|Pictures taken at the August meeting of the Semilla Cooperativa located in Amplacion Pozorron, Mexico. Photos of the surrounding village are also included.
The road leading out of Omealca, Mexico is like just about any highway you might find in the US. Paved and well maintained, the roadway connects the city of 30,000 with the rest of the western state of Veracruz.
By contrast the road leading to the tiny village of Amplacion Pozorron, which is located 45 minutes outside Omealca, is unpaved, narrow and contains deep potholes that slow vehicles down to a crawl in spots. A steady runoff from heavy rainstorms the night before flows across the road in several spots. Only the tall stalks of sugar cane on either side of the muddy trail slow down the flow of water.
Just about every building, like the roads leading in and out of Amplacion Pozorron, is well worn. Most houses are small, with kitchens detached from the main house. Many have no indoor plumbing. The village supports a small clinic, a grocery store, a school and a Catholic Church.
Located in a broad valley, Amplacion Pozorron gets its lifeblood from sugar cane, which literally surrounds the town. While the crop is plentiful, money is not abundant for most. Most farm & sugar cane industry workers subsist on a few dollars a day in wages.
As you might imagine, a traditional banking model simply won’t work in such a remote area, and many people here remain unbanked. Loan sharks traditionally have been one of the few sources of credit here, as are pawn shops that offer scant money for whatever valuables people may be able to bring in.
However, an innovative program developed by the World Council of Credit Unions is changing that for the better in small, remote villages in Mexico. Called Semilla Cooperativa, the program literally takes credit union branches on the road to places like Amplacion Pozorron.
Semilla Cooperativa (or “Cooperative Seed”) is made up of typically small savings and lending circles in remote villages in Mexico. The World Council developed the program in 2007, and the growth of the program has been spurred by the federal government in Mexico.
“The government wants to provide a pathway for people in rural areas to access financial services,” said Josh Fetting, the World Council’s International Partnership Officer. The government provides credit unions with a small stipend for the new members they attract to the program. “It helps the credit unions here cover the costs of administering the program, and it steers people away from predatory lenders.”
For Caja Yanga, which administers the small group in Amplacion Pozorron, the Semilla Cooperativa program has been a boon. The credit union had 8,900 members in 2000 and today more than 71,000 are members of Caja Yanga. “About 30-35% of that growth is from the Semilla Cooperativa program,” says Margarito Saavedra, the CEO of Caja Yanga. “It’s been a key part of our rapid growth strategy.”
Saavedra says that government oversight, which came with opting in to the program, is another plus for the credit union. “We wanted to be regulated by the CNBV (the Mexican equivalent of the FDIC) so we could demonstrate to our members and the public that we operate legally.” This is no small issue for credit unions in the country, which still suffer from a lack of public trust in the wake of a fraud scandal that happened some 10 years ago.
The group in Amplacion Pozorron, which has named itself Alegria (or “Happiness”), is typical of many Semilla Cooperativa groups that Caja Yanga administers. It started out a few years ago with a handful of people and today has grown to 15 members. Once a month on a pre-set day, Rural Financial Officer (RFO) Javier Cortes travels to the village to meet the group and transact business.
The Contrerez family founded the Alegria group, which meets on the front porch of the family’s home every month. Three family members serve as officers of the small group. New members must be approved by the entire Alegria membership. Everyone here has a voice.
Cortes sets up shop on the Contrerez family porch with a mix of old and new tools. He sports a ledger for recording deposit and loan payment entries, a small calculator and a wireless device that relays member transactions instantly back to the Omelaca branch where Cortes keeps an office. In addition, as members step up to do business, their transactions are recorded in a passbook each member brings to the meeting.
“One-by-one, the members come up and make their deposits and loan payments,” said Ashley Ruffin, Local Government FCU SVP of Marketing, who traveled to Mexico last month and watched members of the Amplacion Pozorron group meet. “They all know each other and pass the time waiting by talking among themselves. So they are not only members, but also personal friends.”
That relationship factor is encouraged in the Semilla groups. “Members are very aware if they default on a loan, that money is coming out of a neighbor’s pocket,” said Jeff Hardin, NCCUL’s Director of Communications. “They take their membership responsibilities seriously as a result.”
Three RFOs in Omealca cover a wide territory surrounding the branch, and each of Caja Yanga’s seven branches has RFOs on staff. All told, some 12,000 members are connected to Caja Yanga through the Semilla program, and that number continues to steadily grow.
“It’s helped people who have been marginalized access financial services,” says Omealca Branch Manager Juan Gonzalez. “They get personal attention and an open line of communication, and they get loans to plant their crops or make house repairs.
“It makes me very happy because I have seen people with very scarce resources improve their lives economically,” said Gonzalez. In addition to the economic benefits, the Semilla concept has also reinforced the idea of community in a very personal way. “People come up and put their pesos on the table in front of the whole group,” says Ruffin. “There are no secrets.”
After completing member transactions, the members depart and the Contrerez family then converts the “teller line” into a lunch table. Soon homemade tamales, beans, chips and baked chicken seasoned with spices and avocado leaves replace pesos, ledgers and calculators. “The Contrerez family made a wonderful meal for our entire group,” said Ruffin. “That was quite an experience!” While today’s meal is a special treat for Ruffin and the other guests, the Alegria group serves Cortes lunch at the close of business each month.
At the close of lunch, handshakes and hugs are exchanged, and the visitors leave the village behind. A hot, tropical sun and thirsty stalks of sugar cane have combined to help dry the road out some. The bumps in the road remain.
Compared to their older cousins in NC, the Semilla Cooperativa groups are at the very beginning of their journey, and their story is still being written. But the rapid growth of the program illustrates the power of the cooperative model to empower & transform the lives of people who have traditionally been shut out of the system.
Ruffin sees parallels between the work that is just getting started here and credit unions in NC a century ago. “The small community component, the access to credit and breaking of loan sharks is exactly how NC credit unions got their start in farm communities. We got a glimpse of what it must have been like in NC at the very beginning.”