Microcredit, an incentive for the excluded in the Dominican Republic

After breaking the barrier of social marginalization and overcoming cancer, Mercedes Arias has become is a thriving small business owner who has raised her family thanks to a recognizable effort.

This 44-year-old woman is one of the thousands of people in the Dominican Republic who found in microcredit an incentive for their precarious economic situation and their status as excluded from the local financial system.

15 years ago when she was diagnosed with cancer of the uterus - which is now clear, Arias decided to end her work as a domestic in a private house, which she had done for more than 25 years, and start her own business selling artificial flowers and household items with a loan of 2,000 pesos (approx. US$52) from her brother.

Shortly afterwards, on the recommendation of a friend of hers, she arrived at the doors of the Fundación Dominicana de Desarrollo (Dominican Development Foundation), a pioneer in the field of microcredit in the country, and took a loan of 20,000 pesos, which has been increased over the years according to her needs.

Married and mother of three adult children, this woman who can not read or write, has made her small business the main source of income for her household, and also other people who have been given employment in the business which she operates from her house in the area of Sabana Perdida, in the North of Santo Domingo.

"I sell flowers, paintings, blenders, refrigerators, televisions, beds, dining sets, furniture", sums up 44 year-old Arias, awarded 'Small Business Owner of the Year' by the Dominican Development Foundation, in 2009.

Her items are offered house-to-house in different districts of the capital and, occasionally, she says, their working hours extend to 15 hours.

As fruits of her business, Arias now has three houses, in addition to the one she had when she first started her business, as well as two vehicles to transport her merchandise.

"Everything goes here", says the woman, among flowers, vases, jars and paintings in the house where she runs the micro-enterprise.

Like Arias, thousands of Dominicans have benefit from microcredit which arrived in the Caribbean country in 1982 thanks to the Dominican Development Foundation, says the CEO of the Foundation, Francisco Abate.

This NGO was created by a group of businessmen with the aim of responding to the difficult situation affecting the country following the civil war of 1965, as noted by Abate, "it highlighted the great social imbalance in which we lived and the large gap between rich and poor".

The Foundation now has over 15,000 customers - which it hopes to double in the three next years – and a portfolio of 190 million pesos (approximately US$ 4.9 million), but it also has a training program for approximately 3,000 people in the provinces where it makes the loans available.

Its main source of funding are the local banks and international organizations, among them, Agencia Española de Cooperación Internacional para el Desarrollo (Aecid) - Spanish Agency of international cooperation for development - who is currently providing 350,000 euros and may increase this to 450,000 euros in 2012.

"Aecid's money came at the right time and has let us reduce our costs in a concrete manner", said Abate.

At the same time he stressed the impact that microcredit has had among the Dominicans of limited economic resources who have no access to private banking facilities.

However, he clarified, the aim of the NGO is not only to lend to small businesses, but also to enable "the little business that is operating purely on a subsistence level, to be able to grow and accumulate, so that people can help their family out of poverty ".

The Foundation, which has no State involvement, is also developing a program to help customers to improve their homes and another to help entrepreneurs make their life more productive.

On the widespread myth that the poor do not pay, Abate relates that it is "opposite" and argues that "the capacity and the willingness of the low income entrepreneur to pay is known worldwide from India to Nicaragua; they pay very well".

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