approach that generates substantial social impacts,” María Jesús Pérez, the head of research and innovation at the Spanish anti-poverty foundation CODESPA, told IPS at the Global Microcredit Summit running Nov. 14-17 in Valladolid, in north-central Spain.

This type of insurance is similar to traditional insurance policies available on the market, but is adapted to the spending power of people with low incomes, Pérez said.

In the Dominican Republic, CODESPA and its local partner the ADOPEM Bank have developed a “very successful three-in-one” microinsurance policy that covers life insurance, disability and funeral expenses, Pérez said. Health and agricultural insurance are now also being offered.

The microinsurance policy, which has been taken out by over 2,000 people in the Caribbean nation, provides nearly 1,000 euros (1,375 dollars) of cover and can be acquired by a single annual payment.

“Dominicans pay four euros (5.5 dollars) a year, the cost of two sodas, for life insurance worth 1,000 euros,” said Pérez.

More than 2,000 delegates from nearly 100 countries are taking part in the Microcredit Summit.

Paloma Pérez, a Spanish volunteer who spent two months in the Dominican Republic, said the three-in-one microinsurance product was in great demand, as it is low-cost and covers essential needs, although she said there is “competition from informal insurance arrangements.”

Microinsurance should be very low cost, with policies issued quickly and easily, and they should offer adequate cover, without administrative red tape hampering access.

“One of the aspects valued by poor families is speed in receiving insurance pay-outs,” said Pérez, who stressed the importance of building trust in the service.

In her view, the challenges are to convince insurance companies that it is feasible to develop profitable microinsurance with social goals, and to encourage people to buy the policies.

Microfinance has a longer track record and is more widely known than microinsurance, which is still relatively new.

According to the latest State of the Microcredit Summit Campaign Report, published Nov. 10, over the last 13 years the number of extremely poor families with a microloan has grown more than 18-fold, from 7.6 million in 1997 to 137.5 million in 2010.

Assuming an average of five persons per family, these 137.5 million microloans benefited more than 687 million family members, which is greater than the combined populations of the European Union and Russia.

In contrast, some 150 million people worldwide have access to microinsurance, Isabel Cruz, head of the Latin American and Caribbean Forum on Rural Finance (FOROLACFR), told IPS.

Microinsurance is less widespread, partly because the insurance industry is “very traditional” and not very innovative, and because of a lack of understanding on the part of potential beneficiaries, said Cruz.

“Poor people don’t know what microinsurance is, and they need to have the concept introduced gradually by other mechanisms, with the help of financial education,” said Cruz. This requires insurance companies to change the way they operate, and “they aren’t too willing to change.”

Another reason for the slower growth of microinsurance is the lack of channels for delivering it to the population, because until now this has always been done through microfinance. But in Cruz’s view, microloans do not always “understand the poor,” and they also “link insurance to loan protection, instead of shoring people up against risks.”

Cruz, who is from Mexico, said “microinsurance does not just mean small insurance policies; an entire new institutional architecture of insurance companies is needed, as well as concepts such as microinsurance networks.”

Moreover, “regulators don’t always understand microinsurance, because the turnover is smaller than for traditional insurance.”

In her view, specific professional architectures are needed to make microinsurance attractive to customers. “Insurance must be given value; instead of being sold just as a financial product, it must be given value that is appreciated by the customer. And legal reforms are also needed.”

In Brazil, for instance, the “very innovative” concepts of licensed microinsurers, social brokers and microinsurance correspondents have been created.

Most microinsurance worldwide is life and funeral insurance; catastrophe and crop microinsurance is less well developed, although according to Cruz, “they are much more important.”

Estela Cañas, head of the Small and Micro-Business Management Centre at the José Simeón Cañas Central American University, in El Salvador, told IPS that “microinsurance growth is essential.”

The high level of violence against ordinary citizens in El Salvador makes life microinsurance policies crucial, and natural disaster insurance is also important, she said.

In Honduras, COMIXMUL (Mixed Cooperative of United Women), a savings and loan cooperative, has 21,500 borrowers who are served by 13 offices around the country, its coordinator Magda López told IPS.

As well as having access to specific microinsurance, the women members make a small monthly payment for each loan, and a solidarity fund pays out death benefits and health insurance for members, she said.

Excerpt:

By Raquel Martinez
VALLADOLID, Spain, Nov 14 2011 (IPS)

While microcredit remains the best tool available to address poverty it is no magic wand and can only be a part of the larger development process, say experts gathered in this historic Spanish city.

Stalls await business at the Valladolid microcredit summit. Credit: Raquel Martinez/IPS

José Antonio Alonso, professor of applied economics at the Complutense University of Madrid, thinks that microcredit suffers from overblown expectations when the reality is that some goals are achievable and others are myths.

Alonso counts among the myths the idea that anyone can become a businessman. “Entrepreneurial skills are necessary to run a successful microenterprise and not all potential customers are equally able to take on debt”, he told IPS.

The professor said microfinance institutions continue to be an important tool to reduce the poverty, but they have to be integrated into a larger view of development.

According to Alonso, the most important achievement of microcredit is reduction in vulnerability as the World Bank report, ‘Voices of the Poor – From Many Lands’, shows.

Todd Bernhardt, director of marketing and communications at the Washington-based Grameen Foundation, said that microcredit institutions alone are not the answer to poverty. “It is also necessary to have a broader view of development and include factors such as knowledge, savings, healthcare and a good framework of regulation.”

The Grameen Foundation helps replicate Bangladesh’s Grameen Bank microfinance model around the world through a global network of partners.

Bernhardt said the Grameen Bank model is sustainable because “the savings of members flow and can be reused by other borrower-owners.” The model also concentrates on income generating activities rather than consumer spending.

“The impact of microfinance in MDG (Millennium Development Goals) is more associated with reduction of poverty, not only because of better incomes but also because of capacity building,” Bernhardt told IPS.

Currently, 1.4 billion people live on less than 1.25 dollars per day, while more than three billion live on less than 2.50 dollars per day. The U.N.’s first MDG focuses on cutting extreme poverty and hunger to half by 2015.

“In addition, there is a huge effect on the other MDGs,” Bernhardt said. “When credit is given to a woman it increases her self-confidence as also levels of education and health for herself and her family. In other words, microfinance has a ripple effect on the MDGs,” he told IPS.

India, according to Bernhardt, presented a case where there were no conducive polices. “Microfinance institutions in India are prohibited from offering savings accounts to borrowers, who are forced to borrow money from commercial banks or sources.

“This is sometimes reflected in higher interest rates charged to borrowers, as compared to institutions like Grameen Bank, which leverages funds from savings and passes them on to borrowers,” Bernhardt said.

Even so, according to a report released by the Microcredit Summit Campaign (MSC) – a programme of the United States-based advocacy group RESULTS Educational Fund – nearly 9 million Indian households involved in microfinance rose above the 1.25 dollars-a-day poverty threshold between 1990 and 2010.

This is good news coming as it does at a time of difficulties for the sector in India and elsewhere.

The microfinance community attending the summit is taking promotional steps such as introducing the ‘Seal of Excellence’ to recognise microfinance institutions with significant outreach to poor and excluded households.

The MSC aims to reach 175 million of the world’s poorest families by 2015 and ensure that 100 million of those families move above the World Bank’s 1.25 dollars-a-day poverty threshold.

According a recent, unpublished report from the Consultative Group to Assist the Poor, called ‘Latest Findings from Randomised Evaluations of Microfinances,’ the microfinance industry needs to continue to mature in ways that allow it to view poor customers as individuals.

“Some of those individuals will leverage financial services to smooth consumption; some to manage risk; some to make investments where they have the skill and resources to profit from; some will do all of the above,” the report concludes.

It was shown at the summit that when the ability of microfinance institutions to deliver education and health services to the poorest are combined with savings, loans and insurance, they become powerful tools in the fight against global poverty.

The best yardstick of microcredit’s success is its own steadily growing popularity.

Some 137.5 million families received a microloan in 2010, according to the ‘State of the Microcredit Summit Campaign’ report. That supposes an 18-fold increase since the original microcredit summit was held in 1997 when only 7.6 million very poor families had taken a microloan.

Excerpt:

By Patricia Grogg
HAVANA, Nov 14 2011 (IPS)

The creation of co-operatives forms part of the current “updating” of the Cuban economy, even though no official information has been provided about the expansion of this form of business management, which has already been tested, with mixed results, in agriculture.

Due to a lack of autonomy, cooperatives in Cuba have been less successful than individual farmers who hire local labour. Credit: Baldrich - IPS

“The guidelines do not talk about this,” Pampín added, referring to the document approved in April during the Sixth Congress of the governing Communist Party, which sets the agenda for the Raúl Castro government’s modernisation of the country’s economic and social policies.

The document, however, does announce that “first-degree” co-operatives – where members are individuals or legal entities – will be created as a socialist form of collective ownership in different sectors, with the goal of producing and providing useful services for society, with members using their income to pay for all costs.

It also provides for “second-degree” co-operatives, whose members are “first-degree” co-ops, with the goal of organising complementary activities that are related to or add value to the products and services of member co-ops (involved in production, services or distribution), and making joint sales and purchases for greater efficiency.

Legal regulations reportedly now being drawn up are expected to guarantee that co-operatives, as a form of social property, cannot be sold, nor can their ownership be transferred to other co-operatives, non-state businesses or individuals. At the same time, the regulations will serve as the basis for determining the income of workers and the distribution of profits.

For some analysts, the delay in the materialisation of these initiatives may be due to the fact that they are changes that the government does not wish to rush, to avoid subsequent errors or delays. “We are not going to rush things to meet a timetable,” Castro said, referring to the pace of reforms during a government meeting in September.

For now, the authorities seem to be focusing on the expansion of self-employment or private enterprise as an alternative for the tens of thousands of people who have lost their jobs in a slashing of the bloated public payroll. This includes the distribution of idle state land to new farmers, under a 2008 law.

But experts say more measures are needed to make the economy grow.

In an article published by the Catholic magazine Palabra Nueva, Camila Piñeiro, a researcher with the Centre for the Study of the Cuban Economy, said additional advantages would be provided by legal regulations for the expansion of co-operatives not limited to agriculture.

“It would allow like-minded people to come together to carry out activities like those engaged in by self-employed workers, but with higher levels of productivity and without having to recur to a concentration of wealth or exploitative work relations,” Piñeiro said.

In her opinion, in this country, progress will be made in the construction of a new economic and social order to the extent that “the number of genuine co-operatives increases and state and private enterprises democratise their management,” along with other conditions.

“The way that co-operatives are organised internally not only makes them compatible with democratic socialism, but also essential, although of course they are not sufficient, nor are they the best way to organise all economic activities,” she said.

In Cuba, Credit and Services Co-operatives (CCS) were formed in the 1960s by land-owning private farmers who voluntarily joined to receive loans, technology and marketing benefits.

A decade later, the Agricultural Production Co-operatives (CPA) emerged, made up of farmers who went from being private to collective owners by selling their land and means of production to the new business entity.

According to economist and agricultural expert Armando Nova, the positive performance of the CPAs over more than two decades served as a model for the creation of the Basic Units of Co-operative Production (UBPC) in 1993.

Over the course of time, however, the UBPCs became “a transfigured form of state enterprise, with unsatisfactory results,” Nova commented in an article on the issue. In any case, the farmland cultivated by co-operatives grew from 15 percent in 1989 to 70 percent in 1999.

According to the information provided by the researcher, the CCSs and private farmers show better results on average than the CPAs, and by 2009 they accounted for 57 percent of total food production with 24.4 percent of arable land.

In Piñeiro’s opinion, if co-operatives have been less successful than private farmers who hire labour, it is due in great measure to the fact that they have not had the autonomy needed to make purchases and decide on their production and sales, among other hurdles.

The co-operatives became “distorted by the statist view of socialism that has predominated,” and the fact that many do not see how the group interests of co-ops can be brought into line with broader social interests without the direct intervention of the State, she said.

Excerpt:

By Ignatius Banda
PLUMTREE, Zimbabwe, Nov 14 2011 (IPS)

Collecting the monthly subscriptions for her co-operative has always been a headache for Thelma Nare, 41. This is because Nare lives in Tshitshi, Plumtree in rural Zimbabwe, about 60 kilometres away from the humdrum of the nearest town centre where banks are located.

Rural women find themselves at the centre of efforts by mobile phone service providers to introduce mobile phone money transfers in Zimbabwe. Credit: Ignatius Banda/IPS

In fact, the women in the co-operative do not have a bank account. Until recently, Nare and the other co-operative members had to physically be present to make their monthly contributions.

But now, these “unsophisticated” rural women find themselves at the centre of efforts by mobile phone service providers to introduce mobile phone money transfers in Zimbabwe.

Those without bank accounts, like Nare and her co-operative, can now send and receive cash via their mobile phones.

The system is fairly simple. A user registers for mobile phone banking with their service provider and is given a mobile “e-wallet” – an application on their sim card that is linked to their phone number.

When the user wants to pay for services or transfer money to someone they simply have to go to an agent and pay the desired amount, which is loaded onto the “e-wallet”. The payment is made and the recipient can withdraw the money from an agent. There are various agents affiliated with the mobile service providers across the country, making the service easily accessible to those in rural areas.

It is a convenient system that no longer limits the women’s movements. Nare and the women in her co-operative make regular trips to Bulawayo to sell produce, like Mopani worms. This means that they miss paying their monthly subscriptions.

And as with many co-operatives, or money clubs as they are called here, defaulters are not particularly valued. But these women would have not been able to cope with the country’s failing economy if it had not been for the money club.

For the women in Nare’s money club, belonging to the co-operative is what cushioned them during the tumultuous years of empty shop shelves in Zimbabwe. In the mid-2000s the country experienced hyperinflation and nearly 94 percent of the country was unemployed.

It was on a recent trip to Bulawayo, some 100 kilometres from Tshitshi, that Nare discovered mobile cash transfers.

Mobile network giant Econet Wireless, which has five million subscribers, introduced the service in September and was quickly followed by its competitors, the government-owned NetOne and Telecel.

These service providers have affiliated agents throughout the country, which include the Zimbabwe Post Office, supermarkets and stores where people like Nare can access their funds.

“I was in the city and was told about the use of mobile phones to transfer money. When I told the other women in my money club, it seemed to be the answer to our problems,” she said.

The model is borrowed from Kenya’s pioneering M-Pesa, which has experienced phenomenal growth from 20,000 users at its launch in 2007 to an estimated 14 million this year.

Girlie Moyo, 40, another member of Nare’s money club said that in the past the women had to gather under a tree to make physical contributions. Now, the convenience of the mobile transfers means “we can co-ordinate our contributions without concerns about distance.”

“Sometimes even if you have the money you will have no clue how to get it to the club members because our co-operative does not have a bank account like some in the city,” she said.

While money transfer services sprouted across the country in the aftermath of the mass exodus of Zimbabweans to work across the world, the “bureaux de change” remained in the cities. So those in the rural areas were forced to rely upon undependable and expensive cross-border transporters who demand up to 20 percent of the total amount being sent.

Mobile banking seems to be the best solution for rural Zimbabweans, as a report released on Nov. 9 by the Groupe Speciale Mobile Association (GSMA) found that Africa has the fastest growing mobile phone market in the world and is the world’s second-largest mobile market by connections, after Asia.
The GSMA report predicts that there will be more than 735 million subscribers in Africa by the end of 2012.

In Zimbabwe, it is expected that with the majority of the country’s population living in the rural areas, mobile phone money transfers will likely meet with the same success as seen in Kenya. The GSMA report noted that Kenya was the leader in mobile phone money transfers.

According to Econet Wireless, by 2015 mobile money transfers in Africa will reach 200 billion dollars.

“These are services which people, especially rural women, have always wanted,” said Viola Matongerere, an economist and gender and development specialist.

“Zimbabwe is one of many developing countries where the efforts of rural women to improve their livelihoods has been thwarted by little things which men have ready access to, like bank accounts for example.

“I think for women, these mobile phone-based services provide opportunities for the realisation of financial autonomy as they can now easily move their money without relying on anyone,” Matongerere said.

Money transfer agents affiliated with the country’s service providers are already reporting huge interest in the initiative as the government of Zimbabwe continues its promotion of paperless banking transactions.

“What has been great so far since the introduction of the service is the amount of cash that is moving to rural areas,” said Stewart Manyora, who works with the Zimbabwe Post Office.

“We have not registered much business of our own lately, yet we can already see that the mobile phone money transfers are making a difference,” Manyora said.

However, service providers are yet to release figures on the amount of money that has been transferred since the introduction of the service.

The United Nations Conference on Trade and Development report titled the Information Economy Report 2011 stated that there remain huge hindrances for women entrepreneurship, and this has been particularly worse for rural-based women.

The report noted that there are an absence of programmes and initiatives that promote the use of ICTs to assist women. Mobile phone banking is being touted by development agencies as a starting point towards empowering rural communities.

“Even when we get money from husbands’ working in Botswana and South Africa, it has been a problem sending this money to our children who are attending school away from the village,” Moyo said.

“The fact that we can organise ourselves as women in our co-operative through our phones is what matters,” she said.

Excerpt:

By Inés Benítez
MÁLAGA, Spain, Nov 10 2011 (IPS)

How does a freezer purchased with a microloan change the life of a poor woman in Senegal? What are the Study Solidarity Olympics? How many lives can an ambulance equipped to attend births save in Ethiopia?

One of many women in Kenya who are self-employed thanks to microloans from the Women's Enterprise Fund. Credit: Miriam Gathigah/IPS

The Nov. 10-12 gathering has drawn nearly 100 groups that work in development aid in Latin America, Asia and Africa.

The meeting that kicked off Thursday in the Feria de Valladolid – a large venue with a convention centre and conference halls – is sponsored by the Spanish Agency for International Development Cooperation (AECID).

It is one of the activities surrounding the 5th World Microcredit Summit, to take place Nov. 14-17 in the same city, with the participation of some 2,000 delegates from more than 100 countries.

The Meeting of Solidarity Projects is accessible to the public, who learn about the effect of projects focusing on health, education, nutrition or microfinance on disadvantaged populations, the director of the Feria, Carlos Escudero, told IPS.

“Microcredit has had a major impact on the women of Saint-Louis, in Senegal,” said one of the founders of the Spanish group Entre Mujeres (Among Women), Trinidad Gimeno, who is taking part in the meeting. “When they are given an opportunity, they seize it, and they say they will never go back to being poor. It has changed the lives of many women.”

Since it was founded in 2004, Entre Mujeres has loaned 40,000 euros (54,400 dollars) in microloans to 158 women in poor neighbourhoods of Saint-Louis for scholarships for training courses, or for the purchase of sewing machines, or freezers to store fish in order to sell the product at a higher price when it is scarce or to serve cold water or soft drinks at weddings and baptisms.

Gimeno told IPS that the maximum amount loaned out is 300 euros (408 dollars) per person, at an annual interest rate of four percent.

She said the women involved are empowered, as they go from “being treated somewhat like children to becoming leaders who know how to read and write, save money, learn from life, and keep their children in school.

“We aren’t a bank; we get to know these women’s homes, we go to the baptisms,” Gimeno stressed. She visits Senegal twice a year and considers a close relationship with the recipients of the microloans essential, “because they are not numbers, but people, and they need a lot of support.”

The number of poor women around the world who have received microloans has soared from 10.3 million in 1999 to 112 million today, according to this year’s State of the Microcredit Summit Campaign Report presented Thursday in the Feria de Valladolid parallel to the Meeting of Solidarity Projects.

A total of 137 million poor people around the world received a microloan in 2010, and microfinance benefited 687 million family members last year – more than the entire population of Europe, including Russia.

Furthermore, the number of very poor families who have obtained a microloan increased 18-fold in the last 13 years.

Entre Mujeres and the rest of the organisations taking part in the Meeting of Solidarity Projects want to bring visibility to their efforts to help reach the eight Millennium Development Goals (MDGs), a series of anti-poverty and development targets adopted by the world’s governments in 2000, with a 2015 deadline.

The MDGs, which set a 1990 baseline, include a 50-percent reduction in poverty and hunger; universal primary education; reduction of child mortality by two-thirds; cutbacks in maternal mortality by three-quarters; promotion of gender equality; environmental sustainability; reversal of the spread of HIV/AIDS, malaria and other diseases; and a global partnership for development between the rich and the poor.

To contribute its grain of sand to achieving these goals, the Spanish NGO Coopera organised the ninth Olimpiada Solidaria de Estudio (Study Solidarity Olympics) where the efforts of young people translate, thanks to sponsor companies, into money donated to educational projects in developing countries.

Every hour of study is converted into one euro of aid for a programme in a disadvantaged area, Coopera director David Ximeno explained to IPS. He said that in 2010, 56,000 young people took part, donating 440,000 hours of study in classrooms across Spain.

With the activity, which has expanded to 10 countries, Coopera is not seeking so much to raise funds as to increase awareness and create a feeling of solidarity among young people, Ximeno said.

Coopera is carrying out education-related projects in Jerusalem, in conflict zones like the Democratic Republic of Congo, in Senegal, Cote D’Ivoire, Angola and Mali, and in Mexico, Guatemala and Peru.

The Feria director Escudero said the aim of this week’s meeting is to get the word out about the work of development NGOs, which includes showing visiting classes of schoolchildren what the different projects do.

“We have sent an ambulance equipped to attend births to the city of Gonder (in Ethiopia), to serve the outskirts of the city,” Clara Valverde, programmes director of the Global Action Movement Association for Women in Africa, Asia and the Americas (MAGMA), told IPS.

On the outskirts of Gonder, a city of 300,000, the poverty is extreme, and women with full-term pregnancies endanger their own lives and those of their unborn children by walking to the hospital – which won’t even admit them if they can’t pay, because in Ethiopia, healthcare is not free, Valverde said.

The activist added that her NGO hired four Ethiopians for the project, including a doctor, and furnished the hospital with a maternity ward complete with an ultrasound and a mammogram machine.

MAGMA, which receives funds from the Madrid provincial government and AECID, plans to build a neonatal unit next year in the Gonder hospital, “where newborns are laid on boards because there are no bassinets.”

To help visitors to the Meeting of Solidarity Projects get an idea of the dire circumstances faced by people in many parts of the planet, more than 25 hours of films will be shown, along with theatre, music and dance performances.

Cives Mundi, another NGO taking part in the meeting, shows how new technologies can be used to raise the public’s awareness, through its web site http//www.haitinet.es.

The head of the Haitinet project, Gonzalo Gil, explained to IPS that by means of a powerful search engine, the web site provides up to the minute coverage on Haiti by gathering all of the articles available on the country on the worldwide web.

The first film shown at the Meeting of Solidarity Projects was “Y también Gaelle”, a documentary by Austrian filmmaker Natalie J. Halla that shows the return to Haiti of a group of Spanish firefighters who took part in the rescue effort after the 2010 earthquake that killed 300,000 people in January 2010.

Excerpt: