16 / 07 / 2004 Pancho Otero, director of the Instituto de Políticas para la Microempresa in Bolivia: "We offer cash and self esteem, the perfect recipe for eradicating poverty"
The Forum's 141 Questions (69): "Eight out of ten microcredits are given to women: Are we breaking down economic as well as social borders? Pancho Otero, a founding father of micro financing said, "I don't know if they break down social barriers but microcredits recognize women's entrepreneurship." He emphasized that this "means the end of relying on government assistance" but said that today only 3% of the needy population has access to microcredits.
Pancho Otero, director of the Instituto de Políticas para la Microempresa in Bolivia, said today at the Haima that, "the majority of people living on less than a dollar a day are women." In his opinion, "microcredits recognize women's entrepreneurship, their capacity to take initiative and risks." In response to question from the audience he said, "in Bolivia's matriarchy" it is no surprise that microcredits are given to women: "Men kill cockroaches, open jars and drive the car for their wives' businesses."
After pointing out that microcredits, "came about spontaneously and simultaneous in different parts of the world because they were needed," he explained that this formula is defined by "lending small quantities of about 100 euros to be returned quickly and without guarantees." He said that borrowers are very concerned about bureaucracy: "they hardly ask about interest rates but rather how much documentation they'll need or how many times they will have to sign. It's a different economy." Pancho Otero insisted that this type of operation requires mutual trust: "It works by word of mouth. People believe what their neighbor tells them, not what TV ads say. At first it's difficult to gain their trust, but afterwards the loan applications increase quickly."
Otero emphasized the fact that microcredits “put an end to relying on assistance,” though he added that currently only 30 million people have access to microcredits, though “over 1 billion people are not prospering because they do not have access to this resource.” He said that investors’ contributions will be very important for dealing with product expansion and denounced the fact that very few countries have regulations in place that make it possible to set this sort of social banking in motion. On that note, he criticized governments—“some of which are very close to you—just on the other side of the Mediterranean”—, whose state banks accuse borrowers of not making proper use of international aid: “They’re lying. If they receive 40 million, they don’t even pay out 20. This kind of aid is the main source of income for corrupt governments,” he argued.
Despite the attempts made by large traditional banks, Pancho Otero doubts they are capable of getting involved in social banking: “We have opposing viewpoints. They are based on bureaucracy and intimidation; we, on the other hand, ask our clients what they need, what help they require, and we make it clear to them that we are interested in their prosperity.”
Pancho Otero concluded by expressing that he is opposed to the concept of “banks for the poor”: “I prefer to use the term social banking; these people are in a temporary financial situation that we want to help them with. We offer cash and self-esteem, the perfect recipe for eradicating poverty.”