In the center of the highlands region, among the Cuchumatanes Mountains, sits a small town called Nebaj. This is home to the indigenous Ixil Maya, which form one of Central America’s smallest ethnic groups. The area of the Ixil Region or Ixil Triangle was greatly oppressed and affected during the Guatemalan Civil War from 1940 to 1996. During the war, acts of genocide were committed by the Guatemalan government against the indigenous Mayan population. This year, Efrain Rios Montt, Guatemalan dictator from 1982-1983, was on trial for genocide for killing over 1400 Ixiles during his rule. The trial is a testament to the progress made by the current Guatemalan government, but cannot reverse the damage done or wipe out memories that still reside in the minds of many of locals in Nebaj.
Despite its troubled past, Nebaj is a bustling town full of local businesses including the sale of hand woven huipiles, traditional shirts with intricate and colorful designs worn by the indigenous women, and bright red skirts lines with tasteful vertical stripes. The town, however, was not always as busy and offered little accommodation for passing tourists. This was an observation made by Greg Van Kirk, co-founder of the nonprofit organization Community Enterprise Solutions (CES), when he was volunteering in Nebaj as a Peace Corps Volunteer from 2001-2003. As part of his work in sustainable economic development, Greg helped to foster a number of local businesses: a restaurant (El Descanso), a hostel, an internet café, a trekking service, and a Spanish School. Now entirely locally owned and operated, these were the first of their kind in the town and served passing tourists, allowing them to stay longer and invest their money in the local economy. Later on, Greg turned his focus to a new form of micro finance [hmm I don’t think I would describe microconsignment as microfinance. It would be more accurate to call it a social enterprise] called the MicroConsignment Model, and helped to found a Guatemala-based social business called Soluciones Comunitarias (SolCom) to create market-based access to key technologies in rural villages through empowered local entrepreneurs. Today, Community Enterprise Solutions supports all of these initiatives.
Since Community Enterprise Solutions originated in Nebaj, it made sense for me to start my investigation there. What am I investigating, you ask? Well, there is a type of microfinance focused on savings called, appropriately, savings groups. Savings groups have been used to help alleviate poverty for years now all over the world. There have been many different variations of the service, but they all essentially work the same way.
The purpose of these groups is to teach locals (often the poor and very poor) how to come together and pool their savings into a group fund. This group fund is slowly accumulated over monthly meetings where every member purchases shares of the total pot. The group decides the share value, such as 100 quetzales (Guatemalan currency), and members save their money by purchasing these shares. If one member wants to save, for example, Q300, they would purchase 3 shares. After a few meetings the group fund gets to a large enough size to then be loaned to members desiring a loan. These loans can be used for whatever purpose the group deems acceptable and are typically used for emergencies such as the need to pay a doctor’s fee. The member then pays back the loan, according to the loan terms agreed upon by the group, with interest which is added to the group’s total savings. By charging interest on the loan, the group grows their savings fund. This process is repeated throughout the cycle of one year. At the end of the year the fund is paid out to each member at a ratio equivalent to their percentage of the total pot in savings.
So my task is to investigate the possibilities and the need for these savings groups within the network established here in Guatemala by CES. The model I am working with is called Comunidades Autofinanciadas or CAF. This model was created by Jean Claude Rodríguez-Ferrera and used by the organization he founded called Asociacion de Comunidades Autofinanciadas (ACAF) in Barcelona, Spain. Why this model? Well, I was connected to Jean Claude, who is currently running Puddle.com a San Francisco based on-line savings and social networking program, through Bill Maddocks. Bill is the director of the Sustainable Microenterprise and Development Program (SMDP) at the Carsey Institute, a training program for practitioners in the microfinance and microenterprise development field. The Carsey Institute is a research institution affiliated with the University of New Hampshire that “conducts policy research on vulnerable children, youth, and families and on sustainable community development”. I participated in the SMDP program in March of 2012 in Accra, Ghana. It was through this program that I learned about savings groups from Hugh Allen, a leader in the field, in an 5 -day course on the Village Savings and Lending Association model (VSLA). Bill and Jean Claude are good friends and I worked closely with the Carsey Institute while at school (see the How I Got Here page on this blog to learn more about that). Community Enterprise Solutions has also worked with the CAF model in Haiti and Nicaragua.
All of this came together quite nicely in the form of my 6-month feasibility study for CES. After some planning and discussion with Greg we decided the best plan of attack was to work inside out. This meant finding ways to incorporate CAFs within the organizational structure. This will allow CES to gain firsthand experience with the CAF model and thus be better equipped to potentially offer trainings to their community members in the future.
Enter Descanso. The restaurant is very closely affiliated with Soluciones Comunitarias, and SolCom employees will be participating in the group. Thus far I have conducted various interviews with the Descanso and SolCom staff and have learned they are all interested in creating their very own CAF. Over the course of the next month I will be giving training sessions teaching the Descanso and few SolCom employees how to run their CAF group. It will be the first CAF comprised of members within the CES organization and thus a great place to start.
Make sure you stay tuned to follow the progress of the CAF group at Descanso in Nebaj. In the next post I will go in depth about the goals of the potential members and explain exactly how it will be run. I am thoroughly excited to be creating my very first CAF model savings group and can’t wait to share my findings. It should prove to be an enlightening and interesting experience.