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By Lionel Vigil
Guatemala suffers from poverty, violence and corruption. While no one wishes these things to drive them from family or community, sometimes it can be the only option when hope for change disappears.
This is especially true in Guatemala’s coffee growing regions, where many farmers and their families depend on this single crop for their incomes. Fluctuating prices and extreme weather intensified by climate change are making coffee farming more precarious than ever. Diversifying incomes is a first step to higher incomes and the stability that makings planning for the future possible. Savings and credit groups are helping many coffee farming families create new and more secure income sources that provide hope and reason to remain in their communities.
In Sololá, not far from Lake Atitlan, groups of about 20 women are forming savings and credit groups with the help of international development organization World Neighbors. Members contribute a small amount each month. They elect an administrator from among them to hold the funds and handle the bookkeeping. Every member of the savings and credit group receives training in basic accounting, how to calculate interest and other core financial skills.
When a group amasses enough capital, it makes loans at very low or no interest. If a member has trouble paying back a loan, the group works with them on terms that fit their circumstances. This cuts out moneylenders and others who can loan at high rates and impose harsh terms if a lender has trouble with repayment.
Loans are used to invest in improvements like tunnel greenhouses to grow vegetables, fishponds to produce tilapia for family consumption and sale and other agricultural innovations. They are also used to start small businesses, including the production of tote bags and clothing, small retail shops and more. Finally, communities with established groups also take out loans to build community public goods, like meeting centers and even elementary schools. All these investments diversify incomes and meet needs identified by communities.
Interest on loans is combined with continued monthly contributions to steadily build the amount of capital available for investment. The amount available to lend members can grow quickly and to substantial levels.
This spring, 12 savings and credit groups were formed in Sololá. The groups have saved nearly $10,000. The groups have loaned members over $4,000, about 44% of the total saved.
Foreign investment would certainly help Guatemala grow faster. But savings and credit groups provide capital that is owned and controlled by communities and invested to meet pressing community needs. Combined with health, education, clean water and other initiatives, these groups enable communities to lift themselves from poverty and catalyze sustainable development. In that, lies hope for a better future. And a reason to stay in the community one knows, living and working with the people one most values.
This article originally appeared on NewsAmerica on September 9, 2022.