Putting a face on the impact of the global economic crisis
Members of a solidarity group in Chague, León, Nicaragua, meet with a WCCN delegation and explain what is happening with their microloans. Photo by Michael Kienitz.
When the financial crisis hit, Latin America was experiencing its fastest rate of economic growth in 30 years. During the boom of the 1990s and most of this decade, the percentage of Latin Americans living on less than $2 a day declined from 26.2% to 22.2%. However, the severity of the recent financial crisis threatens to erase twenty years of progress in the fight against global poverty.
Sitting in a dimly lit wooden shack in the rural community of Chague, in León, Nicaragua, are members of this summer’s WCCN study tour and Concepción Mendez, Maria Maraolioga, Ramona Monolez, and Ellania Mendez. The four women are a solidarity group that has been receiving loans to purchase livestock and plant crops for over a decade. As the women passionately begin to tell their story, it becomes painfully clear that the world recession is weighing heavily on Nicaragua’s rural poor.
These women represent Nicaragua’s most vulnerable people living in rural areas: small scale farmers and landless farm workers. Before the recession, these women operated a successful slaughterhouse. They used small loans to purchase young livestock, fattening them up to sell them to larger slaughterhouses and in Leon’s bustling markets. Six months ago, Nicaraguan slaughterhouses were paying 52 cordobas a kilo but now prices have fallen to 36 cordobas. The continuing drop in export prices has drastically reduced the solidarity group’s income and has made it increasingly difficult to pay back their existing loans.
Rising demand for fuel drove the price of maize up, as consumers began using grains for biofuel. This meant that less corn was available for the production of cattle feed, which resulted in a rise in beef prices. But now, with falling oil prices and the closing of some United State’s ethanol plants, the price of both maize and beef have fallen.
One of the members of the solidarity group and her granddaughter. Photo by Michael Kienitz.
Ellania, the youngest woman in the group, had just received a small loan to begin planting corn on a small parcel of land. As she looked out into her fields, she sighed and said, “It has been a dry start to the growing season and my corn is looking very sad.” These women, like many rural Nicaraguans, live in the dry central region where natural resources are limited and the land has been overexploited. Most families live on marginal land where water is scarce. Still, eighty percent of the rural poor depend on agriculture for their livelihood, causing a severe strain on the fragile environment. Rural people’s dependence on only a few crops, sorghum and maize in the lowlands, has also made them extremely vulnerable to market variations and abrupt changes in climatic conditions.
This critical economic situation gives even greater importance to the availability of credit provided by microfinance institutions. Microfinance institutions are essential to allow households to have their own small businesses in rural communities and to help those who live from livestock and agriculture production cope with the crisis and get the working capital they need to survive.
Indirectly, the solidarity group acts as a moral support group for the women living in Chague. Most of the women in the group have lost their husbands and rely solely on each other to take on the physical workload of running a farm and the financial responsibilities of paying their loans on time. “If one of us can’t pay, then the other women in the group will pay a little more to help her out,” says Concepción. In such dire times, it is hard for the women to stay optimistic about the future of their business, but they are grateful for the support that WCCN and its partner FDL have given them. As the meeting begins to wind down, Concepción leaves us with words of encouragement, “We are strong women, and we will continue to do what we can, one day at a time,” she says.
By Nicholas Vandervelde
WCCN Intern