Posted by: Micol Pistelli
Interview with: Martin Burt, Executive Director of Fundación Paraguaya
Founded in 1985, Fundación Paraguaya (FP) is a leading social enterprise that develops innovative solutions to poverty and unemployment in Paraguay and proactively disseminates them around the world. All FP programs promote economic self-reliance through entrepreneurship, and in keeping with this philosophy, FP itself is financially self-sustaining. In this interview with MIX, the Executive Director of FP, Martin Burt, tells us about his institution’s approach of fighting against poverty in Paraguay by using microcredit and social capital formation as tools for development.
MIX: Mr. Burt, Fundación Paraguaya has developed a multidimensional approach that aims at promoting economic self-reliance through entrepreneurship. Can you give us an overview of these strategies?
Mr. Burt: Fundación Paraguaya runs four programs:
i. a microcredit program which began in 1985, which has 20 offices and serves over 37,000 clients in urban and rural areas throughout Paraguay
ii. an economic and financial education program (Junior Achievement) which has trained over 150,000 youth since 1995 and, since 2005, 20,000 low-income women
iii. a financially self-sufficient agricultural school, operated by the FP since 2003, which trains the sons and daughters of poor small-scale farmers to become successful “rural entrepreneurs”
iv. TeachAManToFish, a separate NGO established in 2005 which disseminates FP’s financially self-sufficient school model and the concept of “Education that Pays for Itself” worldwide.
The four programs are separate in budgetary terms, but are closely integrated at the operational level so that each program enriches, and is enriched by, the other three.
MIX: Let’s take a closer look at each of these programs, starting with the microfinance program. Fundación Paraguaya offers a broad product portfolio whose primary beneficiaries are women and children of the community. What are the development goals of Fundación Paraguaya and what kind of products do you offer to meet these goals?
Mr. Burt: FP’s first and longest-running project, the microfinance program, was created in 1985- almost 25 years ago- to promote the development of micro and small enterprises by people with scarce incomes through the creation, expansion, and strengthening of sustainable lending, training and advisory services.
In a country where an estimated 32% of the population lives below the poverty line, and about one-third of those live in absolute poverty, Fundación Paraguaya’s microfinance program strives to reach poor, underserved microentrepreneurs in urban, rural and remote areas who are generally neglected by the financial sector. Today, this program serves 140 towns and villages through a network of 20 regional offices spread throughout the country.
With loans starting at US $40, FP’s average loan size of US $300 continues to be the lowest in Paraguay’s financial market as well as in Accion International’s network of microfinance institutions in the region.
More recently, the microfinance program has expanded its operations to offer a broader product portfolio that includes microfranchises and other non-financial services. Making the most of FP’s growing network of women village banking groups, additional sources of income are being offered to clients in the form of microfranchises and community development programs. These include: reading glasses provided by Vision Spring; accessories and materials specially tailored for village vision entrepreneurs; loans which finance cataract surgeries to low-income patients in remote areas; Aflatoun children village clubs for social and financial education; and networks of women and children for the development of musical talents.
MIX: In which ways are the other FP programs interrelated and how do they reinforce one another to fight against poverty and generate employment?
Mr. Burt: Fundación Paraguaya’s Economic and Financial Education Program was started in 1995, in association with Junior Achievement International, with the express aim of equipping schoolchildren and youth with the entrepreneurial skills and spirit needed to secure the leadership of tomorrow. By means of an effective link between the private and the education sector, more than 150,000 children and youth have been trained since the launch of the program.
With a strong focus on entrepreneurial skills, a “learning by doing” methodology is used in hands-on, experiential programs that teach the key concepts of work readiness and financial literacy. In this way, thousands of private and public school students located in urban and rural areas are served.
Since 2005, Junior Achievement methodology has been adapted to benefit training sessions especially designed to develop the financial, interpersonal and entrepreneurial skills of over 20,000 women participating in FP’s village banking program.
Moreover, in 2002, Fundación Paraguaya took over a bankrupt boys’ agricultural school and set out to turn it into a financially self-sufficient, co-educational school. Five years later (2007), this goal was achieved. Since then, the school has been generating enough income to cover all of the school’s operating costs.
The school has developed a 100-percent-market-driven rural education program that seeks to transform youth into “rural entrepreneurs.” The income generated by these enterprises covers 100 percent of the school’s operating costs. These on-campus enterprises also provide a “learning by doing” environment for students to develop the technical, entrepreneurial, financial, and leadership skills they need for future economic success.
Fundación Paraguaya measures the success of its model by the fact that 100% of its students are “productively engaged” within four months of their high school graduation. This means students either find mid-level jobs in the modern agricultural sector, become agricultural extension agents or instructors at other agricultural schools, return to the family farm with a business plan and a line of credit to start their own small rural enterprises, or begin university studies.
Our financially self-sufficient school model has gained international recognition. Last year, FP’s agricultural school won second place in the 2008 BBC World Challenge, and this year, the school has received the Wise and Templeton Awards, as well as being selected as ‘Best Practice in youth policies and programs in Latin America and the Caribbean’ by UNESCO-IDB. Currently, there are over 50 projects that replicate the self-sufficient school model by partner organizations in the Americas, Africa, and Asia.
Finally, TeachAManToFish (TAM2F), a separate NGO based in London, was born out of a drive to share and promote the pioneering work of the Fundación Paraguaya with educators and social entrepreneurs around the world. The UK-based group has created a growing international network of agricultural schools committed to sustainable approaches to tackling rural poverty.
TAM2F’s vision is a world free from the extremes of absolute poverty, one in which all individuals are able to enjoy the empowering benefits of an education that meets their needs and aspirations in life. To this end, the mission of TAM2F, its partner organizations and its network of members is to broaden access for the poor to a high quality education combining vocational training and entrepreneurship by supporting institutions working in this field to increase their financial self-sufficiency.
MIX: Poverty alleviation’s efforts are mostly associated with access to financial resources. What is the approach adopted by Fundación Paraguaya in the fight against poverty? Do you have any specific program in place to measure the poverty level of your clients and their progress out of poverty?
Mr. Burt: The Poverty Elimination Project started at the beginning of 2009 as a response of inclusive microfinance for FP’s women village banking program.
The project aims to develop a methodology capable of eliminating poverty through the implementation of sustainable programs which are 100% market-based by means of fully sustainable methodologies. To get there, we are working with poor women micro entrepreneurs who are members of over 1,000 village banking groups to help them escape poverty and progressively become part of the middle class.
The project methodology seeks to attain the comprehensive empowerment of the women that will provide them with the psychological and organizational tools and capabilities to make them leave their current state of poverty, and to identify and develop the business opportunities linked to the supply of goods and services to satisfy their needs.
The program intends to solve the severe social problems of our clients and their families by focusing on structural problems, such as “access” and “quality” of goods and services, as well as on the interior of the individual, like negative personal and communal beliefs and low self-esteem.
In particular, the project’s methodology aims to find sustainable solutions to 50 pre-identified poverty indicators in 6 broad areas: Income and Employment, Health and Environment, Housing and Infrastructure, Education and Culture, Organization and Participation, and Interior and Motivation. It identifies the basic needs of entrepreneurs and develops strategies that help the women to develop managerial skills, citizen activism and social entrepreneurship, so that the women can set their own strategies and find their own solution to escape poverty.
As the project only started very recently, it is still in its pilot phase. Nevertheless, several workshops have been organized in order to familiarize employees with the project’s methodology and objectives. Moreover, Fundación Paraguaya initiated a contest in which each branch office had to come up with a sustainable solution to at least one poverty indicator.
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For more information on Fundación Paraguaya, visit http://www.fundacionparaguaya.org.py/ or review the Social Performance Report at MIX Market: http://www.mixmarket.org/mfi/fundación-paraguaya/files.
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