This is from a series of reports written in 1997 for an NGO, Mopawi, exploring their efforts to promote sustainable development in the native Miskito and Garifuna populations in La Mosquitia, a rainforest in eastern Honduras.

banco comunal
puerto lempira
silberio simon

la mosquitia is a place where the rule of the government is largely absent. families, family connections determine the allocation of resources, and the punishment for abberance is social.

how do you conduct a loan program in that environment? after some years of only halfway successful collection, mopawi is trying a new approach to offering credit in la mosquita.

silberio simon, supervisor of the proyecto de credito in puerto lempira, reports that mopawi has dispersed 268,113 lempiras (about $20,500) to 109 moskitians; the average loan being around 2,400 lempiras. loans go to build small restaurants, shops, factories for clothes, furniture, and to start transportation businesses. small scale commercial enterprise, and not just in the larger pueblos of la moskitia; officers of the proyecto travel across gracias a dios to offer moskitians the opportunity to borrow.

the rate of interest is rather high, by american standards: 36% (annual, uncompounded); but not when compared to the rates of most honduran banks, over to 40%. this covers the honduran rate of inflation (in the high twenties), and the high default rate of the program.

a local sheriff is said to have remarked that he doesn't want to enforce the law, because people might become upset with him.

of those people who recieve mopawi monies, 10% pay on time, another 40% pay eventually, and the rest... the rest are here in la moskitia, where there's only electricity in the big city four hours a day, if you're lucky. the basic necessities of life take up more time here than in the developed world. people have mouths to feed, and without refrigerators, every day is another trip to the market. mopawians don't have the time or will to force folks to pay up if they say they can't. what would then be the purview of a collection agency in the united states is here beyond the reach of the overtaxed and underrespected local authorities. a local sheriff is said to have remarked that he doesn't want to enforce the law, because people might become upset with him.

of those people who recieve mopawi monies, 10% pay on time, another 40% pay eventually, and the rest...

still if the moskitians are to develop their own industries, there needs to be capital investment. so in order to shift the burden of collection and perhaps the locus of repect and authority, mopawi has developed a banco comunal program, whereby groups of locals band together to request funds (from mopawi at 2% a year), which in turn comprise their own collective bank. in their communities they provide opportunities for savings and loans, and they perform the collection. since july 1996, the program has reported a 100% successful collection rate, with three banks in operation, responsible for a total of 72,215 lempiras. each banco communal is comprised of between 13 and 19 persons, mostly women. there are two in puerto lempira, the capital; one in cocobila, and one planned for batalla.

this is a promising start to an interesting idea. perhaps if their own money is on the line, members of the same community will have more success luring return funds from their friends and family. perhaps there will be more respect between them. perhaps 15 people will keep each other in line.

mopawi has access to money, and the people here know it. all over gracias a dios, as i was examining the other programs, people were asking for dinero: in las marias, to expand their hospedajes; in brus laguna to buy motors for boats. it's not the mission of mopawi to hand out money - they're more about education, and having miskitos teach each other stuff.

la mosquitia is quickly being opened up to all kinds of foreign investment; the miskitos need to know how to participate in capital markets. if they don't have the money management skills to run their own business and remain personally financially solvent, the land could easily end up being owned and exploited solely by foreign interests. they want to have electricity and appliances - to have those things they will have to change the way they manage resources.

this banco comunal could be the best approach to money in la moskitia, both in terms of successful collection and teaching money management skills. social pressure is clearly the most effective encouragement. this banco comunal idea works the social network to regulate the flow of available small investment capital.

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