Bolivia - A Model for Microfinance
As he stepped off the plane in one of the poorest countries in the world, Haida Gwaii Community Futures General Manager Art Lew was thinking of comparisons and contrasts to Haida Gwaii. Bolivia, a country in transition, has a large portion of the population struggling to meet basic needs. For over 20 years non-profit groups like FONCRESOL have been helping communities gain economic self-sufficiency through microfinancing.
Haida Gwaii Community Futures has partnered with Canadian Crossroads International (an international cooperation agency) and FONCRESOL to support microfinancing initiatives in Bolivia and to bring the concept of microfinancing to Haida Gwaii. Many on Haida Gwaii face challenges achieving sustainable livelihoods and Haida Gwaii Community Futures believe the Bolivian microfinance model could work here.
FONCRESOL facilitates tiny communal banks in rural and urban communities throughout Bolivia. The banks are actually peer lending groups consisting mainly of women who would have no chance of securing loans from mainstream lending facilities. They come together with their business ideas. Many of these people have no assets and no bank accounts let alone access to credit. FONCRESOL provides the loan and the group guarantees to repay each other's debt. Loans start out small and are repayable over a short period of time. The size and duration of the loans increase as the groups show they can be successful. The group also keep a portion of the interest paid in a pool which provides a way to self-finance future business needs. Ongoing participation not only allows community members to pool their resources but also improves local governance skills.
Bringing this model to Haida Gwaii is the goal, but the hurdles for people faced with poverty here are different. For one thing, people are often receiving Social Assistance which penalizes them for earning money. "For people to give up the security they have for something unknown is a difficult decision" General Manager Art Lew says. He hopes to ensure that people can continue to receive benefits while starting their small businesses and that once the business earns more than the social assistance cheque the client would forgo their assistance payments.
Haida Gwaii Community Futures will help individuals find business opportunities with low capital requirements that can create cash flow quickly. As with the communal groups in Bolivia, the Haida Gwaii groups will accept or decline business ideas based on their knowledge of each other - developing trust and self-governance skills along the way.
