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OW: So "peer pressure" encourages women to payback their loans. Are there other reasons that make women better payers all around?

S.C.: At one point women's businesses were considered less attractive to finance because they did not have the same dramatic growth rate as men's businesses. Then studies showed that in the developing world, over the long haul, women's businesses lasted longer and grew at a steadier rate. It turned out that men took bigger risks resulting sometimes in more dramatic growth, but sometimes in more dramatic failure and loss of the business. Women's businesses tend to be steadier and less risky, possibly because a poor woman knows she has no other options for feeding her children.

We also find that women work better in the kind of group lending structure we use. Most development programs that target the poorest of the poor use group lending because it allows solidarity guarantees where clients have no collateral, it enables us to manage small loans efficiently, it creates a larger risk pool, and the support structures created are important for clients who have unstable circumstances. Women do much better in this kind of context.

We had an instance in the Dominican Republic where a Trust Bank member's daughter was walking down the ladder that serves as the entryway to her shack and fell on a vat of cooking oil and was severely burned. The woman took her to the Free Clinic. The Clinic prescribed antibiotics and pain killers that were essential for this girl to heal, but she had no money to pay for them. So she went and found the president of her Trust Bank and said, "I don't know what to do, I'm desperate." And the woman said, "Don't worry, we'll help." She called an extra meeting of her group and every member of the group, and these are all poor women who are barely surviving themselves, all donated money towards this girl's antibiotics. But this wasn't enough. So they went and met with all of the Trust Banks in the community and collected enough from all of the Trust Bank members to buy the girl all of the antibiotics that she needed.

One of the more mature programs that we have is in the Philippines. The Trust there had been doing well and wanted to show its gratitude for how much their lives had turned around through this program. They decided to give a gift to others in the community. So for their second anniversary of being a Trust Bank, they decided to host a celebration in their community that would be a day of preventive health care. They organized a one-day clinic where some doctors came in and gave free checkups. They solicited and received the donation of several first aid kits and demonstrated how to use them and then they did some educational presentations on how to avoid common health problems. This is a group of poor women who did this on their own initiative because they had been empowered through the ability to manage their own loans, through the ability to grow their own businesses successfully, through this group support structure called "Trust Banks."

OW: What's the average size loan that you give?

S.C.: That changes from country to country, but I would say that our loans range anywhere from about $40 to $120 for the first loan. The concept is: we give an initial loan of, for instance, $70. She pays that back over four months. In the process she is also putting about 10% ($7) into a savings plan that's managed also by her Trust Bank. At the end of those four months, if she repaid her loan on time and she has saved the amount that she had committed to save, then she might be given a loan of $100. Then after four months again, with a successful repayment record, she might be given a loan of $150. Over about a three year period, she might end up receiving a loan of anywhere from $500 to $1000, depending on the rapidity with which she has increased her business.

OW: What kinds of businesses are the women running?

S.C.: Most do some kind of business that arises out of normal women's activities such as sewing and knitting and crafts, or food preparation. And then there is another large group that does what we might call "petty trade" or in some countries it's called "buy and sell." It might be a woman who gets up at four in the morning and travels to the local market where she buys a basket of tomatoes. And then she spends the day selling those tomatoes on the street. What she makes that day is what she and her children have to live on. We find that if we can give her a $50 loan several things happen. One is that it might be enough so that she can buy at wholesale prices instead of retail prices. The second thing is that her normal course of credit for doing this is traditionally a loan shark. In El Salvador, loan sharks were changing around 360% annualized interest. We were charging the market interest rate, the rate that a women would have gotten if she had gone to a bank and had been able to get a loan -- around 20%. Just the ability to get a loan at a market interest rate instead of a loan shark rate automatically increases somebody's income. The other result is being able to sell either a greater diversity of products or a greater volume, and that increases her income.

It's remarkable because almost inevitably a loan even that small has the immediate effect of increasing income ... anywhere from 20% to 100%.

OW: What are some of the drawbacks or difficulties that you have encountered in the field?

S.C.: We're obviously dealing with areas and populations where people have been oppressed and in extreme poverty for generations. That means there are many problems that occur due to the poverty and injustice our clients face on a daily basis. For instance, Rosa, my client in El Salvador, was walking in the market in her town of Soyapango when some drunk police officers drove a car right towards her. She threw herself in front of her children and managed to get them out of harm's way, but she suffered internal injuries. Yet as much as we tried to convince her to get health care, she refused to go to a clinic or hospital. She was afraid of the power of the police officers,that they would take vengeance if they thought she had reported the accident. She spent a month barely able to leave her bed, and her income really suffered as a result.

Just among my clients in El Salvador, the women experienced a number of traumas: one woman's brother was killed on a bus and she had to pay for the funeral; another woman's husband abandoned her and her children, then returned and stripped her little house of everything in it; another woman lost all of her products when she was robbed on a bus; another was hit by a bus; a whole group, including Rosa, were almost kicked out of their housing project because the leaders who controlled the records were siphoning funds and falsifying the women's records.

I could go on at length about the experiences of our clients with death in the family, illness, robbery, gang warfare, being kicked off squatter land, being cheated of property, etc. Our program obviously can't overcome all of these obstacles. What we can do, however, is help organize women into support structures so that they can help each other when such problems come up. And we can try to address some of the things that could instantly wipe out a woman's business.

For instance, in the Dominican Republic, a client named Magale experienced a tragedy when her 16-year-old daughter Mayalin was severely burned on a vat of boiling beans. The women in her Trust Bank rallied around her. Some women helped sell her products so Magale wouldn't be wiped out financially. Others helped sit by her daughter while she was recovering.

The triumph in my eyes was that the women decided that a similar tragedy could wipe out anyone in their group, and they had to do something to prevent that. So they created an emergency loan fund, and each week they voluntarily contribute a small amount so that funds are available if another group member has an emergency. This is a terrific example of women being empowered to take care of themselves and of each other.

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