By Maxine Shapiro, KERA 90.1 business commentator
Dallas, TX – Half the people living in Mexico are equal to the very poorest people living in the world. Their challenge - to survive on $2 a day or less. Well, hopes are now higher and dignity is being restored thanks to a growing small loan program primarily for women. I'm Maxine Shapiro with KERA Marketplace Midday.
There's a widow in a small poor village in the foothills of Mexico's southern Sierras. She lives in a hut with five children. And Guadalupe Castillo Ure a now has her own pottery business as result of a little loan of $250. According to the New York Times, these small loans are known as microcredit or microfinance. Do not mistake these as charity. The interest rate is 6%, high by any standards. But the money these loans make gets turned around to assist other small businesses. And now in some of the world's poorest countries, wealth is being created. Guadalupe can now feed her children and pay for their school expense.
Here's how the structure works: An organization like Finca comes to a village and asks to visit with only the women. Would they be interested in borrowing a little money to start their own businesses? This is not a sexist opportunity. In reality, most of the men are gone, either dead or moved to America. I liked the explanation one successful participant told the Times: "Everyone knows women have the capacity to do this. Running a family, running a business - what's the difference?"
In Guadalupe's case, she received a loan of $250. That's about average. She began making hundred of clay pots. Finca helped find a wholesaler who sold the items in the city. Her net profit is $15 to $20 a week, not to mention the opportunity it brings for her and her children's future.
Finca and other loaning organizations like it are reaching hundreds of thousand of women and children in Mexico. The article reveals just in the last two years, women have borrowed and paid back tens of millions of dollars. And here's a figure any developed country would be envious of - the default rate on these loans average 2%. For KERA Marketplace Midday, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 p.m.
Email Maxine Shapiro about this story.