My time in Paraguay is winding down, and I’ve been spending a lot of time in Fundación Paraguaya’s microfinance headquarters, crunching the numbers I gathered in my office visits, working out what makes the women’s committees tick—and what doesn’t.
First, what are the women’s committees? They represent a way of borrowing working capital that’s different from the way you or I might do it. Instead of borrowing individually and guaranteeing the loan with collateral or your credit rating, clients in Fundación Paraguaya’s women’s committees borrow together and guarantee the loan primarily with their solidarity as a group.
So then, what is solidarity? It is actually a deceptively simple concept: the degree of integration between separate social groups.
But in a complex society, it is obviously more complicated than that. The traditional – familial – source of solidarity still exists (even with Fundación Paraguaya setting limits on family relationships within a committee). Plenty of grown sisters, sisters-in-law, cousins, mothers and daughters join a committee and borrow together. But in addition to just familial relationships, there are many other reasons women join a particular committee too, like friendship, home or workplace proximity, shared history (such as being displaced by flooding from the Yacyretá hydroelectric dam in Itapuá), shared work activities, and even shared experiences borrowing from Fundación Paraguaya in the past.
So, if solidarity refers to the relationships within the group, it still has to manifest itself somehow. In the case of the women’s committees, if for some reason a member can’t pay her loan installments, the committee (using its petty cash fund or, in worse situations, its group savings) steps up to help her with her payment. The group is responsible as a whole for each individual loan. The vision is beautiful: a woman gets sick and her co-borrowers dip into the savings they’ve built together (though group activities like street parties, artisan fairs, food sales, and soap-making) to pay the loan installment that she can’t. They may help her out in other ways as well, such as buying her a basket of groceries and pitching in around the house. At its best, this is what solidarity look like within a women’s committee at Fundación Paraguaya.
But, as you may suspect, results, and circumstances, vary. Some groups realize this ideal situation of solidarity on their own and upon encountering their first problem, while others struggle to figure it out, and even still some groups never find an answer. If payment problems go on too long, the group’s savings (and spirit) suffer until they can’t cover the gaps anymore.
And the reality of solidarity is that sometimes a faulty payment isn’t for a reason as innocent as poor health. Unfortunately, a significant number of the individual defaults that Fundación Paraguaya records are due to falta de voluntad – a ‘lack of will.’ While this general term is used when a woman decides that the program just isn’t for her, it can also be used to cover broader and deeper reasons for non-payment, like a husband’s opposition to his wife’s borrowing or to her business pursuits.
While not all of these negative situations can be averted, there are steps that Fundación Paraguaya is taking to try to make the ‘ideal’ kind of solidarity prosper. Steps like making sure that each new committee knows the vision of functional solidarity and what it can do to make their group successful and re-setting the minimum and ideal numbers of women in a committee (larger committees have more resources to successfully handle problems). In addition, they are evaluating which group activities and other practices are most successful at stabilizing a troubled committee and using the power of Fundación Paraguaya’s clients’ Club benefits and discounts program, loan officers’ knowledge of their clients, and the network of businesspeople that the clients represent to offer help and training beyond what even the most successful groups offer—focused more on preserving a struggling client’s business than on her immediate, personal circumstances.