In the lower Amazon, most residents have few options for accessing capital to help them build viable micro-scale businesses. The most common sources of entrepreneurial funds come from their own savings and/or money borrowed from family members. These options are very limited, which undermines microenterprise growth.
Microfinance is recognized as an effective instrument of change, one that empowers individuals to build small businesses that help them become economically self-sufficient. Rotating savings funds are an important and effective microfinance method. The Banco da Mulher, one of the few such funds in the Brazilian Amazon – and the only one in the region around Santarém – made its first loan in 2003. The fund served members of its parent organization, the regional women's association known as the Associação de Mulheres Trabalhadoras do Baixo Amazonas (Association of Women Workers in the Lower Amazon, or AOMT-BAM). The Banco da Mulher was established as a way for members to access badly needed capital to start or expand microbusinesses.
About 54 women joined the fund by paying a small membership fee of R$100 Brazilian reais (approximately US$46 at the time). From this pool of money, members were given the opportunity to request loans for their own entrepreneurial projects.
The projects these loans made possible resulted in an increase in income, as well as sense of security and personal empowerment for borrowers and even those who never took out loans. Furthermore, the successes and failures of the fund have provided important lessons for the development of similar programs.
CEN's Banco da Mulher Evaluation Project is an in-depth assessment of the bank with the objectives of providing bank organizers with concrete recommendations, and providing CEN and other organizations with a model to draw upon for future projects. CEN will evaluate the fund and issue a report:
- Documenting the project from inception to the present
- Assessing how well the bank met the objectives of its organizers and members
- Providing lessons learned and recommendations for improvement
As of Oct. 15, 2016, we are currently in the process of finishing a comprehensive report that documents and evaluates the operations and performance of the fund, as well as offers recommendations for improvement. With this report, we hope that the Banco da Mulher can become a framework for other groups in the region to establish similar programs.
Most members of the communities in the lower Amazon have few options for accessing financial capital. Monetary resources and access to financial capital help the poor increase their income levels, build viable businesses, and reduce their financial vulnerability. Entrepreneurs need capital to invest in equipment and materials to run their business. Many aspiring entrepreneurs are unable to produce the collateral that commercial banks require for making loans, and because few are formally employed, they are unable to provide the salary history that banks require. Today, the most common sources of funding for starting and operating entrepreneurial activity are entrepreneurs’ own savings or money borrowed from family members; however, such funds are often very limited. Better access to capital is needed to stimulate microenterprise.
Banco da Mulher is an Important Model in the Region
Graciete dos Anjos Pinto with her certificate of membership in the AOMT-BAM
The Banco da Mulher is a rotating savings fund or rotating savings and credit association (ROSCA), which is based on a group lending/savings fund combined with education. Members come together over the course of a year, and during that time, each member contributes a specific amount of money, shares advice, and provides moral support for the other members. Some ROSCAs also provide training needed by members to ensure the success of their projects. Each member must approve the loan and business plan, and the borrower pays in weekly increments over the term until the loan is repaid. At this point, another borrower can take out a loan with the money that was repaid, also upon the group’s approval. Unlike a formal microfinance institution, Brazilian law permits community-based associations to issue microloans without requiring special licensing. The heavy regulation on standard microfinance institutions is a primary factor in these institutions being less prevalent in Brazil than in many countries, so the ROSCA model is especially helpful for fulfilling the need for small loans. In particular, the high costs of serving isolated and low-population communities make community-funded savings programs even more attractive to those living in more remote areas.
The Banco da Mulher was formed in 2003 by members of the Associação de Mulheres Trabalhadoras do Baixo Amazonas (Association of Women Workers in the Lower Amazon, or AOMT-BAM). The regional association of over 3,000 members was created to foster leadership through empowerment, income generation, and to combat violence against women. Prior to the establishment of the Banco da Mulher, the AOMT-BAM sponsored series of vocational and entrepreneurial training courses designed to help members increase their family’s income. While members gained skills that were crucial for starting and operating a wide variety of entrepreneurial opportunities, they discovered that their inability to access startup and working capital was a critical obstacle for getting ventures off the ground. Members founded the Banco da Mulher in order to provide a source of capital.
AOMT-BAM Provided Rosa Maria the Skills and Confidence She Needed to Become a Successful Entrepreneur
Rosa Maria felt trapped in the cycle of poverty. The few pennies per kilo she could get at the market for her manioc flour, a local food staple, was barely enough to eke out a meager existence for herself and her growing family.
That was until she attended a training course offered by the AOMT-BAM. Through the training, Rosa learned how to improve the quality of the flour, as well as how to package it in a more attractive way. As a result, she often sold out of her premium manioc at local markets after just a couple of hours. Rosa reinvested much of her income back into her business, and she later began selling chicken that is now renowned for its quality and flavor. The funds earned from her successful business endeavors enabled Rosa to send her children to school, and to expand their home and provide it with electricity. Her example has paved the way for her children to become entrepreneurs of their own by learning from their mother.
Out of the 82 AOMT-BAM members who participated in training, 54 participants from all over the region contributed R$100 (Brazilian reais) (approximately US$46 at the time) to join the bank, creating a fund of R$5,400 (US$2,500). Borrowers were charged between 0.5 and 1 percent interest per month or an annualized rate of 6 to 12 percent, depending upon the size of the loan. The interest rate compared favorably with those charged in Brazil to borrowers who qualified for a commercial loan.
Empowering Entrepreneurs and Growing Communities
The projects that were made possible by the group had profound impacts within the borrowers’ communities. Borrowers gained access to education to allow them to grow their businesses, which in turn allowed many to build better opportunities for their families. Some examples of the success of the fund can be seen in the stories of some of our borrowers:
- Maria do Socorro, a widow with a child, had some land 5 kilometers from her house. Through the program, she borrowed R$950 (US$500), which she used to purchase several types of fruit trees, pepper plants, and tools to build a well. As a result of the project, she was able to triple her annual income, which enabled her to send her child to attend high school.
- Antonia Valderene Brito Angelotti used a loan to buy a motorcycle to rent out, and within three years, she was able to expand her business to a fleet of 18 motorcycles.
- Francisca Chaga Socorro (Dona Chaga), a woman in her 80s who was a pioneer in the region’s women's movement, formulated a rheumatism salve but didn't know how to commercialize it. She now sells the salve around the region and has even begun shipping it to Manaus and other distant locations. With a loan, she spent R$3,500 (US$1,800) on a machine to pulp fruit and built a hygienic kitchen. With the help of the program, she also learned how to maintain good hygiene, which has benefited her family's overall health.
Despite early success, the fund issued its last loan over five years ago. Among the factors that contributed to the program’s inactivity was a shift in the focus of the AOMT-BAM from grassroots empowerment to greater involvement in state and national politics. Subsequently, the organization discontinued its regular meetings, which deprived the members of the Banco da Mulher of scheduled opportunities needed to gather to discuss the operations of the fund, solicit advice on their projects from fellow members, obtain moral support, and repay the loans. As a consequence, the program stagnated.
The last loan took place in November 2008. At this point, the fund was in stasis, with establishment deposits still not returned to the contributing members. Several of the borrowers have also failed to repay their loans because of collapsed projects. Furthermore, without regular meetings, a good system for repayment has yet to be established. The geography of the region and the lack of resources (e.g., transportation, electricity, etc.) for many individuals make communication and planning between members prohibitively difficult without a strong internal organizational structure. For several years, the Banco da Mulher and AOMT-BAM leaders struggled to host concurrent meetings to determine what to do with the remaining funds, as well as resolve outstanding loans. Without concurrent meetings, it was extremely difficult for members to have the incentive to travel.
Members of the Banco da Mulher taking a vote at the November 2015 meeting
CEN’s report on its evaluation of the Banco da Mulher finally provided the incentive needed for the membership to meet. In late 2015, our local partner Eunice Sena, herself a member of the Banco da Mulher, and the Centro de Estudo, Formação e Pesquisa dos Trabalhadores e Trabalhadoras do Baixo Amazonas, a local nongovernmental organization, successfully organized the first member meeting since 2008 for members to learn CEN’s conclusions. During this meeting, at which 22 members were in attendance, many important topics were finally able to be discussed. CEN Director Bob Bortner presented CEN’s findings based on the research and evaluation of the fund to the members in attendance, and members discussed some of the important successes that were a result of the program. The members were faced with the challenge of determining what to do with the funds that were provided through the initial deposits for the group. After 10 years, it was extremely unlikely that the loans that had not been repaid would be repaid. After some deliberation, the group decided to use the remaining funds to pay off the debt of the fund’s parent organization, the AOMT-BAM. By doing so, the group is able to start any new project off with a completely clean slate, as well as redirect its focus to training and other needs of its members, versus internal administrative and financial crises.
In order to encourage broad participation, CEN subsidized the travel for members traveling outside of Santarém. This was vital to the success of the meeting, as without such funds these members would not have been in attendance, which would have potentially left the issue of funds unresolved.
Regardless of the current state of the fund, the Banco da Mulher is a partial breakthrough for the region and serves as a model for many producers, co-ops and community associations. It was the first project of its kind and produced great results. For individual members, the bank made a concrete difference in their lives, providing them with opportunities to earn a living and obtain education for their children. For the region, the fund demonstrated that the basic model offers a sound alternative for microentrepreneurs to access the capital, skills and support they need to start and grow their venture, in a region where there are few other viable alternatives. The results were not sustained, however, so the program still needs modification to become a complete success. Nonetheless, the program overall was a big step in the right direction.
CEN will evaluate the Banco da Mulher and issue a report:
- Documenting the project from inception to the present
- Assessing how well the bank met the objectives of its organizers and members
- Providing lessons learned that can be applied by other organizations in the future
- CEN and other organizations will have a model to draw upon for future projects.
- Bank organizers will have concrete recommendations on ways to revitalize the project.
In early 2011, CEN Director Bob Bortner interviewed Eunice Sena and Paulo Melo, the designers and project managers of the original project, in order to document key aspects of the project design and implementation. During this same period, he also interviewed five of the 11 project participants, as well as many other key leaders and other members of the association who are still involved with the Banco da Mulher, to assess the project's impact, current status and future needs. Bob also secured copies of all of the fund’s surviving records.
Although we initially intended to finish the evaluation within several months of conducting the research, CEN and Eunice Sena agreed to postpone work on the report so that we could focus on our community-based tourism program.
In November 2015, Bob shared CEN’s initial conclusions with 22 members of the fund, including Eunice Sena.
We are currently in the process of finishing a comprehensive report that documents and evaluates the operations and performance of the fund, as well as offers recommendations for improvement. With this report, we hope that the Banco da Mulher can become a framework for other groups in the region to establish similar programs.
We anticipate disseminating our evaluation’s findings in a number of ways, including:
- Sharing the full report on our website
- Translating the full report into English and posting it on our website
- Holding a series of briefings with our supporters
- Meeting with other nongovernmental organizations and associations in Brazil to determine the most effective process for collaborating to implement similar funds that draw upon the experience of the Banco da Mulher
- Participating in global conferences focused on microfinance
The evaluation report will be shared with other associations in the region as a catalyst to start similar initiatives. In fact, many former participants have already been inspired to renew both the fund and the AOMT-BAM. Interested parties will be offered the chance to learn from the fund’s successes and mistakes so that they can build more efficient and sustainable community-based microfinance programs. Each new project will improve on the last, and as more and more individual entrepreneurs are given mutually beneficial opportunities to help each other to develop profitable businesses, the economic rewards will spread throughout their communities and beyond. CEN intends to share the experience with other organizations within the region. If there is enough interest and funding is available, CEN may partner with other local groups both within and outside the region to replicate the Banco da Mulher model.