Building assets to reduce vulnerability: microfinance provision by a rural working people's union in Mexico

Abstract

Proyecto Tequisquiapan (PT) provides protective microfinance services in a small region of rural Mexico, including, importantly, open access to deposit facilities. The authors report on new research which examined PT's record in enabling people with different degrees of vulnerability to build assets and protect themselves from both sudden shocks and more predictable demands for lump sums of cash. Proyecto Tequisquiapan was found to be relatively more useful for the most vulnerable households. Its successes rely on its small scale and on the commitment of its staff, whose salaries are subsidised, to innovation and experimentation in order to remain relevant to members' changing and differentiated financial lifeworlds. This stands in contrast to the current trend towards large‐scale commercialised microfinance. The World Bank, the authors argue, should take note.

Notes

See www.worldbank.org. Mexico—Savings and Credit Sector: Strengthening and Rural Microfinance Capacity Building Project. See Project Information Document PID 9068.

In fact there have been previous studies of PT (e.g. Johnson and Rogaly 1997) but these also appear to have escaped the attention of the author of the World Bank document.

Despite claims about the ‘democratisation of capital’, Robinson (2001) rules ‘very poor people’ out of the ‘clientele’ of the new institutions she envisages, because she sees them as having more urgent needs (food and employment) before they can make use of financial services.

Proyecto Tequisquiapan works across the five municipalities of Cadereyta, Colón, Ezequiel Montes, San Juan del Río, and Tequisquiapan.

They include a combination of foreign and domestic, public and private sources, such as the Ford Foundation, the Mexican government's SAGARPA and SEDESOL programmes, and Evangelische Zentralle für Entwicklungshilfe (EZE).

There is variation in both communities in the extent to which contact is kept with home and remittances are sent.

Issues of organisational design and management are discussed in detail in Castillo (2002).

Proyecto Tequisquiapan's combination of continuous self‐critical assessment with ongoing attempts to understand members' lifeworlds is close to the kind of impact monitoring system advocated by Simanovitz based on ongoing research under the Ford Foundation's Imp‐act programme (Simanovitz 2003:8).