IN THIS ISSUE:

A SPECIAL FEATURE PAGE 3

B NEWS FROM AROUND THE WORLD PAGE 4

C SPOTLIGHT ON OUR SUPPORTERS PAGE 5

D VOICES FROM THE FIELD PAGE 6

FALL-WINTER // 2013-14

Income and Health and Housing and Happy Employment Environment Infrastructure Families 69 18 20 PERCENT PERCENT PERCENT A TOOL TO MEASURE POVERTY

IN PARAGUAY IS ALSO HELPING Reported to be below Reported having access Reported having no the poverty threshold to drinking water in access to electricity TO ELIMINATE IT their homes

BY JORDAN CORIZA

Education and Organization and Interiority and Culture Participation Motivation 29 56 39 PERCENT PERCENT PERCENT

Reported being unable Reported having some Reported having complete to read or write Spanish or full capacity to solve autonomy and ability to problems and conflicts make decisions

Scorecard for Curuguaty, a town in eastern Paraguay, where Fundación Paraguaya is working with indigenous groups, rural residents and local business leaders to assess and eliminate poverty

uruguaty is a Paraguayan town in the eastern department of Canindeyú. income, strengthen existing jobs and create new ones. The idea worked. But If you’ve heard of it – which you almost certainly haven’t – it’s probably like similar programs in , Fundación Paraguaya dedicated its early C because its population, which is poor and mostly rural, has been surveyed years to achieving financial self-sufficiency. Doing so required the adoption of and plotted on a map using Fundación Paraguaya’s color-coded ‘Poverty Stoplight,’ what some refer to as a minimalist strategy: focusing solely on providing access an innovative poverty measurement tool that has helped nearly 18,000 families to credit rather than the integrated strategy of urban and rural development overcome economic poverty since the program began in 2010. programs that were complex, costly and time-consuming. The underlying assumption was that would help clients increase their incomes But is it a measurement tool or a poverty-elimination strategy? It is both. In a and that they, in turn, would take care of the rest. As long as clients were Huffington Postarticle titled “Measure? Alleviate? No, Eliminate Poverty,” Elisabeth repaying their , Fundación Paraguaya considered their knowledge and Rhyne writes, “The beauty of Fundación Paraguaya’s concept, christened Ikatú skills sufficient to manage their microbusinesses. (“Yes we can” in Guaraní), is that although it starts out like a poverty measurement program, it turns into a much more important poverty reduction program.” But Burt wasn’t happy with his institution’s minimalist approach. “We are one of the very few Latin American institutions that has not become The man behind it all is Fundación Paraguaya’s founder Martín Burt. He regulated financial institutions. And that is because Fundación Paraguaya is contends that new methodologies and technologies are needed to address dedicated to social innovation and social entrepreneurship. We believe our role seemingly intractable poverty issues. The Poverty Stoplight is such a tool. is to develop and disseminate new methodologies to eliminate poverty.” In Burt’s words, it uses cheap, easily available technology to help people understand complex poverty problems, to simplify previously cumbersome THE IDEA IS BORN AT SCHOOL processes and to implement effective poverty elimination strategies. Burt was convinced that if Fundación Paraguaya invested in education, he Assisted by a group of local business and civil society leaders and by Accion’s very might be able to help the next generation of Paraguayans overcome poverty. own Steve Gross and Bill Burrus, Burt started Fundación Paraguaya in 1985. It was So in 1995 he brought nonprofit Junior Achievement’s model of deploying Paraguay’s first microenterprise development program. The organization provided trained volunteers to elementary and high school classrooms to deliver an loans and training to help the poor in the informal sector increase their family entrepreneurship-focused, hands-on curriculum. The program proved to be PAGE 2 ACCION VENTURES // FALL-WINTER 2013-14 ACCION VENTURES // FALL-WINTER 2013-14 PAGE 3

SPECIAL FEATURE

Happy Families CONTINUED extremely popular. Burt partnered with business leaders to sponsor and expand the program to some “We knew that microfinance worked, Bruce Tippett: of the poorest schools throughout the country, many attended by the not just because of its financial children of Fundación Paraguaya’s The Father of clients. Thousands of poor students strategies and strengths, but also learned to write business plans and because it tapped into poor clients’ set up for-profit microbusinesses. Microfinance And when, a few years later, Burt dignity, self-respect and self-reliance.” was approached by a group of La WHEN ACCION MADE ITS FIRST MICROLOAN 40 YEARS AGO, Salle Christian Brothers asking MARTÍN BURT Fundación Paraguaya to take over FOUNDER, FUNDACIÓN PARAGUAYA NOBODY THOUGHT IT WOULD BE SUCH A BIG DEAL their bankrupt 60-hectare agricultural high school for poor rural youth – San Francisco Agricultural School – Burt A LESSON FROM TOLSTOY than insufficient income. Second, and over-the-counter pharmaceutical If, after having heard Bruce Tippett’s account of his work with Accion in its early days, saw an opportunity to combine Anna Karenina’s opening line reads, poverty doesn’t affect families products, that Fundación Paraguaya you were to ask us who invented microfinance, we would most certainly say he did. Fundación Paraguaya’s two skill sets, “Happy families are all alike; every uniformly; each family has a different is working to turn into client Today, 40 years after that momentous endeavor, he explains the genesis of a movement financial inclusion for the poor and unhappy family is unhappy in its set of poverty-related problems to microfranchise opportunities. that has left an indelible mark on the course of economic development and touched the entrepreneurship training, and apply own way.” Burt realized that the same resolve in order to overcome poverty. lives of hundreds of millions of people. The data from the survey also provide them to the field of education. could be said for poverty: every poor Third, the main protagonists in the baseline against which to measure WHEN AND HOW DID YOU COME TO ACCION? family is poor in its own way. The eliminating poverty must be the poor In a case study that appears in each client’s progress in overcoming Another Accion fellow, Bill Cloherty, and I worked for People to People tricky part would be to understand themselves. Institutions, however far- the Massachusetts Institute of poverty. Finally, the data are geo- International in the mid-sixties. Accion came to us and asked if we could the ways in which each family is poor, sighted or well funded, do not have Technology’s innovations magazine, referenced on a Google map and made do some recruiting for them. We did, and we ended up recruiting ourselves! A TRUE PIONEER Now in his seventies, Bruce Tippett helped Accion lay define what it means to be not poor, sufficient insight into the poverty- Burt writes, “We knew that available to NGOs and government I joined Accion in 1965 and went to , which was the only place down roots in and make its first microloan in 1973, helping to create quantify all of that, qualify it and then related problems of individual microfinance worked, not just agencies to implement interventions where Accion worked at that time. an industry that would touch the lives of millions of people worldwide come up with an exit strategy. families or sufficient resources to because of its financial strategies such as vaccination events, blood HOW DID YOU END UP IN BRAZIL? permanently eliminate poverty on and strengths, but also because it Burt and his team organized 50 pressure screenings or getting a free I spent a year and a half in Venezuela working half-time in the office fundraising their behalf. Fourth, a poverty- of years. But when we started to do something else, there was a good deal of tapped into poor clients’ dignity, poverty indicators, such as jobs and wheelchair to a person in need. and half-time in a local Caracas barrio in community development. I was then elimination strategy must be scalable, jealousy on the part of those local organizations. So when it came time for us self-respect and self-reliance.” access to water, into six dimensions: drafted by the head of Accion, Joe Blatchford, to go to Brazil to start a local which means that it must cost very This level of coordination happened to think about experimenting with microlending, neither Ação Comunitária 1) income and employment, 2) health community-development program. I went there in November of 1966 and He applied what he knew worked little to implement and, ultimately, in Curuguaty. in Rio nor in São Paulo was willing to take the risk to try it out under their and environment, 3) housing and was part of a four-man team that helped set up Ação Comunitária do Brasil in microfinance to the high school. must be financially self-sustaining. umbrella. Most people thought we were completely nuts to try to money infrastructure, 4) education and culture, PUTTING CURUGUATY ON THE MAP Guanabara in Rio de Janeiro. After being there for about four to five months, Joe Not only did the new curriculum and to poor souls in favelas. So we decided to go to , which was high-profile 5) organization and participation and After completing the 20-minute, Tablets in hand, Fundación asked me to go to set up another organization, this time in São Paulo. I spent products sold by the 15 school-based in the international-development community. 6) interiority and motivation. They 50-question pictorial survey on a Paraguaya loan officers canvassed a couple of years between Rio and São Paulo, and those are both successful microenterprises run by teachers and also identified three conditions for touch-screen device (developed pro the outskirts of Curuguaty to community-development operations, similar to Venezuela. They’re still active WHAT WAS YOUR ROLE? students prove that the school could each poverty indicator (not poor, poor bono by Hewlett-Packard), clients administer the Poverty Stoplight to today, more than 45 years later. I was executive director of AITEC Brazil when we decided we were going to survive, they also proved that the school and extremely poor), assigning to receive a one-page report that hundreds of residents. One of them provide consultancy and assistance to other organizations. We ran AITEC in could guarantee almost 100 percent HOW DID THE IDEA OF COME ABOUT? each the corresponding colors green, summarizes in ‘heat map’ fashion was Benita Chaparro, who, along the same way that we ran Accion. We had a local board composed of business employment of its graduates. San We got some initial experience with community credit in Rio. I was involved yellow and red. Because Fundación the areas in which the family is with her husband, was supporting leaders, some of whom also served on the boards of the Ação Comunitárias. Francisco Agricultural graduates were with negotiating loans from CitiBank and a local subsidiary of Chase Bank to Paraguaya’s students’ families and extremely poor (red), poor (yellow) their 13-year-old son on her small We also looked for support from foundations and others, and had two sources moving seamlessly from poverty to the finance community projects, such as putting water in or arranging for electricity microentrepreneur clients were mostly and not poor (green). income as a housekeeper. Benita of income: one was contract income, such as from OPIC, and we also had middle class before Burt’s own eyes. in the slums. We found out that the banks never expected to get paid back! They functionally illiterate, a photograph was is a member of one of Fundación donations through AITEC from other foundations and the local private sector. Fundación Paraguaya’s loan officers were expecting these [loans] to end up as donations. But in a very short period This success was the result of Burt included to represent each condition Paraguaya’s 2,600 all-women solidarity and San Francisco Agricultural School of time these loans were paid back… Everyone put in their small amount in IS THAT THE FUNDING THAT YOU USED FOR THE FIRST LOANS IN RECIFE? and his team putting themselves in the local context. For example, to groups participating in a program teachers then work with the client’s order to get electricity or water or whatever the project was. The result of that, No, it wasn’t used for loans. In Recife we set up a nonprofit organization in the shoes of poor rural youth, of represent the three possible conditions called ‘Mujeres Emprendedoras’ and/or student’s family to develop plus the knowledge of all the microbusinesses that were going on in the poor called UNO. UNO received funding from local business sources, and we also understanding how and why these for access to water, the survey (Entrepreneurial Women). The groups a specialized package of services to areas, gave us the idea that we should try out some way of creating credit for worked hard to get financing internationally to cover most of the operating youngsters were growing up with respondent could look at a picture access small loans from Fundación address their specific poverty-related the smallest businesses in the slums and favelas. costs, but not used as loan funds. We were able to get key backing from a little or no prospect of an economic of a woman carrying a bucket of Paraguaya and learn business and problems. Typically, the first task is couple of foundations. And we had some experience with creating guarantee future. This understanding informed water on her head (extremely poor), entrepreneurial skills such as self- HOW DID YOU FORMALIZE THE PROCESS? to help the client develop a business funds, through OPIC. What AITEC did was set up a fund, on paper, anyway, every decision made to shape and run a well outside her house (poor) and management, budgeting and leadership While working in Rio and São Paulo, Accion decided that, rather than go and plan to increase per-capita income which guaranteed 80 percent of the loans to be made. We got five local banks the school. And that experience, in a faucet at home (not poor), and using Junior Achievement’s model. set up new organizations as it had done in , Brazil, and so on above the national poverty line ($3.5 to commit to two things: They committed to provide funds of their own for turn, begot the following question: If quickly identify which photograph best during the sixties, it was going to start providing advisory services to existing per day per member of a household When Benita took the survey in 2012, a portfolio of loans to microenterprises, and they agreed to put up some they could help rural youth overcome represented the family’s situation. organizations under contract in order to spread the community-development in Paraguay). That might include she fared poorly on indicators related money for the guarantee fund. So, in part, they were guaranteeing their own poverty, couldn’t they do the same methodology it had created. We set up a separate organization in Brazil called Burt explains that the approach of a microloan for another family to safe cooking and trash disposal, loans. The guarantee fund formally guaranteed all loans of UNO’s portfolio. with their microenterprise clients? AITEC [Accion International Técnico] to provide services to organizations his Poverty Stoplight incorporates member or the option to become earning yellow and red respectively So we convinced local bankers to put up their own credit in order to make the The first step, naturally, was to outside of the Ação Comunitárias in Rio and São Paulo, which were increasingly the following four propositions: First, a microfranchise by selling certain in those categories. She prepared program operational. We never used international funds to provide credit. understand their poverty. independent of Accion. At that point AITEC secured a contract with OPIC, an poverty has many more dimensions products, such as reading glasses meals using firewood in a pit and It was all done with local resources. American government development finance institution. We were hired to carry

CONTINUED ON PAGE 5 out their new experimental credit guarantee program in Brazil. It was supposed SO IT WAS ESSENTIALLY THROUGH THE CREATION OF A LOCAL GUARANTEE to be done in the northeast, which was considered to be very backward and in FUND THAT YOU WERE ABLE TO START MICROLENDING? need of help. We made arrangements for some local organizations and some It was only one of the factors that were key to create this program. We were other rural institutions to carry out the small loan program, where OPIC would very fortunate that one of my close friends in Recife, Bill Yates, was the head provide a guarantee for their loans. Unfortunately, we spent a year and a half of Oxfam Brazil. I convinced Bill to put up a grant – I think it was $10,000 – to trying to get the Central Bank of Brazil to approve the OPIC program. Those initiate the guarantee fund. Interestingly enough, the guarantee fund never paid were the days when no one said “no” in Brazil. They’d say, “Gee, we think so, out a penny, because we had no losses. The guarantee fund eventually faded but come back in a month or two.” In fact, they didn’t want the American away, but the concept of the fund was an important factor in the beginning. government involved in a program with their poor. So OPIC’s program was The president of a bank could say to his board, “We have our guarantee for this never approved. But we met a lot of people in the Central Bank and the special microlending program, so we won’t end up losing our share.” banking world in the process, and from there we decided to launch program WHO WERE THE FIRST CLIENTS? WHAT WERE THEY LIKE? on our own – again in the urban area of the northeast – to provide credit to We did a survey in about five low-income communities in and around Recife. what are today known as ‘microenterprises.’ We met all of the local organizations and all of the microenterprises in those WHY RECIFE? communities. You know, we were very good at training community-development Recife was sort of the capital of the poor region of Brazil. They’d tried lots of workers, so we trained the initial group of field workers to research and programs there, government-supported programs, many of which had failed. implement the program, and we convinced Maurício Camurça, who had been the In the old days, we espoused the idea that we would go in and help set up a operational head of a small farmer credit program in Brazil, to come to Recife. local community-development organization such as in Rio and São Paulo and He became the first executive director of the UNO program. He stayed with UNO we would train local staff, help them set up their fundraising and then they’d until it eventually closed down, in about 1990. By the way, UNO was followed by be off on their own. We did that very successfully, usually within a couple a fully self-sufficient microcredit program originally assisted by Accion. AT YOUR FINGERTIPS The Poverty Stoplight visual survey app, developed by Hewlett-Packard, is brought to residents all over Paraguay on smartphones and tablets CONTINUED ON PAGE 7 PAGE 4 ACCION VENTURES // FALL-WINTER 2013-14 ACCION VENTURES // FALL-WINTER 2013-14 PAGE 5

NEWS FROM AROUND THE WORLD SPOTLIGHT ON OUR SUPPORTERS

IN THE Celebrating Big Decisions

DEVELOPMENT POLICY MAVEN AND ACCION BOARD MEMBER NANCY SHERWOOD TRUITT HELPED ACCION TAKE MANY IMPORTANT STEPS

United States Latin America hen luck knocks on your door, you have to let it in. And it happened Those decisions were informed to us in the late seventies, when longtime Accionista and board by Nancy’s knowledge of W chair Bob Helander told his colleague, Nancy Sherwood Truitt, economic development and In the U.S., Accion relies strongly on referrals from the Our -based technical assistance team is “You’ve gotta learn about this organization.” a deep understanding of small-business banking community. To deepen our winding down a program initiated in 2008 with a poverty; by her firsthand Nancy joined Accion’s board of directors in 1992. By then, she had enjoyed engagement with this group, we have launched an $4.2-million grant from the Inter-American Development experience visiting and online program for small-business bankers. It incudes Bank to extend financial products and services to a successful career in international development policy, raised twin boys with working with our clients; and a banker-specific microsite (uspartners.accion.org) rural areas in Latin America. This large-scale project her husband George Truitt and founded Truitt Enterprises, Inc., a development by a philosophy formed not that leverages LinkedIn technology to immediately has been carried out with six partners: Finamérica consulting company. As a result of her work with multinationals, training establish a connection with a local Accion lending on someone else’s opinions (Colombia), CREDIFE (Ecuador), FAMA (Nicaragua), and funding think tanks, and the research that took her around the world staff member. In addition, we have launched Bankers Mibanco (Peru), Banco Ademi (Dominican Republic) but her own. “You should care – including a stint living in Peru and another working alongside renowned for Financial Inclusion, a LinkedIn discussion group, and CrediConfía (Mexico). On August 20–21, more about microfinance because and are expanding outreach to the banking community economist Hernando de Soto – Nancy crossed paths with Accion repeatedly. GENEROSITY AT ITS BEST Decades of development than 100 participants representing 11 countries and our clients are the base of via a digital advertising campaign. 63 institutions attended the closing seminar to discuss Something Accion was doing at the time caught her attention: Accion was experience and dedication to microfinance led Nancy the economy,” she explains, the learnings and results of the project, which trained helping to establish ’s BancoSol, the world’s first commercial bank Sherwood Truitt to Accion’s board of directors – she’s To join the conversation, visit 420,000 microentrepreneurs, acquired 350,000 credit “particularly in developing DAVEN LEE AND HER CHILDREN, CLAUDIO GONZÁLEZ-VEGA dedicated solely to serving the needs of microenterprises. been a member since 1992 linkd.in/17rnweq clients and enlisted 1,400 banking agents and economies. It’s the largest ROAN AND SIMON LEE-PLUNKET Rural microfinance expert and 273 mobile agents. Participants received a toolkit Nancy served on Accion’s board of directors from 1992 to 2007 and was group of people. If they are not employed and able to take care of their children – Farm owners and clients of Accion special guest during Accion’s with 33 key documents in Spanish. chair for nine of those years. She’s now an emeritus member and is still feed them and clothe them and get them into good schools – then you’re likely New Mexico • Arizona • Colorado rural finance seminar in Bogota, at their goat farm in Santa Fe, very much engaged in Accion’s work. But her contributions go beyond to face real difficulties, economically and politically. And then there is the moral Colombia, this past August Toolkit available at philanthropic dollars and a commitment that will endure beyond her argument that these are people who need help. But the help they need is giving New Mexico www.accion.org/cajadeherramientas lifetime, through her membership in the Recife Society – Accion’s legacy them a fishing pole and teaching them how to fish; it’s not giving them the fish.” gift program. Her dedication is forever crystallized in the critical decisions Reflecting on Accion’s evolution during her tenure on our board, Nancy she helped Accion make during her years on the board: steps so bold as to points out that she was comfortable getting behind the courageous decisions expand our operations to new continents and to change our credit-focused we made because “Accion is very lucky to have the team of talented people Brazil model to provide our clients with other important financial tools, such as that it’s always had.” And we are privileged to have supporters like Nancy. savings and insurance. It is only because of them that we have made so much progress. Our expansion strategy in China, known as With the support of Citi Brazil, over the last year Accion Grassland, is under way. In partnership with has been building the capacity of local microfinance Sagamore Investments, we are exploring opportunities professionals and supporting the growth of Accion in a number of locations, including provinces such Microfinanças – Accion’s majority-owned venture in as Chongqing, Hunan, Pudong and Guizhou. Over the Amazon region of Brazil. In 2012, Citi Brazil CONTINUED FROM PAGE 2 the next five years, Accion will improve financial awarded Accion a U.S. $150,000 grant to support Happy Families inclusion in China through the development of a the adaptation and contextualization of training and core group of partner microfinance institutions, capacity-building materials to the local environment burned their trash in her yard. provided a methodology that enabled supplemented by regional training and capacity and language. Citi support has also provided a dozen Fundación Paraguaya staff asked why more than 1,500 local businesses to building. The expansion seeks to replicate our existing training sessions, including hands-on field training to “If 92,000 people have been lifted out of business model in Chifeng, , while more than 230 loan officers and more than 90 credit that was the case and realized that sponsor one extremely poor village or also developing microcredit institutions that meet the analysts, promoters, sales staff and others in Brazil. part of the reason had to do with poverty by their own efforts, how much settlement in their community, thereby specific needs of each new market. lack of motivation and insufficient becoming the designated liaisons ACCION CHINA TEAM ACCION MICROFINANÇAS TEAM more can be accomplished if society as Staff in our office Loan officers study their daily knowledge about health hazards. They between government agencies that kick the day off with a routes on a city map in one of worked with her on that, eventually a whole makes a concerted effort?” provide services and the community planning meeting Accion’s two offices in Manaus convincing Benita’s husband to use his represented by each business. construction skills to build an elevated MARTÍN BURT BEYOND PARAGUAY stove. That was only the beginning. FOUNDER, FUNDACIÓN PARAGUAYA Burt wants more. “The truth is that, just Today, Benita has a kitchen with like David against Goliath, we want a stove, a sink and running water. poverty in all its dimensions. As was the smallest microfinance to demonstrate to the microfinance “These changes have lifted my spirit,” this article is being written, in 2013, organization in Paraguay, with 9,000 industry that [the Stoplight] is a Worldwide Worldwide she says. “When I go to bed I think Fundación Paraguaya is working with clients. Since we’ve changed our platform that needs to be used for about this accomplishment and feel another 6,000 families while helping focus, we’ve grown to 57,000 clients. the eradication of poverty at an happier and more rested because to ensure that previous families From the commercial standpoint, it international level.” The Center for Financial Inclusion at Accion recently A key part of our commitment to strengthening of the comfort these things have remain above the poverty line. has positioned us as a development announced the launch of the ‘Roadmap to Financial the microfinance industry is training microfinance And he’s working on it. Burt has given me.” The family plans to put organization instead of a financial Inclusion,’ a series of recommendations designed to professionals around the globe, and our Training and “If 92,000 people have been lifted partnered with ProMujer and the in cement floors and build a laundry institution. This has given us a expand access to quality financial services globally. Capacity Building (TCB) team is always seeking new out of poverty by their own efforts,” BBVA Foundation to help bring his room. Not only has Benita’s family competitive advantage. We don’t The Roadmap, a part of the Financial Inclusion 2020 and innovative ways to promote knowledge sharing writes Burt, “how much more can be Stoplight to Mexico. Organizations project, focuses on five crucial areas: technology, and learning exchange across regions and functions. moved from red and yellow to green compete with banks and other accomplished if society as a whole in Nigeria, Tanzania and Uganda are meeting customer needs, credit reporting, financial This year, TCB has launched Learning Circles – a on most of their indicators, but their financial institutions, which have a asking Burt to localize his Stoplight capability and client protection. It follows the earlier new initiative that uses a blend of different media makes a concerted effort?” achievements have helped motivate lot more capacity than us. But from release of ‘Mapping the Invisible Market,’ research to connect professionals from , and Latin in their respective countries. (He’s other women in her solidarity group. YES, MR. PRESIDENT examining forces instrumental to achieving full financial America in a learning community. Over a period the standpoint of our mission, which looking for financial support for that.) Luis Fernando Sanabria took over inclusion by 2020. Findings and recommendations of six months, participants join monthly expert-led “It’s important to have goals,” she has always been to help people “Our objective is to transcend from both initiatives will be discussed at the Financial virtual sessions, share tools and experiences in a explains. “At first the work seemed Fundación Paraguaya in 2012, overcome poverty, we’ve found a way what we’ve done so far, which is Inclusion 2020 Global Forum, set to take place in discussion forum, and put theory into practice with daunting, but then we got motivated after Burt was invited by President of operationalizing our mission and set SEEING THE INVISIBLE TRAINING AND fighting and alleviating poverty, London, October 28–30, 2013. an exposure visit to a model institution. Lessons Federico Franco to join his cabinet Markets like this one in Manaus, CAPACITY BUILDING and now it’s a reality.” very concrete goals for ourselves.” learned from the group are captured, synthesized to eliminating it. We want to Amy Stewart presents the new as chief of staff. Burt, no stranger Brazil, may seem like any other Download the reports and read the Roadmap at and shared with our field staff and partners to In 2011, Fundación Paraguaya’s Poverty In December 2012, Paraguay’s national go from financial inclusion to at first, but understanding their ‘Learning Circles’ to Accion to public service – he spent a term centerforfinancialinclusion.org/fi2020 maximize learning and add value. Stoplight helped 6,400 families like government launched its Private-Public poverty eradication. We consider uniqueness is the first step in colleagues in Washington, D.C. as mayor of Paraguay’s capital, Benita’s (an estimated 32,000 people) Partnership Action Plan to Eliminate the microfinance industry to be offering financial services to Asunción – stepped down from mature enough and have new raise their income above the national Extreme Poverty by 2018. Burt’s their microbusinesses Fundación Paraguaya to serve his methodologies to move away poverty line. In 2012, they helped an Stoplight became a major component country. He would eventually find from the minimalistic approach additional 6,000, while enabling 600 of the policy. It was used to design a a way of raising the Stoplight to of the last 20 years.” of the 6,400 families from 2011 to strategy to map 1.2 million people living the highest levels of government. transform all the indicators in their in extreme poverty in 400 rural villages, Burt is leading by example. The report from red or yellow to green, “Before the adoption of the Stoplight,” 1,000 urban slums and 116 indigenous question is, what will it take to indicating that they had overcome says Sanabria, “Fundación Paraguaya settlements. The Stoplight also get others to follow suit? PAGE 6 ACCION VENTURES // FALL-WINTER 2013-14 ACCION VENTURES // FALL-WINTER 2013-14 PAGE 7

VOICES FROM THE FIELD

Bruce Tippett: The Father of Microfinance CONTINUED FROM PAGE 3 Good Karma and Perseverance

WHEN A RANDOM ACT OF KINDNESS (AND HARD WORK) PAYS OFF IN COLOMBIA

n their way back to Colombia from their nervous. She was also prepared. She entered the honeymoon in Rio de Janeiro several years conference room and the interviewer stood up from O ago, Liza Guzmán and her husband found her chair, extended a friendly handshake to Liza and themselves stranded at the airport for 72 hours. Their said: “Welcome to Accion. I already know everything I airline had gone bankrupt and all its flights were need to know about you. Two years ago you helped one cancelled. It was chaos. Dozens of people formed lines of my employees from get to Bogota.” at the ticket counters while many slumbered on floors, Today, six years later, Liza is a vice president in charge using backpacks as makeshift pillows. Others rushed of Accion’s savings project in Latin America, heading in every direction, crowding restrooms and restaurants. a multi-year, $6-million grant from the Bill & Melinda Among this mayhem Liza noticed an Indian woman Gates Foundation to develop savings products for low- COLLECTIVE INITIATIVE Residents of a Venezuelan barrio, young and old alike, come together to organize a community development project in the early 1960s who seemed especially lost. The woman was on her income, hard-to-reach populations living in urban and way to Bogota – just like Liza and her husband – so Liza rural areas in seven Latin American countries: Bolivia, DID YOU PROVIDE ANY TRAINING TO THOSE FIRST MICROENTERPRISES, WHAT WAS YOUR OPINION? took her under her wing and helped her get a ticket Colombia, the Dominican Republic, Ecuador, Honduras, OR STRICTLY MONEY? Initially, we were thinking about making credit available, how to get it out. and a vegetarian meal. Once they arrived in Colombia, they Peru and Nicaragua. She also manages Red Acción, Latin There was a lot of advisory assistance provided at the outset. Early on, we kept We didn’t start out thinking, “This should become self-sufficient.” It was only exchanged pleasantries and went their separate ways. America’s leading network of microfinance institutions. in fairly close contact with the businesses. We made sure they were paying. after the first few years when one could see down the road. Because it was so Before getting married, Liza had just finished a master’s As for her journey from investments to developing We gave them financial guidance through our field people and training on the successful in terms of repayment and in terms of impact, we began to believe degree in social planning and development in Brisbane, savings products and playing a leadership role in the financial side, in marketing, and in other aspects of business life. that it would be possible to do this on a larger and larger scale. And as we understood that it was possible, we realized that either the government would Australia. During her studies she learned about Accion microfinance industry, Liza says she worked hard WERE THEY INDIVIDUAL LOANS OR GROUP LOANS? have to take it over – it had become very expensive in terms of manpower – or and fell in love with the organization, hoping that one and kept her eyes on the prize. All of them were individual. There was no group lending in Brazil in the early day she’d be able to work at Accion’s hub office in her we would have to develop a model where fees could cover the costs. “I met people in Ecuador and Colombia who sometimes days. It was those [businesses] you’d expect to find: the butcher, the baker, CONNECTING WITH CLIENTS Liza Guzmán (right) native Colombia. While her professional background the candlestick maker. DID YOU SEE CLIENTS AND THEIR FAMILIES STRENGTHENED AS A RESULT? says the key to her success is staying in touch with had to walk for hours to make a savings deposit,” was in investment banking, Liza wanted to dedicate We saw it in a number of ways. Many of these businesses were able to clients, like Flor Castro, bakery owner and client of Liza explains. “Missing hours of work meant losing HOW LONG WERE YOU INVOLVED? herself to the type of work where she could see the increase the number of employees. The owners would increase their income, Accion partner Finamérica in Bogota, Colombia income, so saving was expensive for them. You and Maurício became the executive director of UNO, and I was involved for the first immediate, positive result of her toil in people’s lives. and that would have an impact on their family, on education, health and I can sit in front of a computer and make a deposit three or four years. But I was also involved in a lot of other projects, so I was so on. And we looked at all of those factors from very early on. There was an So after the turbulent return from her honeymoon, Liza with a few clicks of a button, or we can walk down in and out of Recife. I spent half of my time there. I was involved in all their obvious impact. This was the first time any of these people had any outside applied for a job at Accion. She was turned down. She didn’t have the field the street to a bank. But that isn’t the case for many people living in isolated policies, but not the day-to-day operations. experience she needed to work in operations. So she applied again, and again. areas. So they save at home, where they are vulnerable to thieves or a landslide credit whatsoever, and it had a dramatic effect. The problem was that once WHAT HAPPENED NEXT? Over the course of the next two years, Liza would apply for several positions at or an overflowing river that can literally wipe away their life’s savings. We’ve we reached 100 people, we wanted to reach 500. It didn’t grow that quickly We decided to set up a second UNO in Salvador, Bahia, the other major city Accion, not giving up on her dream to do work that would truly touch people’s created innovative savings channels that really work for them. It’s amazing to because it was very manpower-intensive in terms of making contacts and in the northeast. I actually moved to Bahia and was there between 1975 and lives. Realizing that she just needed a foot in the door, she sought a job in see a client light up when telling you they have 25 dollars in a bank; their pride selecting borrowers. We couldn’t have selected anybody if we hadn’t had the 1977. UNO Bahia did essentially the same thing: conducted initial surveys of Accion’s investments department. After a couple of preliminary interviews, is almost palpable. And you can only wonder about the infinite possibilities community-development experience we had. We made contacts throughout poor communities; hired local personnel, mostly out of the university; trained she was invited for one final meeting with the head of investments. Liza was those savings can open up for them.” the community and then we’d know who was reliable and who wasn’t. So them; etc. In 1978 I returned to Rio. Both organizations were up and running. I we selected very carefully. stayed with Accion and I was the executive director until 1980, and then I decided to retire. At that point I had been there 15 years. I was the old man, you know. THIS MUST HAVE BEEN VERY REWARDING. WHAT ABOUT IT WAS MOST I was 39 or 40 years old. So I decided to finish up with Accion and remained as REWARDING TO YOU PERSONALLY AND PROFESSIONALLY? SUCCESS STORY a consultant. It was only in about 1980 that Accion as an organization formally I was always a conceptual person. I was thinking five, ten, twenty years down decided that they were going to concentrate on microcredit. the road. I’m from a small business family, and so I think I grew up to have a natural affinity with microenterprise. When we were doing community THAT MUST HAVE BEEN A GREAT FEELING… development, Accion was helping communities in ways that weren’t self- Great, obviously. And when I left Accion I set up a small consulting company sufficient, and so I always dreamed about coming up with systems that would And You Eat It? called Trade and Development International. TDI did some work for Accion, be self-sufficient, so that they could grow and reach scale. It was enormously but I stayed also mostly in the microenterprise field. TDI did consulting work satisfying for me over those years to see steps, constant steps, in that direction. in 30 countries. We were trying to work out a model and convince Accion, HOW UDONGO PEMBA IS SUPPORTING A BUSINESS, AND MANY PREGNANCIES, IN TANZANIA Today there are [microfinance] programs all over the world – and a reasonably among others, that there was a way to make the whole system self-sufficient high percentage of them are paying for themselves. in Brazil. There was an enormous amount of internal argument about whether we should charge interest at all. Camurça, for instance, I think, went to his SO IT’S TRUE, THEN, THAT YOU ARE THE FATHER OF MICROFINANCE? Innovative entrepreneurs can be found everywhere. Indeed, visiting them is Udongo pemba is – well, it’s deathbed thinking that the government should pay the costs of providing Well, that’s academic, at best. I mean, we certainly started this before the best part of our work at Accion. dirt. But very special dirt. credit to microentrepreneurs. Muhammad Yunus did. We started working on this in 1971, 1972. And we Available only from Kigoma. But just when we think we’ve seen it all, we have to step back and re-calibrate were definitely full-time at it in ’72. So we started before he did, and then Iron-rich. Hand-rolled. Sun- HOW MUCH INTEREST WAS BEING CHARGED AT THE TIME? our expectations and appreciation, whether for an Ecuadorean mask-maker Accion and those of us who stayed with it made a good deal of progress. But I dried. Building a stronger Brazil had inflation that was anywhere from 50 to 100 percent a year, so Brazil, (Halloween, political satire, national holidays…), a Peruvian builder of portable would say that we were always the visiting gringos – the outsiders. We weren’t Tanzania, one baby at a time. in a sense, was a very bad place to try to cast a model for microlending. It was spas, or a Colombian whose educational puppets come with moving parts to Bangladeshis in Bangladesh. He was able to do a terrific job of promoting the an entirely distorted situation. Basically, the interest they were charging was a illuminate the lessons – think Pinocchio with detachable donkey ears and tail. “This business is still new to work they did, and then expanding the work. And, you know – more power to favorable rate to the clients. They [clients] were not paying a market interest. And, us,” the Akiba team admitted Our current favorite is Hadija Haruna Ally, a 40-year-old Tanzanian mother of him. But Accion was there first, in terms of microlending. as we tried to follow a rapid- in general, people thought it was just terrible to talk about charging market interest three. Hadija sells udongo pemba, a rare and special nutritional supplement, rich At the time of this interview, in July of 2013, Bruce Tippett was 72 and battling cancer. fire exchange in Swahili rates. I mean, the change in mentality from the early days to today! We worked in iron and other nutrients and much prized by pregnant Tanzanian women. between Hadija and loan for a decade trying to develop a way in which a program like this could become Watch “The Recife Experiment,” a video featuring Bruce Tippett and the staff of the A client of Accion partner and now on her third loan, officer Godfrey Swila. Hadija self-sufficient. Part of that was overcoming the resistance to the idea of charging UNO program in Recife: http://vimeo.com/47180514. real rates based on cost, whether that was 10 percent a year, or whatever. for 3 million Tanzanian shillings (U.S. $1,800), Hadija runs her business from was clearly asking for bigger ESSENTIAL MINERALS Hadija Haruna Ally makes a modest compound in the Lola-Boma neighborhood of Dar es Salaam. Seven loans; even we figured that and sells udongo pemba, a clay-based nutritional years ago, trading on experience as a food vendor, she came up with the much out. Business was supplement popular among pregnant Tanzanians idea of supplying udongo pemba wholesale to area shops. To get started, she booming. She had orders to traveled two days to Kigoma on Lake Tanganyika, spending three weeks there fill… and three children who needed to finish their education. to learn the business and set up a network of suppliers. But the news was positive – Akiba planned to move Hadija from the group Ventures, published twice yearly, offers reflections on Accion’s work, regional news highlights, firsthand accounts from staff in the field, and stories of Today, able to leverage Akiba loan capital to buy in greater bulk, she makes loan she was on to a biashara – business, or individual – loan, which would microentrepreneurs succeeding with the help of microfinance. Continue reading this and past issues of Ventures on our website, www.accion.org/ventures.

the arduous journey less frequently – once every two months – and with qualify her for larger amounts. As she answered a cell phone ringing to the Write to us: Send an email: [email protected]. Send a letter: Accion, 56 Roland Street, Suite 300, Boston, MA 02129. Customer service and change her employee, Bula Mohammed, is able to roll, dry and pack up to 30 bags tune of “We Wish You a Merry Christmas,” she sat back down on the hard- of address: Please call us at +1 617.625.7080 or, toll-free, at 800.931.9951. Back issues, reprints and permissions: contact us at [email protected]. of udongo pemba every day. Depending on the size of the bag, they sell to packed earth with a smile, hiked up her long skirt, and began shaping more Copyright © 2013 Accion International. All rights reserved. Contributions to Accion are tax deductible under Section 501(C)(3) of the U.S. tax code. retailers for 8,000–10,000 TZS ($5.00–$6.25). The recommended daily dose – of the magic earth into money. Follow us on Twitter @Accion_Global and on Facebook at www.fb.com/accion.international. in the form of a fat, blunt, chalky, rust-red cigar – is one per day, for which And, yes, udongo pemba tastes like dirt – but lemon-flavored. Design: Neo Design Group Printing: PrintSynergy Solutions expectant moms pay 30 TZS, or about a penny. ACCION 56 Roland Street, Suite 300 ADDRESS SERVICE REQUESTED Boston, MA 02129 RETURN POSTAGE GUARANTEED

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You can leave a legacy of hope and empowerment for millions of people living in poverty worldwide. By making a legacy gift to us, such as naming us in your will or trust, you join a special group of friends known as Donations to Accion help strengthen businesses and families the Recife Society. Named after the city in all over the world, like the Albuja family of Ibarra, Ecuador Brazil where we made the very first microloan in 1973, the Recife Society continues the tradition of helping hardworking people build “I have joined the Recife Society better lives for themselves and their families. because I think it’s an important Learn more about this dedicated group way of making sure I give totally, and it’s over my lifetime.” of supporters. Call or email us: NANCY SHERWOOD TRUITT +1 617.625.7080, [email protected]. RECIFE SOCIETY MEMBER SINCE 2005

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