Many of the Zapotec weavers in Teotitlán buy their wool thread from other vendors, but Crispina likes to make it by hand. When we visited her house this afternoon, she showed us how to card the raw wool until it was soft. Then, her practiced hands held the fiber in one hand while gently turning a crank that spooled a thin strand on to a waiting spindle.
We gave it a try, but quickly found ourselves less than adept.
“Gently! Gently!” she admonished another visitor in our group with a wide smile on her face. “Turn it!”
Crispina is one of about 330 women in small towns surrounding Oaxaca City who have benefitted from a microloan from Fundacion En Via, a unique organization that provides zero-interest loans funded almost entirely with revenues from their responsible tourism project.
The group was started by Oaxacans about six years ago, and began giving small loans to women entrepreneurs in 2010. Their work has been featured in a number of U.S. newspapers, including the Seattle Times.
Many of En Via’s clients are indigenous Zapotec women who work in a variety of trades, including traditional weaving, cosmetic sales, agriculture and the restaurant business.
I’ve been interested in microfinance for years, ever since I learned about Grameen Bank, one of the first microfinance institutions (MFIs) in the world, founded in Bangladesh in 1983. The founder, Muhammad Yunus, realized many women were living in abject poverty because they lacked a few dollars to buy the raw ingredients they used to make stools.
Giving them a small loan was a simple solution to the problem, but no bank wanted to take on the risk of lending to people with no capital or credit history, or spend the time administering loans worth only a few dollars. So microfinance institutions (MFIs) were born, to provide low-interest loans to the working poor across the world. (This is, of course, a vastly oversimplified history that’s coming from my memory, so you should check out other sources if you want to learn more.)
Over the past decade or so, microfinance has become a trendy thing, and the growing number of MFIs worldwide has led to some skepticism about the business. Some lenders charge fairly high interest rates – I’ve seen 20-25% in many places – leading to questions about the supposed affordability of financing. Kiva, a website that’s turned into a major source of funding for larger MFIs (and where I’ve worked as a translator for about two years) had a mini-scandal a few years ago when people discovered that the individuals loans donors were ostensibly funding via their website were often disbursed to borrowers well in advance (they’ve since updated language on their site to more clearly reflect this).
En Via is a very small player in the MFI game, with just five staff members and a handful of volunteers running the program, which works in seven communities around Oaxaca. Having spent time working for Kiva and around others interested in microfinance, I was curious to see how their program worked.
Women join the program in groups of three. Usually, one woman hears about it through word of mouth and recruits two friends or neighbors to join her. The three of them receive an interest-free loan of 1500 pesos, about $100, and decide on a repayment term together (no more than 30 weeks). They also get a six week business class which discusses financial planning and goal-setting.
If one member can’t make her weekly payment on the loan, she and her groupmates all earn a fine. Three fines, and the loan amount they’re allowed to take out decreases.
Once a group has paid back their first loan, they’re required to host an En Via tour group before they can borrow again. En Via leads twice-weekly tours where tourists like us can visit several entrepreneurs in their homes and hear more about their businesses. The $55 tour cost goes entirely to cover loans, and tourist revenue covers about 86 percent of En Via’s funding (the rest comes from donations).
Money is lent out three times, then goes back to En Via to pay staff salaries and administration costs. Groups are eligible to take out larger loans as they’ve been in the program longer, with a current maximum of around 3,500 pesos (about $230).
On our tour, we met Crispina and her daughter Silvia, both weavers, and Rufina, another Zapotec weaver in the town of 5,700.
We also stopped in the town of Tlacochahuaya to meet three women who had just finished paying off their first loan. Acelia, the group leader, sells garlic in the local market on Sundays and used her loan to buy more inventory. She told me she’s considered financing before, but could never afford it because Mexican interest rates are so high – about 70 percent on average, according to En Via staff.
Carmen, another group member, sells cosmetics through a catalog and said having access to credit has helped her expand her business. Her customers order items from her and she has to go pick them up and pay out of pocket, assuming her customers are good for the items later.
Before her first En Via loan, she often had to cap sales because she was short on money or didn’t want to take on that personal risk. But with access to a loan, she’s been able to cover more inventory costs upfront and worry less about customers defaulting, allowing her to make more sales.
The women we spoke to were enthusiastic about their work and profusely thankful (in a way that seemed entirely genuine) to us and the En Via staff.
Silvia showed us how she weaves – she’s working on a wool blanket with a design called the Tree of Life. She joked with Kim, our tour guide, about how weaving was such good exercise she’d never have to go to the gym and smiled as she explained the origin of her three looms – one a wedding present from her father, one originally her great-grandfather’s.
“I love this work. I’m happy weaving,” she said, beaming as she wrapped white strands of wool on the loom.