Community banks helping Salvadoran women get badly needed loans

By Sara Acosta

San Salvador, May 16 (EFE).- Lucia Guevara is a young Salvadoran woman who turned to a community bank to secure the funding she needed to start a small store selling basic goods, a life-changing move that has given her economic independence, a feeling of empowerment and a means of helping provide for her family.

Like thousands of other women in El Salvador, Guevara had found it nearly impossible to obtain a loan in the traditional banking system because she was not employed in the formal sector.

But she found a solution thanks to a community bank initiative in Suchitoto, a municipality around 50 kilometers (30 miles) from San Salvador, taking out a $150 loan at an annual interest rate of 10 percent.

Her mother, Angela Rivera, also obtained a $200 loan that she invested in a poultry farm at her home in Suchitoto, where she has around 45 hens and young chickens.

Guevara also is part of a savings project where affiliated women contribute a certain amount of money to a fund and earn interest.

Maria Ines Enamorado and Rosa Lidia Hernandez, both of whom are residents of rural areas of Suchitoto, are beneficiaries and leaders in their communities, supervising the banks and savings committees in their areas through a community organization.

Enamorado told Efe that women receive advice on how to invest their money and are informed of the importance of repaying their loans.

The female borrowers pay back the loans at an annual interest rate of 10 percent. Once that 12-month period has expired, they can request a new loan in an amount ranging from $50 to $500.

“It’s a good benefit so women don’t depend on their husbands and can invest (the money) in an economic initiative,” Enamorado said.

Hernandez said for her part that the experience has been positive because women “have been able to invest in different businesses, such as small shops selling basic goods or clothes.

The funding for the loans comes from international non-governmental organizations and local Salvadoran entities.

One of those NGOs is the Association for the Development of El Salvador (Cripdes), a community non-governmental entity that has been active for nearly four decades..

Its president, Lorena Martinez, told Efe it is “impossible for these women to obtain a loan at a bank” and that the community bank initiative therefore has been an inclusive alternative.

“These women (beneficiaries) aren’t laborers because they don’t work in a factory. They’re not public-sector employees. They’re women from rural communities. They’re peasant farmers who want to (obtain funding) and want to know how to economically manage a resource they have in their hands,” she said.

Another female leader in Suchitoto, Maria Gladys Lopez, told Efe that at least 20 community banks operate in that municipality with support from countries such as Spain.

Lourdes Molina, a senior economist at the Central American Institute for Fiscal Studies, told Efe that in El Salvador “there is, generally speaking, a serious challenge in terms of women’s access to financial products,” loans, insurance and savings accounts.

In a 2022 Central Bank survey on access to financial products and services, 88.8 percent of respondents said they had been unable to access loans over the past 12 months. Among those surveyed, 51.9 percent were women.

Molina said financial inclusion is a challenge generally in El Salvador but that the problem for women is more acute because they have more difficulty entering the workforce.

Those women who are in the labor market typically work in informal jobs in which they lack access to social security and are poorly paid, she said.