Pro-poor microfinance

In Guatemala, finance has historically been denied to the poor who are unable to provide the collateral required by the commercial banks. In the agricultural sector, whilst powerful, large-scale producers have been able to access credit, smallholders cut off from finance, continue using very much the same techniques they have been using for centuries. Isolated from markets, small producers slip further into poverty. The environment has also suffered from deforestation and a huge increase in the use of chemical fertilisers and pesticides as farmers go to all lengths to increase to try to make ends meet.

Providing these small farmers with credit access can slowly reverse this downward spiral. Finance can help them enhance production in a sustainable way and obtain better prices in the markets.

ADIPSA: a facilitator of microfinance

ADIPSA works in affiliation with UAM ('Unión de Agricultores Minifundistas' or 'Small Farmers Association'), a national committee which coordinates with community organisations and rural associations throughout Guatemala. ADIPSA operates as a link to a national microfinance institution to provide our members with credit.

As we consolidate our position and knowledge, we are gradually moving towards administering our recourses autonomously.

Our Microcredit Program

Credits at ADIPSA are distributed over short-term (6 months), medium-term (1 year) and long-term (3 years or more) projects in the following ares:

• Agricultural and livestock production
• Microbusinesses
• Community stores
• Coffee commercialisation

The majority of our microcredit projects aim to enhance agricultural production in the villages of San Agustin. We allocate credits to construct irrigation systems, provide seeds and compost for the cultivation of basic crops (principally maize and beans) and to produce and commercialise coffee. Credits have also been allocated to livestock projects (pig rearing), beekeeping projects (honey production) and small businesses (community bakery).

Microcredit projects at ADIPSA have the following characteristics:

• They are geared specifically towards the current needs of the communities
• They adhere to strict social, economic and environmental standards
• They are complemented by educational activities

Sustainable development

Our microcredit projects not only benefit direct participants, but also the communities as a whole. Participating families consume the produce obtained as a result of the credit schemes and then sell surpluses locally. In this way, we aim to stimulate the economies of the communities. Nowadays, villagers have a healthier diet and are less dependent on external food sources.

Participants of our microcredit schemes play an active role in the programme: they take out a loan and commit themselves to work on the project. When the project bears fruit, it will generate enough income to allow the participants to repay the initial loan and then to continue to benefit from the fruits of project long after the loan has been repaid. In this way, ADIPSA's credit projects fit into the mould of sustainable development. And so, these microcredit schemes are sustainable development projects.