by Frances Smith, NICA Fund Investor

I belong to a group in Claremont, California that for several years has loaned money to Nicaragua through WCCN's NICA Fund. The NICA Fund makes loans to microfinance institutions, which in turn make microloans to small farmers, cooperatives, women's enterprises, and people making housing improvements. I went on this tour because I wanted to see how our money was being used. I came away fully satisfied that my money was going to "a good cause."

On the eight-day study we visited co-ops and "end borrowers" in Managua, Juigalpa, Nueva Guinea on the Atlantic Coast, and León.

A filmmaker accompanied us; the resulting NICA Fund informational video will be available in the near future. One person we met during the trip, Candalario Urbina, a 47-year old cattle raiser, spends six months of the year in the western United States driving a truck and then returns home to help his mother with her cows.

With the loan he grows wheat and corn and would like to build a two-story house and plant fruit trees. In a visit to Prodesa, a microcredit organization, our group learned that of the 13,000 loans, 5,000 go for housing improvements, and more than half of those are to women. Men provide money for food but not for housing, we were told. Women want to have separate bedrooms for their boys and girls.

Repayment of loans is very high due to the lending methods. For example, a group of school teachers makes a collective agreement where the principal is the collection agent and all teachers sign. "We don't look for collateral," said Zobeida Hernandez, executive director of Prodesa. "Rather we look at what the borrower earns."

Since 1992 Prodesa has worked to reverse "a culture characterized by non-payment of loans..."We stress responsibility. We have an impact on people's lives," said Hernandez.

Because banks in Nicaragua have been unwilling to lend money to poor people, microcredit instutions have become the main providers of credit to farmers and small business.

Alfredo Alaniz of ASOMIF (Nicaraguan Association of Microfinance Institutions) told us that ASOMIF's members have a portfolio of $33 million in agriculture and livestock serving 37,000 rural producers. The average loan is between $500 and $900. He said his association has 21 member organizations in 208 branches. These organizations have made loans to 278,000 borrowers.

Some 60% of them are women; 40% of loans are in the rural sector. In Nicaragua, rural poverty is more acute and it affects women to a greater extent than men.

Zulema Mena, 37, mother of four, is the spark behind the women's International Sewing cooperative of Nueva Vida. When Hurricane Mitch struck in 1998 she was one of 150,000 Nicaraguans relocated to Ciudad Sandino outside Managua. The Center for Development in Central America searched for ways to combat 80% unemployment there. Through a marketing partnership with Maggie's Organic in Michigan, Zulema and others started a sewing co-op.

Fifty women worked for two years to construct a cinder block factory, volunteering twenty hours a week of labor and working the rest of the time as street vendors to feed their families.

Zulema told members of WCCN's study tour about how the women obtained sewing machines and learned to sew camisoles and T-shirts. Now this is the first worker-owned cooperative to be certified as a free trade zone. This enables it to compete on an equal footing with conventional maquilas while providing 45% better pay, fair working conditions, and member control of the workplace.

Due to the free trade zone certification the co-op gets tax breaks, duty free imports of raw materials and exports of finished products. This sewing cooperative provides full-time employment for 47 heads of household.

A high point of our tour was a conversation with Ernesto Cardenal, a Catholic priest and a famous Latin American poet, who was Minister of Culture in the Sandinista government. Asked about the status of Liberation Theology, he said that as long as there are poor people, there will be Liberation Theology.