Microfinance has proven to be a powerful engine of change in the fight against global poverty. The idea is that with a small loan for use as startup capital, individuals who have no collateral and are considered “not credit-worthy” by traditional financial institutions will be able to lift themselves and their families out of poverty. Crucially, a large component of microfinance is business and financial training, ensuring that recipients are able to put their loan to good use and repay it in a timely manner. Another key part of the business model is the Communal Bank: recipients band together in groups, elect officers, and guarantee one another’s loans collectively. In the event that one person cannot make a payment on their loan, the others pool resources to cover the debt, making this a stable and sustainable business model. Once repaid, loan dollars are recycled to others, creating significant impact with relatively small amounts of money (as little as $200 to $400).
Pro Mujer has been involved in microfinance in Latin America since 1990, and has so far improved the lives of nearly 2 million women and over 6 million children and family members. The company provides women with vital services for breaking out of poverty, including financial counseling, business loans, business and empowerment training, and health care. Pro Mujer believes that investing in women provides far-reaching returns. Women tend to reinvest large portions of their income into their families and, in turn, their communities, through increasing investment in education and healthcare.
Practically speaking, a microloan may be used to purchase a sewing machine or a market stall, to buy seeds or expand a family farm beyond subsistence level, or to launch a local handicraft cooperative. In broader terms, a microloan is used to create a viable future: an existence that looks beyond the day-to-day struggle for survival and gives recipients and their families a chance to break the poverty cycle. Vaya Adventures is proud to announce that in 2013, through the generosity of our travelers and through our own contributions, we donated over $8,000 to this organization. That’s a lot of microloans.