Microfinance Empowers Mothers and Future Generations
By William Harris, WCCN
This is part four of a six-part series, Breakthrough Strategies with Emerging Managers, in partnership with Confluence Philanthropy to lift up the voices of emerging fund managers, sharing their perspectives and experiences, as they shine a light into the challenges and the opportunities in this unique ecosystem.
Imagine for a moment, trying to make a positive economic change in your life, without access to loans, a mortgage, credit cards or bank account. According to the Development Bank of Latin America, only 49% of women in Latin America have a bank account, and a mere 10% have access to credit. Nevertheless, the economic gender gap is gradually narrowing, with one of the important tools being access for women to microfinance.
The microfinance movement has historically focused on women with up to 70% of borrowers being female, and empirical research has shown that women are indeed better credit risks when it comes to micro-borrowing. Not only do women tend to be better credit risks, women also use their income to better support their families, investing in education, healthcare and housing. Stronger families lead to stronger and more resilient communities in the face of the many challenges in the world today.
For Working Capital for Community Needs (WCCN), which supports microfinance organizations and their borrowers in Central and South America, over two-thirds of our partner agencies' clients have been women. On a due diligence trip to Mexico in June 2022, we had the privilege of meeting Rocio Gaona Veru, a mother of two and an entrepreneur. Rocio and her husband own a hardware store called "El Mundo de Madera." Eight years ago, she took out a loan through WCCN's partner, Itaca Capital, which allowed her to expand their business and eventually move to their current location. Itaca Capital also provides her with insurance and access to medical services.
Rocio has a warm and welcoming family, and they were all present in the shop when our team visited. The Veru family was eager to chat with us, and Rocio's daughter, Cherlin, caught our attention. Cherlin recently graduated from high school in Mexico City and has had an ambitious dream since she was a child: to go to gastronomy school and become a chef. Thanks to her mother's success with microcredit, Cherlin is now one step closer to her dream. Rocio encouraged her daughter to take out her own loan to start a taco stand, which is giving Cherlin valuable business management experience and helping her save up for gastronomy school.
The Veru family is confident that Cherlin will achieve her dreams. Her father proudly declared, "Remember her name. She's going to be the most famous chef in Mexico!" We met this remarkable family just two weeks after Cherlin opened her stand, which is located right outside the family hardware store. This young entrepreneur exudes confidence, undoubtedly inspired by her mother's success. Rocio has shown her daughter that with hard work and dedication, she can achieve great things.
Certainly both Rocio and Cherlin’s journeys will not be without challenges. Climate change, political and social movements, violence related to drug trafficking and other kinds of corruption, along with natural disasters have put ever increasing pressure on the Latin American region leading to mass migration from Mexico and Central America to the United States over the last decade. In most cases, individuals who migrate would rather stay in their home countries, but are forced to leave by necessity. Microfinance is just one tool, but an important one, to helping women keep their families intact in their home countries.
At the core of most microfinance initiatives is the belief that women have the right to determine their financial futures, obtain an education, own land, have access to adequate healthcare and education, and never face the threat of violence. WCCN is also exploring how to have a deeper impact on the lives of its borrowers in the coming years as we adapt to a new climate and more resilient economic structures.
 Development Bank of Latin America (CAF) (2018). Financial inclusion of women in Latin America. Current Situation and Policy Recommendations.
 Zainuddin. “Are Women Better Borrowers in Microfinance: A Global Analysis.” The Empirical Economics Letters, 19(7), pp. 651-660, 2020
 UNFPA (2006). From Microfinance to Macro Change: Integrating Health Education and Microfinance to Empower Women and Reduce Poverty.
 Congressional Research Service. “Central American Migration: Root Causes and U.S. Policy” December 12, 2022
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