Micro Finance in El Salvador

Organisation: El Balsamo/Trocaire
Location: Sonsonate, El Salvador
Project: Micro finance for 350 women to start small industries

El Balsamo is an indigenous charity working in communities in El Salvador and in 2009 on a visit to the area Adsum witnessed their work and the enthusiasm and positive attitude of the local communities involved in the programmes.

Initially El Balsamo’s programme serviced poor women in urban areas but recently they have branched into rural communities and currently divide their credit portfolio to roughly 3/1 urban/rural.

After the success of the urban programmes El Balsamo needed funds for a pilot to reach the rural areas where the poorest people live, and this project focussed on Sonsonate and provides credit and savings opportunities as well as providing training for running small businesses so that women are able to manage micro credit for poverty reduction.

84% of the initial 800 applicants for credit were from women and although they are poor people with low levels of formal education they possessed some of the important assets for entrepreneurs including strong survival skills, shrewd business sense, experience of hard work and knowledge of local markets and needs.

El Balsamo starts out with a new client providing loans of approximately £15-30 and as these are paid off and clients save a small portion of their incomes, the amount they can borrow increases. Interest is based on a nominal 2% monthly rate and this interest is used to accumulate a fund to train new women’s groups in credit management and small business planning.