Banco da Mulher Evaluation
Most residents in the Lower Amazon have few options for accessing the capital that would help them build viable micro-scale businesses to increase their income levels. Their most common sources of entrepreneurial funds come from their own savings and/or borrowing money from family members. These options are very limited which undermines the growth of their micro-enterprise.
Microfinance is recognized as an effective instrument of change, empowering individuals to build small businesses that help them become economically self-sufficient. The Banco da Mulher is a Rotating Saving Fund that was formed in 2007 in the Brazilian Amazon as a way of generating income for members of a regional women's association, AOMT - BAM. The bank collected a small amount from each member to establish the fund, and from this pool of money, members are given the opportunity to request loans for their own entrepreneurial projects. Proposals are reviewed and approved by the rest of the group before any loans are dispersed. Although the fund has not closed, it is no longer disbursing new loans. Between 2007 and 2009, the Banco da Mulher provided over 20 small loans, as well as trained and mentored 82 women with entrepreneurship and vocational skills. This resulted in an increase in income for many members, including those who never took out loans. Furthermore, the successes and failures of the fund provide important lessons for the development of similar programs.
CEN's Banco da Mulher Project is an in-depth assessment of the bank with the objectives of (1) providing bank organizers with concrete recommendations, and (2) providing CEN and other organizations with a model to draw upon for future projects. CEN will evaluate 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 recommendations for improvement
The Problem
Most members of the communities in the lower Amazon, where CEN is currently working, have few options for accessing capital. Access to financial capital helps the poor increase income levels, build viable businesses and reduce financial vulnerability. Entrepreneurs need capital to invest in equipment and materials to run their business. Today, their most common source of funds for starting and operating entrepreneurial activity is through their own savings or by borrowing from family members either living in or outside the community. Their ability to save and to access those savings is very limited however, which seriously undermines the growth of their micro-enterprise.
Few members of the communities are able 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 banks require.
Background
Banco da Mulher is an Important Model in the Region
Banco da Mulher is a Rotating Savings Fund or ROSCA. A ROSCA is based on a group lending/ savings fund combined with education. Group members come together and over the course of a year, 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 in order to be successful with their project. Each member also has to approve the loan and business plan and the borrower pays back his or her loan weekly over the term until the loan is repaid, at which point another borrower can take out a loan with the money that was repaid, also upon approval from the group. Unlike a formal microfinance institution, Brazilian law permits community-based associations to issue micro-loans without requiring special licensing. The heavy regulation on standard microfinance institutions is a primary factor in microfinance 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 makes community-funded savings programs even more attractive to those living in more remote areas.
Banco da Mulher was formed in 2007 through a project that began as a means of training and generating income with a Santarem-based women's association called the Associação de Mulheres Trabalhadoras do Baixo Amazonas (Association of Women Workers in the Lower Amazon) or AOMT - BAM. In addition to the formation of the fund, the project provided classes and peer-to-peer knowledge sharing to 82 women who gained entrepreneurship skills and close mentoring as they began to build their own microenterprises.
Out of the 82 project participants, 52 participants from all over the region contributed enough money to join the bank, creating a fund of R$5400 (around US$2500 at the time). Borrowers are charged ½% interest per month, which is very, very low by commercial standards in Brazil.
Some examples of projects which were made possible by the group are:
- A widow with a child had some land five 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.
- One woman used a loan to buy a motorcycle to rent out and within three years was able to expand her business to a fleet of 18.
- An 84-year-old woman, who was a leader of the women's movement in the region, invented a rheumatism salve but didn't know how to commercialize it. She's now selling the salve around the region, and has even begun shipping it to Manaus and other distant locations. With a second loan, she purchased a $R3500 (US$1800) 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 three years ago. There are several factors which have contributed to the current inactivity of the program. Over time, the AOMT-BAM disintegrated because of a lack of internal leadership and a fundamental shift in the women's movement. Since the AOMT-BAM discontinued their regular meetings in Santarem, the women no longer have scheduled opportunities to gather and discuss loan dispersal or the operations of the fund so the program has stagnated. The fund is 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 there is not a good system yet established for repayment. The geography of the region and the lack of resources (e.g., transportation, electricity, etc.) for many individuals makes communication and planning between members prohibitively difficult without a strong internal organizational structure.
Regardless of the current state of the fund, 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 bank demonstrated that microcredit projects can work in this region. The results were not sustained, so the program still needs modification to become a complete success, but the program overall was a big step in the right direction. Future projects are more likely to be sustainable if run by smaller groups in a smaller geographic area.
Project Objectives
CEN will evaluate 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 organization in the future
Project benefits:
- 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
Status
- In early 2011 we interviewed Eunice Sena and Paulo Lima, the designers and project managers of the original project, in order to document key aspects of the project design and implementation.
- Eleven participants (20% of the total) in the project, as well as key leaders and other members of the association that are still involved with Banco da Mulher, met to access the project's impact, current status, and future needs.
In February 2013, however, CEN Director, Bob Bortner will be returning to the region for the first time since conducting the research. During this visit, Bob plans to share an initial draft of our evaluation with the members for the feedback before finalizing the report. The report will document the project from inception to the present day; assess how well the Banco da Mulher met the objectives of its organizers and members; and provide lessons learned that can be applied by other organizations in the future.
We hope to finalize the report and share it publicly by the end of April. We anticipate doing this by:
- sharing the full report on our website
- holding a series of briefings with our supporters later in 2013
- creating a report and manual in Portuguese which we’ll make available to NGOs and associations in Brazil
- hopefully working with the Banco da Mulher members to either revive operations or return remaining funds to them
- possibly disseminating details of the findings at conferences that address microfinance
- potentially partnering with local NGOs and community associations to help implement similar funds that draw upon the experience of the Banco da Mulher
Anticipated Impact
The evaluation report will be shared with other associations in the region as a catalyst to start similar initiatives. Interested parties will be offered the chance to learn from Banco da Mulher's successes and mistakes so 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.
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