Article January 1, 2000 Issue

South America

“Prayer for the unity of nations brings peace and harmony.”

with contributions from Michael Chu, Katharina Helmick, Pedro Grieco, Jorge Leuschner

SOUTH AMERICA How can globalization help rather than hinder positive social change, economic development, and the beating back of poverty? Significant departures from the past are needed.

The bottom of the socioeconomic ladder may be just as important as the top, in terms of unleashing the beneficial side of market forces. There is an asset in the most fragile sectors of society: the initiative of the people. Its expression is selfemployment — in today's jargon, microenterprise. But microenterprise has always faced obstacles, among them lack of access to capital.

Microfinance is commercially viable. In Bolivia, the most solvent bank with the highest return on assets is the one solely dedicated to businesses on the unfashionable side of town. The most valuable of its assets is the credibility of its clients — hard working microentrepreneurs that have paid both principal and interest on 99% of their loans. This allows the bank to fund itself, not only from the local but also the international capital markets.

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