Venezuela’s Women’s Development Bank, abbreviated Banmujer, joins a long line of micro-credit institutions intended to alleviate poverty by encouraging small-scale entrepreneurs. What makes Banmujer unique is that it loans only to women; in fact, it is the only state-sponsored women’s micro-credit bank in the world. Since its inception on March 8, 2001, Banmujer has been commended for its successes in helping women escape poverty and in instilling a new economic model of cooperation instead of competition.
Women’s Rights in Venezuela
Over the past decade, the Venezuelan government has been consistently supportive of women’s rights. For example, the Bolivarian Constitution, adopted in 1999, uses non-sexist and gender-neutral language throughout. Instead of “all men are created equal,” as is stated in the U.S. Constitution, Venezuela’s constitution holds that “all persons are equal before the law.”1 When discussing the role of the President, it says “Presidente o Presidenta,” instead of using only the male form.
The Venezuelan Constitution also explicitly prohibits discrimination on the basis of gender: “no discrimination based on race, sex, creed, or social standing shall be permitted.” Moreover, it prohibits not only intentional discrimination, but also any actions with discriminatory effects. Gregory Wilpert, a researcher at VenezuelaAnalysis.com, commented that “what this means in practice is that public policies must be reexamined for their possible discriminatory effects. For example, if women were under-represented at public universities, the state would have to examine the causes for this and eliminate any barriers that exist that cause fewer women then men to attend the university.”2 In contrast, the U.S. Constitution has no language explicitly forbidding even intentional gender discrimination. Although a coalition of feminist groups fought to add such a provision to the Constitution, the Equal Rights Amendment narrowly failed being ratified by the necessary three quarters of the states after passing Congress in 1972.
Finally, Article 88 of Venezuela’s 1999 constitution recognizes housework as a valuable job that, like any other vocation, entitles the worker to social security benefits. This provision has substantially furthered the cause of women’s rights because it allows many women to receive social security and other protections which when in the past were denied to them. This and other provisions on women’s rights have led expertsto conclude that Venezuela’s new constitution “is now among the most progressive in the Western Hemisphere on gender issues.”3
The government’s effort to support women’s rights has not been limited to the constitution. Starting in 1998, the Law of Violence Against Women and Families increased legal penalties for domestic violence, an effort which in recent years has also included a government-sponsored television campaign and the 2007 Organic Law on the Right of Women to Live Free of Violence. Under the Chávez administration, the National Institute on Women (Inamujer) has been very active, coordinating activities such as educational workshops on reproductive rights, lobbying congress for more protection of women’s rights, and supporting women campaigning for office.4
BANMUJER: Encouraging Female Entrepreneurs
It was in this context that President Hugo Chávez launched the Women’s Development Bank on International Women’s Day in 2001. The bank, led by economist Nora Castañeda, issues micro-credit loans to small groups of women to help them start small-scale local business projects. Typical loan projects range from a cooperative farm to a craft workshop to a bakery to a hair salon. The credits average between 500,000 and 1,000,000 bolívares (US$260 to $520) and are subsidized by the government, allowing the bank to charge interest as low as 1 percent.5
Unlike most banks, Banmujer does not have regional offices but instead employs women who travel to rural communities to help develop loan proposals. Castañeda explained that this decision was made to facilitate the bank’s ability to assist poor women. She questioned, “How can the poorest indigenous women in the state of Amazonas, the southernmost state in the country, come here, if they are so poor, to ask for a credit?”6 Thus Banmujer is able to reach women with no access to typical banks.
In addition to helping develop loans, regional workers of Banmujer provide “non-financial services,” or training, to women in rural communities. The training, which is the bank’s secondary purpose after issuing credits, typically focuses on basic business principles such as teaching women how to develop an entrepreneurial idea, use the loans, and manage their business.7 Banmujer also offers workshops on broader issues such as women’s health, leadership, community organizing, and prevention of domestic violence.8 Thus far, the bank has provided training to more than 100,000 women.9
Banmujer was initially criticized for its high default rates. After its first year of operation, 41.6 percent of its loans had not been paid back, leading some analysts to conclude that the bank had failed financially.10 Yet after only two years, almost 23,000 credits had been repaid and the default rate had dropped to 26.3 percent.11 In strictly economic terms this is still far from successful, but the Women’s Development Bank is far from a traditional economic institution. Rather than measure success by profits alone, the bank prefers to focus on the progress it has made in empowering women and helping to break the cycle of poverty. In the pursuit of these goals it has indeed been successful; according to one estimate, the credits issued by the bank have created more than 260,000 jobs and assisted more than 1.3 million people.12
Combating Poverty by Working Collectively
Almost 45 percent of Venezuelans live in poverty and 70 percent of these are women, so targeting women can be an effective approach to try to reduce poverty in general.13 Banmujer’s micro-credit loans are specifically designed to reduce poverty in a sustainable manner. Castañeda explains, “If we just gave them money the women would continue to be poor, but … with debts.” Instead, the bank strives to help women form businesses that will provide them with a long-term source of income, allowing them to escape the cycle of poverty. By helping women become entrepreneurs and lead their own businesses, Banmujer actively encourages them to step outside their traditional roles and claim more respect in society.
Another of the bank’s overarching goals is to encourage women to work collectively. Although the loans are issued individually, recipients must belong to a group of five to nine women working together on a project. Men can receive loans, but only if they are in a group comprised of a majority of women; to date, women have received 96 percent of Banmujer’s loans. The groups must work collectively to develop a proposal and apply for a loan, and the ultimate goal is to encourage them to continue working collectively in the business even after the loan has been repaid.
“Creating a Caring Economy”
At the center of Banmujer’s philosophy is an economic model that is very different than the accepted version in the United States. Castañeda told VenezuelaAnalysis.com that “we are creating a caring economy, an economy at the service of human beings, not human beings at the service of the economy.”14
Perhaps what the United States so intensely dislikes about Venezuela is not so much its political system (which is, after all, democratic – Chávez won 56 percent of the popular vote in 1998, compared to Bush’s 48 percent in 2000), but rather its rejection of free-market capitalism as the ruling economic paradigm. Instead, Chavez is using programs like the Women’s Development Bank to encourage the formulation of what Castañeda terms a “popular economy.” This economy is intended to serve average people instead of large corporations by mirroring on a larger scale the cooperative work that Banmujer encourages for the groups of women with whom it collaborates.15 Just as the individual women work together to run their business or workshop, the “popular economy” promotes larger economic actors to work together, complementing each other instead of competing for resources. An article in The Guardian commented that “the mini-entrepreneurs [given loans by Banmujer] are encouraged to cooperate with other small business rather than competing with them. If one group is given money to rear chickens, another nearby will be given a loan to slaughter the chickens.”16 Thus, Banmujer uses financial and non-financial services to empower women, enabling them to overcome poverty sustainably, while also promoting Venezuela’s vision of a “popular” or “caring” economy.