Teacalco, Mexico — A $140 loan enabled Irma Rojas Ayala to start a business out of her home making and selling doughnuts and tamales in this rural village about an hour and a half northeast of the capital.
Rojas' earnings have bought her a new washing machine and clothing for her three children. Now, she is thinking beyond her kitchen. The fledgling entrepreneur is studying for a high school diploma and dreams of opening a bakery or full-service restaurant.
"I feel happy. Independent," said the 30-year-old, who said she was rebuilding her confidence after her estranged husband beat her so savagely when she was pregnant that she lost their fourth child. "My family can see the change in me."
Rojas obtained her seed capital from Pro Mujer, a small, new microcredit organization in Mexico.
She is one of an estimated 100 million people, mostly women, around the world who have access to microcredit programs that typically provide very small loans, training and peer support to the poor to help them start or expand self-employment projects.
Pro Mujer, the nonprofit group whose name in English means pro-woman, provides entrepreneurship training that teaches borrowers to recognize value in themselves as well as their businesses.
The program also helps bring basic health services such as cervical exams to women who routinely put other family members first.
Pro Mujer in April received a $3.1-million grant from the Bill & Melinda Gates Foundation, which recognized that boosting the skills and earning potential of women, the primary caregivers, is key to breaking the cycle of poverty in developing nations.
"Poor women in Latin America are very much second-class citizens," Lynne Patterson, co-founder of the organization, said in a telephone interview from Pro Mujer's headquarters in New York. "We are committed to helping [them] develop their human potential as much as their economic potential."
A former elementary school teacher in Long Island, Patterson started what would become Pro Mujer in 1990 after moving to Bolivia with her husband, who had been transferred there on business. She found work as a consultant, providing child development training to women who were receiving food aid for their youngsters through a government program.
Patterson said she soon discovered that her clients didn't want handouts but a way to earn their own money. Most desired self-employment but lacked capital and basic skills such as bookkeeping.
Patterson teamed up with Carmen Velasco, a fellow educator and native Bolivian, to scrape up grant money for loans and entrepreneurial training. And so, Pro Mujer was born.
Today, the organization serves nearly 140,000 clients in Argentina, Bolivia, Mexico, Nicaragua and Peru. It provides them with loans averaging about $150 and bank accounts through other financial institutions so the women can learn the discipline of saving. Mexico's program began in 2002 and has grown to about 16,000 borrowers and savers.
Sylvia Mathews, a director at the Gates Foundation, said the organization "sees Pro Mujer as a leader in providing financial services to very poor communities."
"We want to support their work in creating innovative new ways to expand the outreach of those services to underserved populations so that the very poor can improve their own lives," she said.
Pro Mujer is tiny compared with Mexico's largest microcredit organization, Compartamos, which last year served more than 400,000 clients. But there is plenty of room in the country of more than 100 million people, the vast majority of whom are excluded from a banking system that caters mainly to the well-to-do.
Lack of credit is one of the greatest drags on Mexico's development, stunting business growth and formation. Pawnshops are the only financial institution willing to give many low-income Mexicans a loan.
Enter microcredit. Pioneered by the Grameen Bank in Bangladesh in the mid-1970s, microcredit provides loans to the poor to finance income-generating activities rather than consumption. And it rejects the notion that people aren't creditworthy simply because they don't have many assets.
Instead of collateral, microcredit organizations typically lend to people based on little more than trust. It does this by putting them into small groups, or "lending circles," that agree to share the financial burden if one of the members doesn't pay.
Installments are tiny but borrowers must pay on their loans frequently, often once a week, so that members usually know quickly who is falling behind. New loans become available only when the group's current obligation is paid in full.
Peer pressure is particularly strong in rural towns such as Teacalco, where gossip spreads quickly when someone isn't carrying his or her load. Pro Mujer's default rate in Mexico is about 1.1%, well below the microfinance industry average of 4%.