Intro to Political Economy Essay Series

Belize Rural Women's Association Revolving Loan Fund & Women's Cooperatives

by Satya J. Gabriel
 

September, 1990

The Belize Rural Women's Association (BRWA) was formed in early 1985 to provide rural women with both an independent advocacy organization in Belmopan, the capital, and to provide health education for rural women.  The assumption was that poor health was a primary impediment to solving the other social problems faced by rural women.  BRWA quickly expanded its focus, however, to include leadership training and support for the creation of cooperative business ventures among the 24 local member groups of BRWA.  BRWA's leadership (particularly Cynthia Ellis and Lucia Engleton) concluded that it must focus on the larger goal of working for the economic and political self-sufficiency of its members; and that this goal could not be achieved unless the dependent economic status of women (particularly in those communities where women toiled under conditions of feudal exploitation) was broken. 

It would be misleading, however, to describe BRWA as a feminist organization.  All of its goals, explicit or implicit, have to do with improving conditions for women and giving women more of a chance at economic and political growth.  But these goals are understood as distinct from those generally attributed to "First World" feminist organizations grounded in the essentialist assumption that the fundamental struggle for liberation from oppression is defined in gender terms.  BRWA, on the other hand, is a grassroots organization of rural Belizean women from many diverse cultural/ethnic groups, where this diversity includes a wide range of political, cultural, and economic relationships both linking and dividing gendered subgroups.  The organization is built upon a sensitivity to cultural differences among these various ethnic groups (and, in particular, the cultures of the women of these groups), recognizing that patriarchy is neither universal (some of the groups are, in fact, matriarchal) nor, when present, homogeneous.  Thus, BRWA does not promote an ideology of "liberating" women from men, but of "mutual liberation" of men and women from the consequences, material and non-material, of colonial oppression, racism, and exploitation.  The mutually reinforcing goals of promoting greater solidarity among women (sisterhood) and of developing economic self-sufficiency among women is thus viewed in the larger context of "Third World" liberation.  Ultimately, it is hoped that the example of BRWA will influence the economic and social development strategies of other organizations in Belize, including those dominated by men, and of the national government.

BRWA's leadership believed that a key impediment to achieving a goal of self-sufficiency for women was the inability of women to individually or collectively obtain access to means of production which could be used to create products and services (the disposition of which was under their control).  In a larger context, this is a problem for Belizean society as a whole.  In the world economy, Belize has a marginalized status not that different from that of women within Belize.  In any event, BRWA advanced a solution to this problem , one which would bypass the traditional institutions that controlled financing.  Their solution was the establishment of a revolving loan fund.

Acquisition of means of production and marketable (i.e. commodity) inputs is a potential problem for BRWA member groups because they rarely have access to cash or loanable funds.  Indeed, the absence of loanable funds is a serious problem for Belizean businesses in general, as the banking system in the nation is dominated by four big banks, three of which are foreign owned transnational banks, and all four of whom typically do not provide loans to small and medium sized local businesses, much less business projects run by women.

In addition to these four banks, the Belizean government provides limited loanable funds through the Development Finance Corporation; there are 12 credit unions; and USAID provides funds through its National Development Foundation of Belize.  All of these institutions maintain loan standards that make it difficult, if not impossible, for low-income groups, in general, and women, in particular, to obtain loans.  For example, except for the credit unions, all of these financial institutions require substantial collateral and provide loans at relatively expensive commercial rates.  Credit unions do not represent an alternative for rural women because they are concentrated in urban areas.  In addition, all financial institutions, following practices which can be dated to the not so distant colonial past, continue to discriminate against women applicants, implicitly requiring a male signatory for loan approval.

Public institutions are also not an option.  The Development Finance Corporation and the National Development Foundation of Belize are located in the towns and focus upon making large loans to established business concerns.  Thus, the present financial environment effectively denies loanable funds to poor people, in general, and rural women, in particular.

If BRWA was to promote economic independence for rural women, it had to develop a mechanism for self-financing.  The BRWA Revolving Loan Fund, which the author helped to set up while working as a consultant for the United Nations Development Programme (UNDP), was created to provide financial resources to member groups for the purpose of purchasing means of production and related services necessary to the development of income generating cooperatives which would be under the complete control of the rural women who worked in such cooperatives.  The Revolving Loan Fund (RLF) would finance training, management, and technical assistance and research.  Participation in the RLF was expected to foster cooperation among rural women from Belize's diverse cultural groups.  Although member groups were encouraged to obtain what they needed by trading and other non-monetary arrangements, it was understood that money would be required if these projects were to obtain all that was needed for success.  In fact, thousands of dollars of revenues would be necessary to finance the various projects planned by the member groups of BRWA.  Dues provided by member groups were hardly sufficient to meet these financial demands.  The United Nations Development Fund for Women (UNIFEM) provided the seed money that BRWA needed to launch the RLF.

The RLF was thus originated and has been utilized in financing an array of cooperative business ventures planned and implemented by the member groups of BRWA.  These projects have included such activities as cassava production and processing, livestock raising, fruit preservation and craft production.  Investment in craft production is the most advanced and provides the basis for much of the analysis here of the early implementation of the RLF.

The bulk of BRWA's financial resources have been directed into either RLF or to administrative costs of maintaining the fund.  Other BRWA projects, such as its health project, have been given lower priority in order to free up BRWA's financial and human resources to get the RLF up and running.  In setting up the RLF, BRWA was concerned with having the fund used as a direct source of income for member groups rather than as a mechanism for acquiring means of production.  Thus, it was expressly stipulated that borrowed funds could not be used to pay member salaries.

In the summer of 1989, BRWA had loaned BZE$12,383 to member groups; BZE$2,083 for agricultural projects; BZE$2,700 for livestock; BZE$500 for a food preservation project; BZE$3,000 for craft production projects; and BZE$4,100 for housing and other miscellaneous projects.  BRWA also established a wholesale/retail outlet in Belmopan and at Altun Ha, a Maya ruin in the Belize District, to sell crafts produced by member groups.

BRWA used borrowed funds to purchase BZE$17,530 in crafts from member groups for re-sale through its wholesale/retail outlets.  As a virtual monopsonist in its relationship to member groups, the main office has a great deal of control over the price it pays for craft products.  However, the special relationship between the main office and member groups has generally resulted in a wholesale price for craft products higher than prices which this author has observed for similar craft products sold by direct producers in both Belize and Guatemala.  The retail prices charged for craft products at the outlets has been set so as to recover the producer price plus administrative, shipping and other costs related to operating the outlets.  Differential demand for the various craft products appears to play a relatively minor role in this pricing practice, contributing to shortages of popular craft items and growing inventories of less popular items.  BRWA is currently seeking a partner to market these craft products in the more developed nations, particularly the United States and Great Britain.  If it is successful in creating such an arrangement, then it will have to develop a more demand-oriented pricing policy to encourage more production of certain products and less output of others.

Nevertheless, the merchanting operation of BRWA has played an important role in the success of the crafts projects.  The existence of a  long-term, stable contractual relationship between the member groups as producers and the main office as wholesale merchant has contributed to a sense of confidence among women involved in the crafts cooperatives, fostering a willingness to take risks that might not otherwise be attempted.  Thus, the members of the craft cooperatives have contributed more total resources, both in-labor and in-kind, than any of the other cooperatives.

Criteria for Making Loans

As a non-traditional source of financing, the RLF does not require tangible collateral, such as material or financial assets.  If it did so, there would be few loans made, since the targeted population, rural women, are largely propertyless.  Instead, the RLF makes loans based upon intangible collateral, the "goodwill" of the women who are members of the group requesting the funds.  Thus, the building of mutual trust within and between member groups is crucial to the success of the RLF.  Members must view the RLF as theirs and must take personal responsibility for its success.

In the context of "goodwill" collateral, the RLF could not be reproduced over time unless member groups accepted responsibility for repayment.  The long-term benefit of the fund as a means of providing member groups with both communal investment funds and reserve funds to cover unplanned events, in addition to the sense of sisterhood and other forms of group bonding/solidarity, provide at least partial basis for member groups to carry out this responsibility.  Thus, the RLF provides a social means for uniting members within BRWA, as well as a means of providing long-term, non-exploitative employment and income outside of the control of males.  At the same time, the RLF sets an example of how indigenously controlled financial institutions might be formed for the purpose of liberating "Third World" people in general from exploitative relationships with transnational corporations.

This is why RLF agreements had to include stipulations regarding the uses to which loans could be put, protecting members' democratic control over borrowed funds, protecting the cooperative nature of work within BRWA projects (and thus prohibiting the development of exploitative relationships within member groups or between member groups and non-member groups or individuals), and protecting members' control over all income generated as a result of projects funded with the borrowed funds.  Although such a restrictive loan arrangement may seem unusual, it is not so different from the kinds of stipulations that often accompany more traditional loans.  Indeed, banks and other traditional moneylenders often include clauses in loan contracts with comprehensive restrictions on borrower's usage of funds, the internal organization of the work process, and acceptable distributions of profits earned from projects financed with borrowed funds.

BRWA also requires its member groups to develop project plans.  These plans must demonstrate the following:  i) that the products and/or services the group will provide match local needs; ii) that the members' have a working knowledge of the type, cost and quantity of the means of production and skills required to provide such products and/or services; iii) that the group will generate sufficient revenues to repay the loan and other operating costs to keep the projecting ongoing (equivalent to meeting the positive net present value criteria in standard finance methodology, but recognizing that alternative uses of funds, within the stated constraints, may be severely limited).  BRWA provides its members with technical assistance in constructing these project plans.

Costs and Problems of Monitoring the Loan Fund

If BRWA is going to fulfill its goal of creating a long-lived RLF, i.e. a RLF that continues to provide loanable funds to its current and future member groups for cooperative income-generating projects, then it must be careful to consider and cover all of the costs related to administering the fund and the relative levels of risk in different projects.  In other words, BRWA must be careful both in selecting an appropriate discount rate and appropriate costs in evaluating projects.  Although BRWA has taken measures to cover the direct administrative costs of administering the fund, it may not have sufficiently taken into consideration either the indirect costs or relative risks.

Each member group is assigned to certain main office staff members.  But all staff members are not and cannot act as liasons with member groups.  Thus, out of the 8 staff members (5 full-time and 3 part-time) at BRWA present in the summer of 1989, only 3 of the staff members were assigned to monitoring the 16 active member groups.  This may appear to be manageable until one takes into account that contact with member groups, who are typically in remote villages, requires site visits.  Telephone communication is typically unavailable and mail communication, even when available, is too slow and unreliable to transmit timely and important information.  Consequently, among the indirect costs of administering the loan fund are the physical and emotional costs borne by BRWA staff members when they travel long distances, typically by bus, over difficult and sometimes impassable roads to meet with member groups.  Not all costs involved in monitoring the progress of projects, conducting workshops or other training exercises, problem solving (which sometimes includes intervening in personal disputes between members), or any of the other tasks taht the staff routinely may be called upon to perform can be readily measured in dollars.

These indirect costs may already be taking a toll on the main office staff.  Since my departure in August of 1989, three main office staff members have resigned to pursue other projects.  It is quite possible that the heavy workload borne by the main office contributed to this turnover.  If this is not a short-term aberration, but represents a present or potential staff turnover problem, then BRWA may face rather high future training costs, at a minimum.  In addition, frequent turnover creates a perception of main office instability in the minds of BRWA's membership and may potentially harm the bonding process between the main office staff and members in the villages, a bonding process that is so critical to building the aforementioned "goodwill" upon which the loan fund is ultimately based.

One of BRWA's shortcomings is its failure to keep better documentation that might give a clearer picture of genuine staff costs, both dollar costs and hidden costs.  Such documentation could also prove critical for training new staff.  Nevertheless, improving documentation in and of itself represents an increase in costs for BRWA, particularly in the short term as the documentation process is improved but its benefits are not yet reaped.

It is also remarkable that loans are made at zero interest rates.  Membership dues contribute toward the general expenses of BRWA, but even with a 100% repayment of loans the RLF cannot cover all its costs without continued outside funding.  It might be better to reflect the relative risks in the projects in charging positive interest rates.  This would influence the final loan requests, perhaps further encouraging member groups to be creative in their attempts to arrange access to means of production, and might help keep loan requests reasonable.  Also, to the degree that members associate interest rates with loans and the lack of interest rates with grants, then the zero interest rate policy might be self-defeating.

Leadership and Coordination

By coordinating the plans of its member groups, BRWA has the potential to integrate the economic activities of the various projects it funds through the RLF.  There is already a high degree of specialization among these member groups.  Since the groups are dispersed, both geographically and culturally, then it was highly probable that, even without the coordinating role of BRWA's main office, the various member groups would have developed specialized and widely divergent projects.  For example, there are Mayan embroidery and other crafts from San Antonio and Santa Cruz, fruit preserves from the Sarawee Women of the Soil Group, animal husbandry in Laguna Village, Garifuna skirts, blouses, and doll-making from the Lu Fuluri Group.  This diversity is proving to be an advantage because it reduces inter-group competition and provides the potential for development of a network of internal trade among member groups.  Such internal trade would further build solidarity among the groups and create a stable market for some portion of member group products.

In terms of promoting non-feudal/non-capitalist employment and greater economic independence from the male population by financing cooperative access to means of production for its members, BRWA has had considerable short-term success.  However, the true test will come over time as BRWA faces a complex array of obstacles, including the problem of meting its aforementioned costs; the problem of maintaining inter-group and intra-group solidarity; problems of marketing cooperatively produced commodities; and potential jealousy of men in some of the villages where its member groups have formed their cooperatives.

It is clear that in some of the member groups, particularly among the Guatemalan refugee women, men have attempted to retain control over the fruits of female labor by both attmpeting to sabotage BRWA projects and by attempting to coerce women who are members of BRWA groups to transfer any net cash flow from the cooperatives to their control.  The member group in Laguna Village was scheduled to begin a pig rearing project in 1987 funded by a BZE$2,000 loan from the RLF.  The apparent receivers of the loan money, however, were the men of Laguna Village.  It appears that pigs and equipment were actually purchased with the money but the amount of female control over these means of production is in question. This presents a difficult internal contradiction in BRWA's drive to encourage greater self-sufficiency among its member groups.  If the member groups are to develop this self-sufficiency then they must be given the autonomy to do so.  However, the more removed the member group is from main office influence the greater the potential for males in the villages to exert their authority over member group projects and project cash flow, either by directly controlling the surplus cash flow or demanding distributive payments from that cash flow.

To combat this and other related problems, BRWA's leadership has encouraged its members to undergo leadership and assertiveness training, as well as education in business planning and skill enhancement.  Inter-cultural contacts within BRWA has also been influential in changing attitudes about female-male relationships.  Women from strongly patriarchal cultures, such as the Guatemalans, have come into contact with women from more gender/sex egalitarian cultures, such as the Garifuna, and this has proved educational for members from both cultures.  It was this author's impression, based primarily upon interviews with BRWA members in the villages, that BRWA's efforts to change attitudes and build solidarity was bearing fruit.

Concluding Remarks

The RLF appears to have provided an effective mechanism, in the Belizean context, for providing cooperatives of rural women with the financial resources needed to gain access to means of production and related services.  This has provided for the growth of non-exploitative relations of production and female solidarity in rural Belize.  It is estimated that RLF-funded projects have provided, directly and indirectly, employment for at least 275 rural women.  Thus, BRWA has demonstrated both that women can effectively lead the way in developing alternative economic institutions in the context of extreme relative poverty and isolation and that such alternative economic institutions can be successful with sufficient planning and coordination.  The former is particularly important for women throughout the less developed world (and for women in the more developed world, as well).  the latter presents an important lesson for all "Third World" people who face dispossession, exploitation, and domination.

Will the revolving loan fund succeed in the long-term?  The early results are mixed in this regard.  Despite the success of the RLF in providing cooperatives with needed financial resources, the default rate on loans appears to be quite high and it appears that the RLF will neither recoup the initial seed money used as principal for loans or the full costs of administering the loan fund.  Thus, BRWA will be forced to continue fundraising and remain dependent upon outside funders and all the typical red tape such outside funding implies.  Ultimately, BRWA must demonstate that it can become fully self-sufficient and that the RLF can become a genuinely revolving fund where loaned principal is returned for future loans and administrative costs are covered fully by the combination of dues plus interest on loans.

The RLF approach depends upon the "goodwill" of members.  Members and member groups must ultimately take responsibility for monitoring themselves and applying "moral" pressures to members who fail to repay loans.  However, even such moral suasion cannot guarantee payment of all loans, particularly since it must be assumed that some of the income-generating projects will fail.  If BRWA member groups do take responsibility for the success of the loan fund, then it is possible that successful member groups might subsidize the fund, thus compensating for member groups who are in default.  Finally, the merchanting role of BRWA can be expanded and this merchanting function can provide another mechanism for subsidizing less successful member groups and of providing a modium of market stability for all member groups.

BRWA's coordinating role can provide the basis for greater inter-group trading and cooperation.  If such inter-group relationships grow then the entire structure of BRWA should become more stable and it should become easier to develop strategies for addressing such problems as loan defaults.

Because cooperatives have directed their production activities to meeting local demand, then they face more stable and predictable markets than do export-oriented businesses.  However, BRWA's desire to expand its marketing to more developed nations may mitigate to some degree against this insulation from the instabilities of international trade.  Nevertheless, given the balance of trade problems of Belize, any effort to meet more of domestic demand with locally produced commodities should be viewed as positive.  And to the extent that BRWA's member groups act as front-line soldiers in the battle to retard the shift in domestic tastes toward imported goods, then BRWA's efforts may have side-effects on the demand for other locally produced commodities, whether such products are created by women or men.

Thus, the overall implications of the RLF are that such an approach can be simultaneously a mechanism for propertyless, oppressed people to gain greater control over their lives by gaining access to means of production and cooperating in the marketing of the fruit of their collective labor; and a mechanism for less developed nations to generate indigenous economic development among the poorer, more oppressed portions of the population.  In the United States, a similar approach is being attempted by members of the American Indian nations through the First Nations Financial Project (which I've also worked with as a consultant).  Such an approach might be recommended to other marginalized social and ethnic groups within the U.S. and elsewhere  For example, why couldn't the National Urban League work in cooperation with local groups in forming a revolving loan fund to revitalize the cities?  And could not such a fund be used to assist "African-American" and "Mexican-American" farmers who are losing their land in the south and southwest at alarming rates?  The BRWA Revolving Loan Fund reminds ut that we must focus our attention upon developing non-traditional economic and social institutions to solve problems that plague oppressed and marginalized peoples.  Such institutions must be established and run by these peoples, although it is clear that a significant portion of the initial funding for such programs will continue to originate with the more philantropic mainstream institutions, such as UNDP.