Guatemala Rural Western Highlands

Utopia Foundation launched a microfinance program in the highlands of western rural Guatemala. Local stakeholders identified the need for financial resources to start or expand a microenterprise. Microfinance provided opportunities for people to develop economically and educationally while determining their own solutions to poverty. Successful microloan programs have proven to have an even broader impact than economic growth, but to also demonstrated increased health and educational and community benefits.

The Need

Guatemala is the second poorest country in the western hemisphere, second only to Haiti. There is an enormous need for microfinance programs, and they have been met with wonderful success.

Goal

To provide a resource for the potential entrepreneurs of western rural Guatemala to develop small business that will help lift them from lives of extreme poverty. This project also provided opportunity for donors to invest in sustainable humanitarian projects.

How

By making available the financial resource of microcredit to fund small enterprises in areas such as: agriculture, livestock, handicrafts, textiles, retail, hospitality, food, health and education.

Intended Impact

Assist the people of western rural Guatemala in attaining resources necessary for them to engage in developing businesses, ultimately resulting in education, improved health, and taking positive steps to find solutions to end their impoverished living circumstances.

Methods/systems

The average loan in rural Guatemala is $90.00-$250.00, each borrower is charged 2% interest per month, and all loans are repaid within 6-12 months. There is a very high record of repayment of 98.5%, which may be reflective of the group lending model.
The loans are currently made to individual women that are members of a larger, formal borrowing group, consisting of 15-20 members. Each member of the borrowing group has their individual loan and separate businesses.
Each borrowing group is created with as little as $3,000 in loan capital, providing microloans to 10-20 individuals.
The borrowing group, as a collective, is responsible for the repayment each individual loan.

Impact studies

Research has shown that individuals involved in identifying and resolving their own solutions to poverty are more likely to:

Benefit from better nutrition, and health education
Benefit from education for themselves as entrepreneurs
Send their children to school, as the parents value education.
Benefit from Increased social capital in their communities, and become agents of change, capable of improving their circumstance.

This program is intended to have a positive impact on future generations, which is the ultimate goal of sustainability.

Group Microlending, Educational Programs, and Repayment Meetings

This unique group microlending model was designed to assist the most impoverished achieve economic sustainability through microenterprise. This Borrowing Group of 10-15 women reside in rural Guatemala, and are using the profit from their microenterprises to ensure better health for themselves and their malnourished children and pay tuition for their children to attend school.

The group members themselves determine who will be members of the group; there is Group responsibility to ensure repayment of the loans. The members themselves elect group officers, determine repayment schedule, and consider potentially new group members. Many of the Borrowers are unable to read or write so they use a thumb-print from an ink pad next to their name, identified by the local Loan Officer. The group-elected secretary takes attendance while the group-elected treasurer collects the loan repayment funds from each group member.

Following this, the group receives informal education on the topic of their choice. The educational modules are taught by the Loan Officers, all of which are paid by the partner organization and are indigenous to that community, thereby having credibility with the local Borrowing Groups.

How are these loans used?

Various businesses have been developed with micro credit funding. The following are some examples of our entrepreneurs:

Chocolate Maker: Borrowed money to purchase a grinder for her locally grown cocoa beans providing more efficiency, and increasing her production to sell in the district. When she is not using her grinder, she rents it to other women in the village to grind their corn for the making of tortillas, which they sell in the marketplace.

Clothing Maker: Bought a foot pedal sewing machine to embroider on her hand woven cloth in larger quantities, to increase earnings. Previously all embroidery had been done by hand and she could not produce enough product to sell in the market place to the tourists. Now she is able to afford better nutrition, and the tuition to send her children to school.

Yarn Dyers: Purchased yarn to dye in beautiful colors, using local vegetation to produce natural colors through traditional non-toxic dying methods. This enterprise sells/provides the yarn to another microenterprise of women weavers.

Matt Weavers: Collect reeds from the lakeside, transport them back to their village by bus or on foot, and weave them into sitting matts for the weavers, and into functional baskets to supply goods and carry product to marketplace.

Back-Strap Weavers: Purchased brightly and natural colored yarns for the artistic weaving of clothes, blankets, table runners, place-mats, baby carrying wraps, and various handicrafts sold in the surrounding district. The weaving is accomplished using the traditional methods of back-strap weaving.

Village Retail Shop: Loan funds used for public transportation to travel to the city to purchase products for resale in the distant rural village. The first retail business has been through one loan/repayment cycle, the larger retail business has been through several loan cycles and has received business education regarding capacity growth. This business also employs two other women in the village.

Agriculture Project: Microloan money was used to rent land and purchase seeds to grow flowers and vegetables. The produce is sold in the local village and in the district markets; loan funds are also used to purchase public bus tokens to transport the product to the market.

Please consider joining us in this effort of providing a resource for positive change in the world. Empower yourself to be part of a grass root effort to provide an opportunity for others to attain economic independence, where they live.

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