Most residents in the Lower Amazon have few options for accessing the capital that would help them increase their income levels and build viable businesses. Their most common source of entrepreneurial funds is through their own savings or by borrowing 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 become economically self-sufficient, while helping them achieve goals. Banco da Mulher is a Rotating Saving Fund that was formed in 2007 as a way of generating income for members of a local women's association. Recognized as an important model in the region, the project provided 82 women with entrepreneurship skills and mentorship.

CEN's Banco da Mulher Project is an in-depth assessment of the bank with the objective 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 membe
• Providing lessons learned

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 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 one another with moral support. 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 legal associations to issue micro-loans without requiring special licensing, thus avoiding one key obstacle to providing credit.

Banco da Mulher was formed though 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 2007. In addition to the formation of the fund, the project provided 82 women with entrepreneurship skills and mentored many of the women as they began to build their own microenterprises.

Out of the eighty two project participants, fifty two 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/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) with which she purchased several types of fruit trees and pepper plants, and built a well. As a result of the project, she was able to triple her annual income, which has allowed her child to attend high school.
• One woman bought a motorcycle to rent and three years later has a fleet of eighteen.
• An 84-year-old woman, who was a leader in the women's movement in 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. She has also learned, through the program, how to keep good hygiene, which has benefited her family's overall health.

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

Proposed Activities

Before we model future microcredit projects on Banco da Mulher, we must assess more closely the association - and its members' - specific needs. This step is critical in order to replicate the rotating savings fund.

To achieve this, we propose to:

• Interview 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.
• Interview a minimum of 11 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 to access the project's impact, current status, and future needs.
• Issue a report in mid-2012. 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.

Status

In early 2011 we interviewed the project organizers and many of the members, and reviewed the bank’s funds in order to document how the project was implemented, to learn how successful the project was, and areas where it was not so successful. Banco da Mulher was successful in making several projects possible in the initial years after its formation in 2007.

However, in recent years the AOMT – BAM group has not been meeting. The geography of the region and the poverty of the members make it difficult for association members to reach meetings in Santarem. There are no interstate highways, and transportation by bus or boat is only available one or two times a week in some communities. Going to meetings takes a day’s travel each way for many members, which takes time away from their business efforts and taking care of their family. It also requires money for transportation, food, and a place to stay for the night. Planning meetings is also challenging. Many communities have no electricity or telephones, so members cannot easily be notified if there is a meeting.

Impact

Banco da Mulher is a partial breakthrough for the region. It was the first project of its kind and produced some 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 breakthrough is “partial”. Future projects are more likely to be sustainable if run by smaller groups in a smaller geographic area.

Future Plans

By mid-2012 our findings will be published in a report and posted on our website.

Additional Resources:

Access to Financial Capital