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I visited these entrepreneurs and interviewed them about their businesses. They shared their visions for the future and the challenges they currently face. Each entrepreneur has his own dream about expanding his business in order to be able to provide his family with a brighter future full of opportunities. The challenges they face are lack of basic accounting, administration and business management skills.
Doña Marisela: Grocery store
Doña Lupita: Grocery store
Doña Maria: Seamstress
Don Telesforo: Sound and lights for parties
DoñaCelsa: Butcher shop
Doña Juanita y Don Antonio: Clothing and shoe store
On friday November 26, 2010 Beck Community Development Foundation and the Center for Regional Development at the Autonomous Popular University of the state of Puebla (UPAEP) co-led a participatory workshop with community leaders in La Preciosita, Tlahuapan in order to
begin the planning process of the Women's Health Center. The workshop's main goal was to define the key objectives of the Center, define the services to be offered and outline governance structure. The workshop turned out to be a great success with enthusiastic participation of the community leaders.
The Women's Health Center has been a dream for many years since La Preciosita lacks access to health services in the community. Doña Natalia said "We have waited so long to make our dream come true. It is a real blessing to be able to participate in this meeting where we can design our dream center. Our families need health services in order to prosper and get ahead in life." Many of the women in the workshop described how they lost loved ones due to preventable illnesses and ailments left unattended due to lack of resources.
We started off the workshop identifying the main health problems facing the community. During a brainsstorming session, the participants came up with the following problems:
Lack of adequate health infrastructure
Lack of nutrition training
People getting ill with preventable illnesses
There is a lot of violence within families in the community
The community is not organized and doesn't collaborate
There is a higiene problem in the home and in the community
There is a problem of food contamination from lack of higiene and from chemicals used in farming
After identifying numerous health problems, the workshop participants narrowed down two problems that are the most important to address: lack of adequate health infrastructure and lack of nutrition training. Then we put together a problem tree to identify root causes and consequences of these problems.
Then the participants defined the services that will be offered in the Women's Health Clinic. The Women's Health Clinic will have two main components: medical attention and education.
The medical attention will consist of primary physician as well as specialists such as dentists, gynecologists, opthamologist, among others. UPAEP,
Beck Foundation and the community will work together to ensure that medical services are consistent and of the highest quality. UPAEP is currently negotiating with the University's medical school to solicit their commitment to send interns on a regular basis.
The second component is education and training. The workshop participants defined the following topics as the most important to address in educational workshops:
Nutrition
Food preparation
Organic farming
Disease prevention
Domestic violence
Hygiene habits
We ended the workshop with a lot of enthusiasm from all of the participants who are eager to work hard to make the Women's Health Center. Don Raul, the president of the construction committee, said "I feel very inspired by the discussions today. I know that all of our hard work will pay off when we see our families get the proper attention and care they need."
I am spending one week interviewing small business owners in an impoverished community, San Andres Azumiatla, in the city of Puebla. These business owners are members of Caja Depac Poblana, a savings cooperative, and must save a small amount on a monthly basis in order to qualify for loans. They take out out loans mainly to improve their businesses but also for unexpected expenses such as
an illness.
After interviewing many business owners, I felt inspired by their stories of survival, perseverance and business acumen. I was surprised by the commonalities in the obstacles that small business owners in poor communities face in order to grow their businesses.
Sra. Maria is a mother of four young children whose husband dedicates himself more to politics than to his family. He eventually left for the United States and didn't send any money to his family. Sra. Maria was forced to find a way to make a living in order to support her family. She opened a butcher shop that is one of the most popular in the community. She currently buys about 6 cows that she slaughters based on demand. Her customers are her neighbors who like the quality of the meat she sells them and maintain their loyalty to her in spite of competition. She currently operates her business from a small room in her house with full time hired help where she has a meat cutting machine and a refridgerator. Sra. Maria's dream is to open a first class meat shop with a glass display, a clean space that is comfortable and appealing to the customers and a diverse selection of meat products. She strives towards registering her butcher shop with the city slaughter house. She is confident that she can realize her dream if she perseveres, making small but constant strides towards her goals. The biggest obstacle she faces is access to credit with a sufficient repayment term that allows her to generate the profit necessary to repay her loan.
Sra. Anselma makes gorditas, a traditional snack from Puebla that consists of fried tortilla with cheese and salsa. As many women in the community, she was a housewife for many years until her husband lost his job and she faced serious health problems, generating an unprecedented level of expenses. In desperation she turned to community loan sharks who would lend her 200 dollars which in a matter of few months became 1,000 dollars. She eventually accrued almost 10,000 dollars worth of debt at an exhorbitant interest rate of 10% monthly. Sra. Anselma opened two gordita stands and has made a serious effort to pay off her loan. She cooks the corn the night before and then wakes up at 5am to take the corn to be ground. Then she prepares the sauces and stores everything in containers that she will need for both of her stands. After dropping off the ingredients to the stand that is operated by hired help, she drives to her stand to set the stove and tables in place. After being up on her feet for more than seven hours, she goes to the market to buy the ingredients she will need for the next day. Sra. Anselma dreams about having an enclosed stand to sell gorditas, where she can be protected from the wind and the rain, offering more quality to her customers. She wants to grow her business and open more gordita stands in the city of Puebla. Sra. Anselma needs help improving the image of her business, learning about ways to ensure higher quality gorditas and diversifying the snacks that she sells.
Sra. Anselma and Sra. Maria are two of the savy business women who want to grow their businesses yet lack the necessary tools to do so. They need support in expanding access to markets, sufficient capital to buy raw materias in bulk, and credit to invest in equipment. Most importantly they need to believe that they can make their professional goals come true.
Reading all of the statistics in the last post, it is easy to get discouraged. Where do we start? How can we identify the root causes of the poverty we detected?
BCDF board members and staff decided to use a useful tool called the problem tree to help us differentiate the effects of poverty from its causes. We asked ourselves what are the root causes of poverty, what is the core problem BCDF needs to address and what are the symptoms of the problem.
After analyzing the root causes of problems in its different dimensions such as education, economy, community organization, infrastructure and the environment, we came to the conclusion that the core problem is weak community economies. The consequences of weak communities include lack of tools, skills, and educational knowledge to incorporate favorably into the workforce, insufficient household income, unemployment and underemployment, deficient basic infrastructure and environmental degradation.
So if we know what the main problem is, what should BCDF establish as its objective? Our objective should be to strengthen and energize community economies in order to contribute to breaking the cycle of poverty in marginalized community. There are various strategies we can pursue such as providing technical training for youth, promote direct access to markets, catalyzing community based development plan, and promoting favorable conditions for agriculture. Since the root causes are complex and multidimensional, there are many ways to attack them.
Based on this problem analysis, what should be BCDF´s strategic lines of work be given its mission and operational capacity? In lively discussion in our strategic planning meeting, we defined our three strategic lines: 1. Investment in human capacity, 2. Advancing community economies 3. Strengthening community infrastructure
These are the three components necessary to accomplish integral community development, breaking the vicious cycle of poverty and empowering community members to become self-reliant. We believe that through education, income generating opportunities and community spaces we can catalyze sustainable community improvement.
Many people ask me why the Beck Group decided to open a foundation that works in Mexico. In 2009 Mexico passed a threshold to become a high income country. It is one of the 5 high income countries in Latin America , among Chile, Uruguay, Argentina and Panama. Mexico has the 11th largest economy in the world as measured by gross domestic product and purchasing power parity. In spite of these seemingly positive economic indicators, if we zoom in on Mexico we can see an incredibly high level of poverty and one of the world´s worst social inequalities.
Nationally 44.2% of Mexican population live in moderate poverty and 70% live in multidimensional poverty. In terms of social rights such as health and education, 40% of Mexicans lacks access to basic health care and 21.7% of all students drop out from school. In 2010 the highest daily minimum wage was US$4.45 and therefore 20% of Mexicans lack access to sufficient food.
Mexico is a young country: 31% of the population is young. But the children and youth live in deplorable conditions. 17 out of 100 Mexican youth migrate to the US. 25% of all children and youth live in extreme poverty while 60% live in some level of poverty. 13% of youth of working age are not employed.
Even though there are many states with social needs, BCDF decided to focus on doing work in the state of Puebla. Puebla is the 4th poorest state in Mexico based on income and 7th most marginalized based on access to social rights. Out of 217 municipalities, 69% are highly or very highly marginalized. In Puebla 29% of the population didn´t finish middle school, 49% live in overcrowded housing and 61% earn less than 250 dollars per month.
These statistics are depressing. How can a small grassroots non-profit organization make a difference in Puebla?
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As I sat in the front row and soaked in Muhummad Yunus´every word about how 27 dollar loans transformed women's lives in Bangladesh, I felt inspired by the power of microcredit to lift women out of poverty. Even though microcredit has really taken off in developing countries as a way to combat poverty, it has also become a source of contoversy and heated debate revolving around the high profits reaped by many microfinance institutions.
The need for financial services: Ever since I moved to Puebla, Mexico, I have been shocked by the number of pawnshops all over the city (sometimes 2 or 3 on one block) and the flooding of advertisements of institutions offering easy and fast access to loans to solve all your needs. In Mexico, only around 32% of the economically active population has access to formal financial services in comparison to approximately 80% in developed countries. In rural areas access to these services is limited to around 5% of the population. (Source: Press release, World Council of Credit Unions) Mexico has more than 60% of its population working in the informal economy and 60% of all of the households in the informal economy are excluded from credit, savings and insurance services.
The lack of access to formal financial services has severe consequences on families, forcing them to utilize loan sharks and pawn shops. Financial inclusion is defined as universal and continual access to integral, formal and adequate financial services that adapt to the needs of the users and therefore contributing to their development and well-being. Financial inclusion allows families to stabilize their consumption, accumulate resources, have investment opportunities and have protection against basic risks in life. (Javier Chavez Minjares, Secretary of Agriculture, PATMIR presentation, 2010)
What are integral financial services?
·Savings account
·Investment
·Credit (loans)
·Remittances
·Insurance
·Payments
·Government transfers, among others.
Microfinance institutions:
(Source: Javier Chavez Minjares, PATMIR presentation, 2010)
There is a plethora of microfinance institutions in Mexico offering diverse services to their clients. Even with all this competition, the average annual interest rate is around 70 percent, compared with a global average of about 37 percent. The main microfinance institution is Compartamos Bank, a Mexican firm that initiated as a small nonprofit organization, and has been at the center of debate since it generated $458 million in a public stock sale in 2007.(New York Times, April 2010) Some of the non-profit organizations that offer microfinance services in Mexico include Fundacion Realidad and Foundation Pro Mujer. Foundation Realidad offers financial and nonfinancial services to families that do not have access to formal banking services to improve their quality of life. (www.kiva.org) Fundacion Pro Mujer offers integral financial services focusing on women and their economic development. Private banks offering microfinance become profitable charging very high interest rates to poor people. Civil society organizations depend on donations to subsidize the cost of microfinance.
Can there be a just and sustainable way to provide microfinance and promote financial inclusion?
“How wonderful it is that nobody need wait a single moment before starting to improve the world. “ Anne Frank
The Beck Community Development Foundation’s service work in the United States, Mexico and Central America over the past years embodies these words. After numerous aid trips to Central America to assist impoverished communities to build lasting social change capitalizing on Beck’s most valuable assets-the development, design, planning and building skills of its employees-the Beck Foundation made a multi-year commitment to catalyze the improvement of educational infrastructure in San Antonio Juarez, a community one hour outside of the city of Puebla, Mexico. The Beck Community Development Foundation’s approach is to work with the community to identify their needs, collaborate to develop sustainable and lasting infrastructure and assist them in making the most of the assets they possess. The Beck Foundation decided to establish its activities in Mexico because it is a country full of contrasts and social needs.
Mexico´s slow yet solid democratic transition coupled with unprecedented economic growth did not ameliorate the high level of poverty and social inequality as revealed in the statistics cited below.
Poverty: (CONEVAL 2007)
In a country of 107 million people:
·13.2% of the population lives in extreme poverty, which means that they do not have sufficient resources to obtain a basic food basket.
·20.7% of the population lives in poverty of capacities which means that they can afford to buy a basic food basket but do not have sufficient resources to invest in health or education.
·42.6% of the population lives in general poverty, which means that they have access to a basic food basket, education and health but do not have a minimally aceptable standard of living such as adequate clothing and transport for all members of the household.
Social inequality: (CONEVAL 2007)
·Mexico has the highest income inequality out of all countries in Organization for Economic Cooperation and Development (OECD).
·The medium monthly income of the poorest 10% of the population is 1,000 dollars which is lowest than in any other developed country.
·10% of the richest population holds 39.3% of nation´s wealth
In the face of these stark social indicators, the Beck Community Development Foundation aims to play a critical role in contributing to Mexico’s social development. The Foundation will use a rigorous methodology to identify key social problems, design innovative initiatives that build on community assets and engage other civil society actors in order to maximize resources and impact. The Beck Community Development Foundation is committed to building better futures with communities in need.
We will use this blog as a space to exchange ideas about innovative approaches to social development and to share our experiences in implementing projects to address community needs. We invite you to engage with us, to respond to our blog posts and to share your ideas and opinions in order to enrich this conversation.
