Change Yourself…Change The World.


LaCarpio
September 8, 2009, 11:27 pm
Filed under: Costa Rica

Note:

This is originally a reflection paper I did while attending Global College’s Independent Study Semester Program. This post was not originally associated with this blog, but I have put it up here around the estimated date written. I thought readers would find these informational, educational, and entertaining. Please note that these posts are much longer than the usual ones, since they are papers.

Names have been changed to in the interest of protecting individual privacy. I would also like to note before starting, that the woman who created this organization is AMAZING, and I highly admire and respect her. I learned a lot from her in a short period of time, and she has done so many unbelievable things for the community of LaCarpio. I am merely critiquing one aspect of her organization which I found puzzling.


About a week ago I visited LaCarpio, one of the poorest regions in San José, Costa Rica. A teacher of Global College and former Peace Corps recruiter, Macy, took me with her one day to visit LaCarpio and to tour her organization she had started. Upon first glance it was apparent that the resources, time, and effort it took to put together the organization was enormous, and it seemed that Macy had one-handedly done everything. The results were amazing; the pre-primary classroom she had created was spacious and beautiful; the kitchen was spotless; the reading room was gorgeously decorated; and the entire place had a beautiful charm to it.

Part of Macy’s foundation is a start-up entrepreneurial business for women, which is the main reason why she took me the organization. Since I am interested in microfinance, Macy wanted me to see an alternative business project to compare and contrast the negative aspects of microfinance. On the bus rides to LaCarpio, we discussed in-depth the problems of microfinance and her aversion to it. She feels that microfinance is set up in a way for poor people to be continually taking out loans that they cannot pay back. She feels that people should just be GIVEN money instead of having a loan. In her opinion, people are greedy enough, and microfinance is more about capitalizing on greed, and on profits that poor people don’t necessarily have. She feels that microfinance is based around capitalism, and why play into a system that has place these people in poverty in the first place? When describing the women entrepreneurs at her organization, she said, “I’m not the loaner and they’re not the borrowers- it’s a partnership.” Her role is to give them ideas and they figure out whether it works or not.

Macy took me to one room in her organization that is used for these women to start a business, and introduced me to two women (of the seven women in the business) who were currently working. I looked around the room at their projects. They make jewelry, decorational items, and have worked on a project on making angel dolls for an organization. Their biggest project that they are currently working on is putting together bags to sell.

Macy explained to me her ideas and approach behind the business. She gave them the money to start up the bag business; she bought them sewing machines, materials, found donations from the United States to help (such as sewing materials and books), and hired a teacher for classroom instruction so the women could learn how to make the bags. After the initial start-up help, it is now up to them to manage their own business. They pay $50 a month to Macy for the room to create and sell bags ($1 per woman per week); contributing to the $350 a month Macy pays for the entire place for rent.

I asked Macy about the bags that they were currently creating. The bags sell for 11,000 colones, or 20 dollars. Every time a bag is sold, the group gets 5 dollars, and the woman who made the bag gets 15 dollars. Each woman has to pay 5 dollars for a start-up kit to make the bag; this way, it is self-sustaining. All in all, a woman usually makes a profit of 10 dollars (a little under 6,000 colones) for creating the bag.

I then asked Macy how much 10 dollars helps the women. She said with 6,000 colones they can get a bag of rice, beans, oil, salt, and coffee- generally enough to last a family two days.  Others are saving the money- one is saving for a washing machine and a sewing machine. When I asked her how the bag business was doing, she told me that this past summer, they sold 113 bags in June and July. I concluded that the bag business is not enough for them to live off of, but it is an extra source of income. All of the women in the business are also teachers at the organization and they get paid 30,000 colones a month for running the education program.

All in all, it seemed like a solid idea. Then I asked Macy about the target audience of the bags.

She stated that the bags are currently targeted to volunteers that are coming through to see her organization, since the bags don’t sell well in the market. She commented that most volunteers buy the bag when they realize ‘what is means.’

I immediately didn’t like this idea at all. First off, I was now put in a position while I was there, as if I had to buy the bag, or else I didn’t care enough about the project or what they were trying to accomplish. It was a subtle hint as if I didn’t buy the bag, then I wasn’t supporting them. Then I balked at the idea that this bag, which was made out of cloth and Styrofoam, was worth $20. To me, this bag was not worth anything near $20- if I was in desperate need of such a bag on the street, I would’ve maybe paid at the most $3. I was put in another position as a student, who doesn’t have a lot of money to spare, to pay $20 for a bag I wasn’t interested in buying.

While I understand that it was completely up to my own imperative to buy this bag and I had the power to buy one or not, I immediately knew that if I walked out of that room, I would feel like a person that didn’t really care about the organization or the women. I would feel like a tourist, rather than a person who was so motivated in alleviating poverty. I realized with a bit of relief that I didn’t have enough money with me. When I hastily apologized to Macy, she immediately said that I could pay her back tomorrow. I guess she missed the hint, or if she did, she was trying to hold me accountable for the fact that I was interested in this organization, and therefore should purchase a bag. I ended up purchasing a bag that I wasn’t interesting in buying, and didn’t need. I purchased the bag out of guilt, not because I thought that it was a worthy product.

And this is precisely what I didn’t like about it. I bought the bag BECAUSE I felt sorry for them; because I knew that they didn’t have any money, and that by buying the bag I was providing them with food for their family. To me, this is even worse that just flat out giving them money. I am now paying them for a product that I don’t care about; I am only paying them out of pity. Why make the product at all then? As Macy stated earlier, she said that people buy the bags because after they realize what it means; it means that these women will have a small fraction of a better life. But this means precisely that all of the sales garnered for their bag business are out of pity, not out of their entrepreneurial skills. To me, this seems completely backwards to what the project is supposed to be about.

Buying bags out of pity doesn’t teach these women empowerment. It is the same principle upon receiving donations, except to me, it feels even worse. It bothers me that a business would be conducted based on pity, not on the quality of the product. How does this teach women about entrepreneurship? In the real world, people would never buy this bag for $20. Why give them these women a sense of disillusionment, as if they are creating a truly profitable product, when the design concept and price is clearly flawed?

The most important question that I had to ask myself was, how could these women EVER make a self-sufficient business without Macy? If all of their income is based on volunteers through Macy’s organization, then they will never be able to expand their business or eventually open up their own store. If their only income comes from volunteers, then how can they move outside of that realm?

This is why I believe micro-finance is more empowering than this project. With micro-finance, the product you are making is based solely off your own ingenuity- no one is FORCED to buy the product, it is solely on whether it is a good idea and it sells. THIS is true entrepreneurship- no one is giving you a handout or buying your products out of pity. Yes, I believe there are some downsides to microfinance- because there are times when the enterprises fail, such as a well-intentioned person making these sort of bags- but that is the beauty of it. It is all trial and error. If the bag doesn’t sell, then the creator knows that they are not making a quality product, and they fix it.

In my opinion, the downside of giving is that oftentimes you are making people feel smaller than you. You are ultimately giving a handout because you pity them. Giving someone money is like telling them they have no value, no skills, and no intelligence or creativity to make this money themselves. They have to rely on you. Creating a work space for a women entrepreneurial business and providing all of the start-up materials, while quite a noble idea in theory, leaves no room for the trial and error that business need to truly learn what is marketable and what is not. Targeting products to volunteers because the products won’t sell in the local marketplace is creating a dependency on the organization, rather than allowing the business to expand and grow through the trial and error.

There are upsides to microfinance, and to giving loans. When you are giving someone a loan, you are saying ‘I DO believe in you. I DO believe that you are smart and talented enough to create your own business, and I DO believe that you can pay back that money.’ It is creating empowerment in people. It is creating positive expectations. Rather than patting someone on the head and saying ‘poor you, here’s a ticket to the soup kitchen,’ you are saying ‘why don’t you START a soup kitchen?’ It is asking poor people to use their talents and creativity and intelligence and knowledge of local resources to help THEMSELVES- and if and when they do help themselves, they have no one but themselves to thank. While I greatly appreciate many aspects of Macy’s approach and the things she is doing for these women, I think that ultimately, micro-finance is the better way to go for entrepreneurs.


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