Microcredit’s Quiet Revolution Takes Root in Brazil
Thursday, March 17, 2011
SOROCABA, Brazil – When people talk about Brazil’s economy, figures numbering in the billions of dollars are usually bandied about to underline the success — and the potential — of this vast Latin American market of 193 million people.
But for one 25-year-old woman, Alessandra Franca, just a handful of cash is all it takes to make a difference for the 40 percent of Brazil’s population who are still poor.
A year ago, Franca founded Banco Perola, a lending institution specializing in microcredit for low-income young people in the town of Sorocaba, outside Sao Paulo, who want to jump on Brazil’s economic express but are otherwise unable to get their foot on the first step up.
It’s a customer base for whom sums as small as a couple of hundred dollars can be life-changing.
“One person took out a 400-real ($240) loan to buy a hotdog cart. He went from earning a little more than 100 reais per month to 800 reais,” Franca explained.
“He took out a second loan for 1,000 reais and lifted his revenue to 2,000 reais. For someone who has little, 400 reais is a lot.”
Originally hailing from Brazil’s northern Para state in the thick of the Amazon jungle, Franca moved with her family as a child to Sorocaba, a rapidly growing town where high-end gated communities exist next to rundown poor neighborhoods.
Inspired by a book she read at age 16 about Muhammad Yunus, the Bangladeshi “banker to the poor” who won the 2006 Nobel Peace Prize for pioneering microfinance to small farmers and villagers, she went on to obtain an MBA and experience in community associations with the idea of making a difference to her society.
“I always dreamed of doing something for the world. I didn’t want to not leave a mark, or do nothing to contribute,” she said. “I thought why not do something different, something that would improve things?”
Uncharacteristically young, but wielding words of finance and sectorial analysis with ease, she makes for a disconcerting banker. And it has taken time to convince institutions providing her bank with credit lines to take her seriously.
“In the beginning, I tried wearing glasses to try to look older, and clothes. Only I saw it didn’t really work. Afterward, I just accepted the fact I looked young, and to break the bias I make sure I am very prepared for each meeting. I do my homework,” she said.
Today, her bank has 44 clients, all aged between 18 and 35, who have contracted a total $33,000. Her microcredit loans are for a maximum $1,000, to be paid back within seven months.