A holistic perspective of Microenterprises between Latin America and India

I believe there's no better way to change the culture of poverty than to empower women
to become active agents of change in their homes, communities and workplaces.
- Lynn Patterson Pro Mujer Founder

Microenterprises constitute the most dynamic and heterogeneous sector in Latin
America. The contribution of microbusinesses, including independent workers, to the
economy in the region has been documented extensively. There are two views of the
microenterprise sector, each one with different policy implications. The first one
considers workers in the microenterprise sector as either underemployed or labor
excess. These workers cannot find a job in the formal sector due to their low skills and
general un-employability. The second view focuses on the fact that some workers
choose this sector for its flexibility and earnings opportunities i.e., micro entrepreneur
view. While the existence of high levels of poverty in the sector is strongly suggested by
the first view, poverty is not necessarily a permanent microenterprise condition
according to the second view.

In Latin America as in developing around the world, woman labor long without any
recognition or pay. These woman wanted their children to be educated well as they
themselves were denied of education. Lynn Patterson and Carmen Velasco founders of
Pro Mujer, a microfinance and non-profit organization for woman development two
decades ago in Bolivia. Since then they have worked to remove poverty and improve
the standard of living of the poor woman. They have distributed around $689 million in
microloans. Pro Mujer offers an integrated approach, combining lending and
healthcare, education and other services.

Over the past three decades women in Latin America have dramatically increased their
role in the workforce. Worldwide the woman represent and own more than half of the
microenterprises however account for quarter of small businesses and only 8 percent of
the medium sized firms. Their ventures are small, limited and concentrated, informal in
the commerce sector, where profits and margins are low, and they often use less credit.

In the Latin America and Caribbeans, almost 120 million of the population are young
people; 30 million of these live in rural areas and a large percentage is poor. Promoters
were optimistic in the 1960s about the prospects for developing a large credit unions in
Latin America. Countries such as Peru, Honduras, Dominican Republic, Bolivia and
Costa Rica were experiencing the rapid growth of credit unions. This has led to the
formation of Confederation Latin American Saving and Credit (Confederacion
Latinoamericana de Cooperativas de Ahorroy Credito). COLAC is a continental body
that aims to representation, funding and technical assistance for cooperatives and credit
unions. The outside funding to further fuel the growth of these cooperatives. Inflation,
economic stagnation, and decline, and too little flexibility in policies in the credit union
system resulted in major deterioration in the strength of many credit unions in the
region.

Lynn Patterson and Carmen Velasco Professor of Psychology at Catholic University
had no financial background and knew nothing about poverty and nothing about
microfinance however were committed to helping poor woman become more self-
sufficient. They developed education programs which could benefit the poor such as
empowerment, maternal and child health, and parenting skills. They identified only
through further education and knowledge of health service the woman will be able to
achieve the full potential.

Since the woman requested them to help them with starting a small business and
enable to earn money and save them for their childrens education. The woman have
formed groups where they invest into the group fund and during need they can help
each other to support for a cause and move up. This has helped them to a larger extent
and they feel confident to deal with relationships. This has led to family unity and kids
complete school and college as well. These kids have made themselves as role models
to the new generation. The countries such as Argentina, Bolivia, Mexico, Nicaragua and
Peru are reaping good results out of this.

In India a similar situations is seen. In Southern India, the microenterprises are doing
well. The microenterprises are making the woman to be self and give them opportunity
to innovate, take leadership roles, own a project, recruit other women who seek
opportunity, support each other, support during distress, work with alcoholic husbands
and bring a change. These woman are given hand loans to purchase mini trucks, sent
to driving school and trained on logistics. These woman independently manage the
suppliers, negotiate, lift packages and move them to nearby towns for further
shipments.

As per Prof. Mohammed Yunus say, No, these women needed opportunity, not charity
They want chance, not bleeding hearts.

The growing commercialization of rural economy, increasing dependence of agriculture
on external inputs, mobilizations of savings towards construction and the growing
education have opened up new avenues for the microenterprise development in India.

Some traditional industries are lowering the cost in terms of using low quality raw
materials to suit the needs of low-income groups of the customers, use low technology,
some are seeking to increase the capital base for improving productivity, continue to
innovate keeping in mind cost reduction and effectively market. In some mediocre
enterprises they make advantage of using a better quality of raw materials, and a slight
improvement in use of technology thus managing low income groups and regional
markets. In any situation the entrepreneur needs a credit as they bring in additional
capital to run the enterprise.

Microenterprise promotion among the very poor requires comprehension of the market
dynamics. Markets are highly vulnerable in the sense they are dynamic and requires to
alter as per the needs, enterprises are constant threat due to easy entry and exit
conditions.

Self Help Group (SHG) as a system has infused certain synergy among its members to
move up the socio-economic chain from passive onlooker into an active partner in the
development process. As far as India goes SHG has become a vital tool for
empowerment of women, socio economic betterment and social solidarity for the poor in
their own settings.

Self Help Groups are formed when people having multifaceted issues such as alcoholic
problems, chronic problems, issues related to sudden death of husband, family lost in
disasters, old age issues, etc. They are self-governed informal association of poor. In
the meetings the issue related to common problems faced in villages, share information
related to health and literacy skills, and plan solutions to tackle the problem.

Self Help Groups are built on the strengths of their members. SHG has a very important
role to play particularly in the transfer of technology to user group population. The
members of SHG offers them organization base, large resources, and access to
modern technology leading to employment and income generation. The pace of transfer
and popularization of technologies must be accelerated so that even the small farmer is
benefited from new technologies.

The Self Help Group is becoming a global phenomenon. In spite of sudden growth of
Self Help Groups in India, the full potential of utilizing Self Help Groups is untapped.
The reasons are due to lack of systematic research and solid methodological
foundations. The helper therapy principle postulated by Riessman (1965) pointed to
the process by which helping others has a therapeutic effect on the helper, and the self
help group provides the context for members to gain the unique benefits that may
arise from helping someone who has the same problem as the helper. Past research
has identified major outcomes of self-help groups such as emotional support,
acceptance, empathy, affirmation, spirit of hope, and sharing of feelings, provision of
factual information, sharing of experimental knowledge, development of sense of
community, individual and collective empowerment*.

One of the vulnerable groups within the Microenterprises sector is female earners, with
an average poverty rate of fifty five percent. Single female heads of household and
young earners experience similar poverty rates as female earners. In this
microenterprises sector, the percentage of poor earners is greatest in the industrial
sector and smallest in the commerce sector. Low earnings firms are more concentrated
among firms with less than two employees than high earnings firms. Microenterprises
workers have lower levels of education than non - microenterprises workers, which may
partially explain microenterprises workers lower levels of earnings and higher rates of
poverty.

Employers in the non - Microenterprises sector register the highest earnings, which are
4.5 times the average earnings of all employees and more than twice the earnings of
Microenterprises employers. Microenterprises employers earn more than non -
microenterprises employees. Microenterprises employees are at the bottom of scale,
earning half the wage of non - microenterprises employees. Although women earn less
than men overall, gender earnings disparities tend to be smaller in the microenterprises
sector than in the non - microenterprises sector.

A comparison of GDP Annual Growth Rate graphs showing the trends between major
Latin American countries versus India.

LATIN AMERICA









VERSUS
INDIA


The conclusion is Latin American countries though they are similar to India in certain
terms, India surpasses the Gross Domestic Product when compared to each individual
Latin American country.















References:
Pro Mujer: A Holistic Approach, Empowering Women for 20 Years
(http://imow.org/economica/stories/viewStory?storyId=3694)
* Gottlieb 1982, Kurtz 1988, Borkman 1976, Levy 1979, Gartner and Riessman 1977,
Katz and Bender 1976, Gidron et al. 1991, Jacobs and Goodman 1989, Bennett et
al.1996, Humphreys & Rappaport 1994
http://www.iadb.org/en/news/webstories/2011-10-05/women-entrepreneurship-in-latin-
america,9586.html
Supporting rural youth microenterprises in Latin America and Caribbean
http://www.ifad.org/events/gc/34/lac/
Growth, Employment and Inequality in Brazil, China, India and South Africa: An
Overview
OECD Secretariat
Web source: http://www.tradingeconomics.com/country-list/gdp-annual-growth-rate
Financing for Sustainable Development, Alicia Brcena, Executive Secretary, United
Nations Economic Commission for Latin America and the Caribbean Countries