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Puerto Vallarta News NetworkBusiness News | June 2007 

Micro-Lending Effort in Mexico Helps Poor Families Stay Home
email this pageprint this pageemail usLourdes Medrano - Arizona Daily Star
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Veronica Arizmendi shows Andrés Alejandro Malmaceda what he can buy for a peso. Arizmendi operates a small market in Nogales, Sonora, that she opened about a year ago, adding stock with a $200 loan that she received from the EnComún micro-loan program. She hopes to take out a second loan and expand. Kelly Presnell/Arizona Daily Star)

• Microcredit or microfinance, sometimes called "banking for the poor," provide low-interest loans to help people finance self-employment projects.
• BanComún de la Frontera, known as EnComún de la Frontera in Mexico, follows the Grameen microcredit model for poor people. Muhammad Yunus, who in 1976 founded Grameen Bank in Bangladesh, shared the 2006 Nobel Peace Prize with the bank.
• Unlike regular loans, microcredit does not require collateral.
• Microcredit targets women but studies show the whole family benefits from loans.
• Loan money comes from donations, social-investment funds and grants.
• To learn more, go to or call 520-838-2534.
Sources: BanComún en la Frontera, Grameen Bank.
Nogales, Sonora — Desperate for rent money, Yadira Marquez recently tried to push her husband north of the border illegally in search of higher-paying work.

But instead of bidding farewell to the father of her three children, Marquez came across a program that extends small loans to entrepreneurs too poor to qualify for a regular bank loan. The $200 that she borrowed from EnComún en la Frontera two months ago allowed her to invest in silver jewelry, which she sells door-to-door. Her husband, Armando Figueroa, kept his $80-a-week job at a local maquila — one of the city's many U.S.-owned factories.

"This loan by no means has solved all our financial problems," said Marquez, 33. "But with my earnings I'm able to supplement my husband's salary and pay for all of our children's school-related expenses."

She is one of about 1,500 Nogales residents participating in the microcredit program known in the U.S. as BanComún de la Frontera.

Modeled on a successful practice in Bangladesh, the program aims to increase the economic self-sufficiency of needy Mexicans — particularly women.

Despite being minute, the low-interest loans — which range from $50 to $800 per person — are making a difference in the city's poorest neighborhoods, said program director José Carlos Mendoza Escoto.

EnComún works largely because borrowers take on a communal risk, he said. Each entrepreneur becomes part of a group responsible for ensuring that all its members are on track with payments that include 3.5 percent monthly interest. If one person defaults, no member receives another loan.

After some initial missteps, the program's repayment rate has climbed to about 95 percent, Mendoza Escoto said. Adjustments were made to target a diversified clientele in a border area where the risk of migration is high, he added.

By focusing on female entrepreneurs, he said, the program builds on evidence that shows women are more likely than men to repay loans and use business profits to improve overall family life.

"Most of our clients, about 85 percent, are women," Mendoza Escoto noted. "They are enterprising women and heads of household who are eager to get ahead."

In some cases, the director said, the women are single, or married with absent husbands, including some who have migrated across the U.S. border.

It may be too early to gauge what impact the program may have on illegal immigration, Mendoza Escoto said. But he noted that EnComún aims to offer economic options that keep people in Mexico.

"We would like them to be able to see that the fruits of their own labor can allow for a life of dignity here," the director said of the mostly home-based entrepreneurs — a vital part of Mexico's commerce.

EnComún's borrowers sell everything from tacos and tamales to shoes and washing-machine covers.

The program began as BanComún in 2003 with just a few borrowers as a pilot project of Catholic Relief Services and BorderLinks, a Tucson group that offers border education. It later became its own nonprofit entity, known as EnComún in Mexico for legal reasons. Its board of directors includes members from both sides of the border, including representatives from Borderlinks and the Catholic relief agency.

Since its inception, the program has pulled in about $2.2 million from various public and private sources, said Erica Dahl-Bredine, manager for Catholic Relief Services' Mexico program. The funding includes about $420,000 from the U.S Agency for International Development and $1.5 million from Howard Buffett, the son of billionaire Warren Buffett.

Dahl-Bredine said plans are in the works to seek loans from the Mexican government.

The existing funding has made possible a recent expansion into Ciudad Juárez, Chihuahua, she said. Next up is an office in Agua Prieta and the creation of a social-investment fund that will allow people to help finance the socioeconomic welfare of EnComún clients.

"We are not so pretentious to think that this program will stop poverty," she said. "But we do hope that people's standard of living can improve."

Money set aside

EnComún is a rare economic opportunity in Yadira Marquez's impoverished Colonia Colosio, born some years ago after squatters invaded the area, divvied up plots and set up a shantytown of old cardboard boxes, tarpaper and discarded wood pieces. Many are cinder-block houses now, but Marquez and her family live in one of the original structures.

Marquez leaves her neighborhood often to sell her bracelets, necklaces and rings. On a good week, Marquez said she can surpass her husband's factory salary. Her profits usually cover her children's school expenses, Marquez said, but she also must set aside money for a loan payment every two weeks at a meeting with her 14-member group of borrowers. Except for one, the 11 women and 3 men all live in the same colonia.

Every other Tuesday, Marquez walks down a dusty dirt road to neighbor Veronica Arizmendi's home for the group's regular morning meeting. Last week, she was fined $2 for being tardy. An absence costs group members another $2; failure to bring along a payment card results in a $1 fine.

During the last meeting in Arizmendi's small living room, the group collected payments from all but one member. She promised to bring Arizmendi, the group's treasurer, her share as soon as she got her factory paycheck later in the week. The woman, who invested her loan money in a tortilla-making operation, is the only member from outside the neighborhood.

Arizmendi, 26, worries when a member falls behind because that means the group has to cover the missing payment. It's only happened once, she said, and the member later got caught up.

"I don't want anything to hurt our credit," said Arizmendi, who with her $200 loan added stock to the tiny market she opened next to her kitchen about a year ago. She plans to take out a second loan to tear down walls and expand her closet-sized abarrotes as soon as she pays off the first one in July.

Making ends meet still is a struggle, said Arizmendi, who until recently was a single mother of two working illegally as a store sales clerk just over the border in Nogales, Ariz.

Selling sodas, fruit, chips and school supplies out of her home while her new husband drives delivery trucks allows Arizmendi to stay close to her two children at all times.

"It's hard because I take care of the store alone," she said. "But the business is growing slowly, and Yami will be able to start helping soon," she said of her 7-year-old daughter. Her son, Antonio, is 10 months old.

A knock on the store window interrupted Arizmendi. Regular customers Andrés Alejandro Malmaceda, 6, and Mario Cota Meléndrez, 5, wanted to trade their pesos for candy and bananas. Bounty in hand, the boys happily sauntered away, oblivious to the poverty around them.

A few miles away, Heberto Coronado tended to a diminutive restaurant that he and his wife, Carmen González, opened a month ago near the baseball stadium. Puesto América seats just eight customers, but Coro-nado said he plans to expand with profits derived from the couple's weekend sales of food and clothing at the tianguis, a street market. Coronado recently quit his longtime factory job to focus on the family business.

"It's more work, but one of the benefits is that you're working for yourself, and if you work hard, you can make a better living," Coronado said.

His only waitress, Maria Esther Lizardo Hernandez, has received $600 in loans from EnComún in the past year. She invested the money in new clothing that she sells at the street market on weekends.

Her profits have allowed her to buy a used car that makes the job easier, the mother of one said. Her business also enables her to contribute to her growing family's budget.

"Sometimes I make more than my husband," she noted.

At 22, Lizardo Hernández is reaching for a dream.

"My goal is to open a boutique downtown," she said, sounding confident.

Contact reporter Lourdes Medrano at

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