The Freedom market economy

About this week's column: As with practically everything else, microlending has some sad stories. In a recent feature article, Business Week showed how banks, including those owned by the retail giant Wal-Mart, are trapping poor Mexicans in "a maze of debt" as these companies cash in on micro-credit. Given the depressing financial news over the past week, however, I thought it would be more helpful to focus on survivors' stories. I also remembered how Dr. Muhammad Yunus, in "Banker to the Poor", wrote that they set out to make sure half of Grameen Bank's borrowers would be women. Given my 3,000-character limit, this column doesn't capture the details of the lives of the three women I met in Carbon market last Saturday. But I hope it does convey how easy it really is to give someone else a fighting chance for an easier life--and how easily most of us can overlook this, if all we ever do is wallow in what we think of as our misfortunes.

ROSITA, Lolita and Maria Teresa are all traders in Freedom Park, part of Carbon market, where the city’s vehicular, commercial and pedestrian traffic meet.

Rosita’s family sells ladies’ bags, baskets, hammocks and little trinkets often used as party giveaways. Lolita’s smaller display of woven bags and baskets shares space with her husband Marcelo’s watch repair stand. Maria Teresa’s family used to sell textiles and clothes, but in recent years she has decided to shift to wooden furniture instead.

Across the three women’s stalls, at least three pawnshops wait, quick sources of cash for those times when their fellow traders need money for tuition or suppliers’ payments. The three, however, belong to at least one cooperative each—and that, they say, is what has made all the difference in their lives.

Rosita says the coop allows her to borrow as much as double her share capital. If she has P2,000 (about US$49) in the coop, for example, she can borrow up to P4,000 ($98), with three months to pay, at one percent interest. Her daily payments would be less than P50 ($1.25). Sometimes, she doesn’t have enough, such as when her stall’s weekly rent of P241 falls due. But the daily payments are small enough that she can usually make up the difference with the next day’s sales.

Lolita has depended on Freedom Park for a living far longer than Rosita has. “We were here long before Martial Law,” her husband Marcelo tells me, which means they’ve seen the public market’s crowds wax and wane for more than 36 years. Like Rosita, Lolita has also tried borrowing money from a coop and from a bank. Both women say the coop’s arrangements were more convenient. The money they needed to borrow was, they felt, too small for the paperwork a bank required. Besides, the coop gave them regular dividends.

Of the three, it is Maria Teresa who knows the most about the coop’s activities. She serves in its audit committee. She knows that in late October, as All Souls’ Day approaches, it’s the flower vendors among their 200 or so coop members who will borrow extra capital. In December, it’s the dry goods merchants’ turn. Every day, she says, the coop earns a little extra money by charging fees (P3 to P5) for the use of four clean toilets—a service the market didn’t have until the coop’s members thought of it.

When Maria Teresa’s sources fall into hard times, she sends them money, usually borrowed from the coop, so they can keep building the wooden cabinets, beds, cribs and tables that fill Maria Teresa’s stall. This way, she also sustains several other households apart from her own brood of six.

The coop gives Rosita, Lolita and Maria Teresa’s families the social insurance they cannot get elsewhere: it has helped them send children to school, weather an illness, or give a loved one a decent burial. It has helped them stay in business, in an economy where the upper limits of microenterprise—capitalization of P3 million ($73,529)—are, for now, beyond their reach.

I spent part of Saturday afternoon in Freedom Park looking for examples of how micro-lending had bettered the lives of those who would otherwise fall through the cracks of the formal banking system. And thanks to three women, I walked away inspired and optimistic.