ACCION's History1970s: Microlending Begins
By the early 1970s, ACCION's leaders were becoming increasingly aware that their projects did not address the major cause of urban poverty in Latin America: lack of economic opportunity.
"We began to sense that a school or a water system didn't necessarily have long-term impact. We were simply reorganizing the resources that a community already had within it, rather than increasing their resources," former ACCION director Terry Holcombe said.
The employment situation in the urban centers was dire. Drawn by the mirage of industrial employment, thousands of rural migrants were flocking to the cities each year. Once there, however, they found jobs scarce. The few that were available often did not pay a living wage. Unable to find work, and lacking a social safety net, many of these urban poor started their own small enterprises. They wove belts, banged out pots and sold potatoes. But they had no way to grow their tiny businesses. To buy supplies, they often borrowed from local loan sharks at rates as high as ten percent a day. Most of their profits went to interest payments, leaving them locked in a daily struggle for survival.
In 1973, ACCION staff in Recife, Brazil noticed the prevalence of these informal businesses. If these small-scale entrepreneurs could borrow capital at commercial interest rates, they wondered, could they lift themselves out of poverty? ACCION's Recife program coined the term "microenterprise" and began issuing small loans. To our knowledge, these first loans launched the field of microcredit.
The experiment in Recife was a success. Within four years, the organization had provided 885 loans, helping to create or stabilize 1,386 new jobs. ACCION had found a way to generate new wealth for the working poor of Latin America.
ACCION's History: 1980s
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