Microenterprise is an escape valve for social tension at times of crisis, and microbusinesses do a better job of weathering the storm than bigger companies because they are used to overcoming difficulties – a positive effect that is further multiplied when it involves women.

Artisans at work. Credit: Maritza Asencios/IPS

“Microbusiness owners have always operated in tough conditions. For them, there has always been a crisis,” Sonia Arenaza, a Peruvian member of ACCIÓN International – a Boston, Massachusetts-based microfinance network involved in Africa, Asia and Latin America – told IPS.

“This is a reality that you see in Peru as well as the rest of Latin America and developing countries in general,” said Arenaza.

The microfinance expert also confirmed that “during this time of global financial crisis, women who run microbusinesses are doing a better job at withstanding the negative effects, as shown by numerous studies.

“They are performing better in financial and entrepreneurial terms,” she said.

In Peru, the impact of the global crisis has led to a plunge in exports, spending cuts and a rise in social tension, especially among the poor.

Against that backdrop, microfinance takes on a special importance because it channels funds into keeping afloat small businesses, which are a lifeline for the lowest income sectors, said Arenaza.

In Peru, which has an economically active population of 10.6 million people, 35 percent of whom are women, there are an estimated three million microbusinesses, which by definition employ five or less people.

Microloans are mainly granted in developing countries, fomented by government policies, local and international NGOs, and regulated financial institutions.

The Inter-American Development Bank’s (IDB) Multilateral Investment Fund reports that there are 565 microfinance institutions in Latin America and the Caribbean financing around nine million microenterprises, with an outstanding loan portfolio of 9.2 billion dollars, which covers 13 percent of demand for microlending.

But the advantages of channeling financial services and products to female microenterprise owners are not limited to times of crisis, said Arenaza.

“This has a multiplier effect in terms of development, in first place related to the microenterprise itself and the improvement of its business, and in second place related to the home and the improvement of living conditions for the microbusiness owner’s family, like health and education for the children,” she said.

Statistics show that women all around the world are better borrowers, when they manage to gain access to loans, the expert said.

But microfinance should also focus on women because they have traditionally been marginalised by lending institutions and because a large proportion of them are among the poorest of the poor.

Women’s ability to combine “productive” and family “reproductive” roles in microfinance activities means microcredits to women can have a greater impact, on their families and on society as a whole, in terms of expanding progress and social improvements, Arenaza added.

The growing awareness of the importance of microcredit was seen at the fifth Summit of the Americas in April, where U.S. President Barack Obama announced the creation of a microfinance fund to promote development in the western hemisphere.

An index called Microscope on the Microfinance Business Environment in Latin America and the Caribbean, carried out by the Economist Intelligence Unit – a specialised service of the British magazine The Economist – and commissioned by the IDB and the Andean Development Corporation, ranked Peru at the top of the list in 2008, pushing aside Bolivia.

The ranking is based on three aspects of microfinance: the regulatory framework, the investment climate and institutional development.

Peru and Bolivia are followed on the index by Ecuador, El Salvador, Colombia, Nicaragua, Guatemala and Paraguay.

Export business

In Peru, the number of groups of women who have used microlending to improve their incomes and lives has grown.

Rosa Pacheco is one illustration of the trend. She embroiders traditional handbags and purses for Casa Betania (Casabet), a small company that she founded with several other women to generate an income for the poorest women served by community soup kitchens in the slums of the Lima neighbourhood of San Martín de Porres.

The Catholic Sisters of the San José del Sagrado Corazón lent the women a locale, and provided advice. A year after the women began to work, they received a donation from Caritas France, which was used to purchase two sewing machines and materials to produce the knitted and embroidered accessories and clothing that the organisation sells at home and abroad.

Since then, Casabet has been self-financing, said Pacheco.

The women, who are highly skilled in embroidery and knitting, produce sweaters, scarves, purses, vests, ponchos, backpacks and a number of other products, using Peruvian materials, patterns and designs. Their logotype is a feline symbol characteristic of the pre-Columbian Paracas indigenous culture.

“We decided to set up Casabet in 2004 because we were already producing and selling our goods, but we wanted to have a more formal business, and to export,” said Pacheco.

Casabet belongs to the Warmimaqui (women’s hands, in the Quechua language) network, which groups five workshops in Lima Norte, the northern part of the capital, where the city’s industrial districts, as well as the most populous neighbourhoods, are concentrated.

“We have come together as a group of organised women to sell our goods,” said Pacheco. “We have a web site, with a catalogue.”

The group’s production is export-oriented, and the company is a member of the Central Interregional de Artesanos del Perú (CIAP – Interregional Centre of Peruvian Artisans).

“Through CIAP, our products are sold in France, Belgium and Italy, although as a result of the crisis, the number of orders has plummeted. We also have clients in Australia and Britain,” she explained.

From the start, Casabet has been much more than just a company. It emerged as a solution to address the needs of the most vulnerable women who visit several soup kitchens in the neighbourhood of San Martín de Porres.

A mental health workshop for victims of domestic violence led the participants to decide to stop being “charity cases” and to seek their own solutions.

They discovered that several of them knew how to embroider, knit and crochet, and that realisation gave rise to today’s flourishing export company.

No more handouts

“We figured that if we were able to run a soup kitchen, we could manage a company that would offer work and generate funds for the soup kitchens themselves,” Martha Vera, administrator of the Virgen de Nazareth bakery, which is also run by women, told IPS.

The poor quality of the bread products received by the soup kitchen prompted the women to think about setting up their own bakery. The initial funding came from two Catholic organisations and Intermón – the Spanish branch of the international aid agency Oxfam – which provided 20,000 dollars.

The women used the money to buy a plot of land and build a one-story building.

Twenty years later they have a three-story building, modern bakery equipment, and a four-ton truck that is used to distribute their products.

The company has two lines of production: enriched bread for breakfasts in public schools, and pastries that are sold to food stores. “We also make fortified bread products for Socios en Salud, an organisation that provides food aid to tuberculosis patients,” said Vera.

They have been good at paying off their loans, and representatives of the state and the institutions with which they work have told them that women generally are better payers than men.

“We are more responsible and aware,” said Vera. “We take our company’s work very seriously, and with greater responsibility. We treat it as if it were another child; we take care of it; we are attentive. We are aware that our households depend on the bakery.”

Of the 200 bakeries producing food for public school breakfasts in Lima, 150 are run by women.

“Our children have completed their studies, some of us have set up our own businesses, and we are an example for other women, so we feel very rewarded,” said Vera.

* With additional reporting from Maritza Asencios in Lima

The melting of glaciers resulting from climate change and the lack of adequate water management policies seem to be the main causes behind the water shortages that are fuelling conflicts in Peru.

Marco Zapata on the shrinking Pastoruri Glacier in the Blanca range in the Andes. Credit: Courtesy of Marco Zapata

This warning is being sounded from a variety of sectors.

Nearly 50 percent of the 218 social conflicts recorded by the national ombudsman’s office as of February 2009 were triggered by socio-environmental problems, many of them related to water management issues, states the report “Water Faces New Challenges: Actors and Initiatives in Ecuador, Peru and Bolivia”, published by the international anti-poverty organisation Oxfam on Mar. 20.

Two southern departments, Moquegua and Arequipa, are at loggerheads over water. And rural communities in the Andean highlands region along the Yauca River have experienced violent clashes that have even claimed lives.

The Chavimochic and Chinecas irrigation projects in the northwest have given rise to ongoing disputes over water resources. Chavimochic irrigates some 155,000 hectares, 66,000 in what is otherwise desert, and encompasses Trujillo, the principal city in the region of La Libertad.

Chinecas, in the Ancash region, has expanded irrigation on 24,000 hectares and pushed the agriculture frontier 10,000 hectares into previously unfarmed areas.

The regions of Piura and Lambayeque in the north are fighting over the use of the Huancabamba River, which originates in the former, but is used for irrigation in the latter.

Water is not only in short supply in Peru, but it is also poorly distributed in relation to the population. Seventy percent of the people live in the arid strip along the Pacific Ocean, where just 1.8 percent of the country’s freshwater supply is found.

Lima, on the coast, is home to eight million people, or 30 percent of the total population. It is the world’s second largest city located in a desert, after Cairo in Egypt. It is estimated that between one million and two million people in the city do not have potable water.

Carmen Felipe-Morales, an engineering expert with the Institute of Water Promotion and Management, underscores the fact that Lima does not have a large enough water supply for its inhabitants.

At one point in his first term (1985-1990), President Alan García proposed moving the enormous population of Lima to another site, but that idea has not been mentioned again during his current term.

Instead, he turned his campaign promise of “water for all” into a strategic programme of his administration, which proposes hefty investment in 185 piped water and sanitation projects.

The stated objective is to expand potable water services from 76 to 88 percent of households; sanitation from 57 to 77 percent; and sewage treatment from 22 to 100 percent by 2015.

This would achieve one of the targets set under the Millennium Development Goals, adopted by the international community in 2000: Halve the proportion of the population without sustainable access to safe drinking water and basic sanitation, by 2015 on 1990 levels.

But the question remains about the limited supplies of water that are available.

“If we don’t put the brakes on the growth in the population of the capital, the problem will get worse, not only due to the demand, but because of a very serious aspect: water pollution,” said Felipe-Morales in an interview for this article.

According to the Oxfam report, more than half of Peru’s rivers with highest demand for use are severely polluted: the Chira, Piura, Llaunaco, Santa and Huallaga rivers in the north; the Chillón, Yauli and Mantaro in the central region; and the Chili River in the south.

In Felipe-Morales’s view, water management seems to be missing from the government’s policy agenda.

“Appropriate management is especially about prevention and education, and compliance with standards, because in Peru we have many, many laws and rules about the environment, but they are unevenly enforced,” she said.

The Law on Water Resources, enacted on Mar. 30, has been challenged by citizens and politicians alike, because “very clearly it opens the doors to the privatisation of water administration,” said Nationalist Party lawmaker Yaneth Cajahuanca.

Meanwhile, a crucial source of freshwater is melting before the very eyes of Peruvians. The massive glaciers in the Andes Mountains are disappearing as a result of global climate change, warn experts.

Of the world’s glaciers found in tropical latitudes, 71 percent are in Peru, 22 percent are in Bolivia, four percent in Ecuador, and three percent in Colombia.

Peru’s total glacier-covered area has shrunk from 2,042 square kilometres to 1,596 square kilometres in the last 30 years, says engineer Marco Zapata, head of the Glaciology and Water Resources Unit of the National Water Authority, in the northwest province of Huaraz.

That is 446 square km fewer glaciers, which represents an estimated seven billion cubic meters of water – the equivalent of 10 years of water consumption in Lima.

In the Cordillera Blanca, the highest and most extensive mountain range of its type, situated in Ancash, glacier coverage shrank 187 square km between 1970 and 2003 – a 26 percent decline in 33 years. But 10.5 percent occurred just in the last six years, between 1997 and 2003, noted Zapata, who has been studying the phenomenon for more than three decades.

“In 1989 the first national inventory of glaciers was published, based on aerial photos from the years 1970 and 1974, encompassing 18 snowy ranges or large glacier areas. The volcanic range of Arequipa was not inventoried because the photographs had many clouds, nor was the Barroso de Tacna (both in the south), because its glaciers had already disappeared,” he said.

In 2007 “we started working on a new inventory of glaciers and high Andean lakes or proglacial lakes, beginning with the Cordillera Blanca,” said Zapata.

This latest inventory was based on satellite images from 2003. While in 1970, the Cordillera Blanca glaciers covered 723 square kilometres, the results from 2003 showed just 535 square kilometres.

That range holds a quarter of the world’s tropical glaciers, says the study “Alpine Lakes and Glaciers in Peru: Managing Sources of Water and Destruction”, published by Edward Spang in 2006.

The rivers of the Peruvian coast originate in the mountains and are fed by the glaciers, yearly winter snowmelt and other precipitation at higher altitudes. “When the glaciers disappear, we will only have the water from rainfall,” warned the expert.

Peru has some 12,200 lakes and “those will have to be used, as will the valleys that have the conditions to store water during the rainy season,” he said.

Crops will have to be determined based on the availability of water, according to Zapata, adding that irrigation systems must be improved and leaks in the channels must be reduced, because that loss is 70 percent of the water from the sierra.

*This story is part of a series of features on sustainable development by IPS – Inter Press Service and IFEJ – International Federation of Environmental Journalists, for the Alliance of Communicators for Sustainable Development (www.complusalliance.org).

The frozen treasure of Peru's glaciers is melting away, leaving the population facing a dry future.

Marco Zapata on the shrinking Pastoruri Glacier in the Blanca range in the Andes. - Courtesy of Marco Zapata

This warning is being sounded from a variety of sectors.

As of February 2009, 48 percent of the 218 social conflicts recorded by the People's Defender of Peru, a national government agency, revolve around socio-environmental problems, many of them related to “water management,” states the report “Water Faces New Challenges: Actors and Initiatives in Ecuador, Peru and Bolivia”, published by the international anti-poverty organization Oxfam on Mar. 20.

Two southern departments, Moquegua and Arequipa, are at loggerheads over water. The rural communities of the high Andean region of the Yauca River have experienced violent clashes that have claimed lives.

The irrigation projects Chavimochic and Chinecas, in the northwest, have entailed ongoing disputes over water resources. Chavimochic irrigates some 155,000 hectares, 66,000 in what is otherwise desert, and encompasses Trujillo, the principal city in the region of La Libertad.

Chinecas, in the Ancash region, has expanded irrigation of 24,000 hectares and pushed the agriculture frontier 10,000 hectares into previously unfarmed areas.

The regions of Piura and Lambayeque, in the north, are fighting over the use of the Huancabamba River, which originates in the former, but is used for irrigation in the latter.

Water is not only in short supply in Peru, but it is also poorly distributed in relation to the population. Seventy percent of the people live in the arid strip along the Pacific Ocean, where just 1.8 percent of the country's freshwater supply is found.

Lima, on the coast, is home eight million people, or 30 percent of the national total. It is the world's second largest city located in a desert, after Egypt's Cairo. It is estimated that between one million and two million people do not have potable water.

Carmen Felipe-Morales, an engineering expert with the Institute of Water Promotion and Management, underscores the fact that Lima does not have a large enough water supply for its inhabitants.

At one point in his first term (1985-1990), President Alan García proposed moving the enormous population of Lima to another site, but that idea has not been mentioned again during his current term.

Instead, he turned his campaign promise of “water for all” into a strategic program of his administration, which proposes hefty investment in 185 potable water and sanitation projects.

The stated objective is to expand potable water services from 76 to 88 percent of households; sanitation from 57 percent to 77 percent; and sewage treatment from 22 percent to 100 percent by 2015.

This would achieve one of the targets set under the Millennium Development Goals, adopted by the international community in 2000: Halve, by 2015, the proportion of the population without sustainable access to safe drinking water and basic sanitation.

But the question remains about the lack of water available.

For Felipe-Morales, “if we don't put the brakes on the increase in the capital's population, the problem will get worse, not only due to the demand, but because of a very serious aspect: water contamination,” she said in an interview for this article.

According to the Oxfam report, more than half of Peru's rivers with highest demand for use are severely contaminated. In the north, it's the Chira, Piura, Llaunaco, Santa and Huallaga rivers; in the central region, the Chillón, Yauli and Mantaro; and in the south, the Chili River.

In the opinion of Felipe-Morales, water management seems to be missing from the government's policy agenda.

“Appropriate management is especially about prevention and education, and compliance with standards, because in Peru we have many, many laws and rules about the environment, but are the obeyed?” she wondered.

In addition to this outlook is the Law on Water Resources, enacted on Mar. 30, and challenged by citizens and politicians alike, because “very clearly it opens the doors to the privatization of water administration,” said Nationalist Party lawmaker Yaneth Cajahuanca.

Meanwhile, a crucial source of freshwater is melting before the very eyes of Peruvians. The glaciers, enormous masses of ice in the Andes Mountains, are disappearing as a result of global climate change, warn experts.

Of the world's glaciers found in tropical latitudes, 71 percent are in Peru. Twenty-two percent are in Bolivia, four percent in Ecuador, and three percent in Colombia.

Peru's total glacier-covered area has shrunk from 2,042 square kilometers to 1,596 square kilometers in the last 30 years, says engineer Marco Zapata, head of the Glaciology and Water Resources Unit of the National Water Authority, in the northwest province of Huaraz.

That is 446 square km fewer glaciers, which represents an estimated 7 billion cubic meters of water – the equivalent of 10 years of water consumption in Lima.

In the Cordillera Blanca, the highest and most extensive range of its type, and situated in Ancash, glacier coverage shrank 187 square km between 1970 and 2003. That is a 26-percent decline in 33 years. But 10.5 percent occurred just in the last six years, between 1997 and 2003, noted Zapata, who has been studying the phenomena for more than three decades.

“In 1989 the first national inventory of glaciers was published, based on aerial photos from the years 1970 and 1974, encompassing 18 snowy ranges or large glacier areas. The volcanic range of Arequipa was not inventoried because the photographs had many clouds, nor was the Barroso de Tacna (both in the south), because its glaciers had already disappeared,” he said.

In 2007 “we started working on a new inventory of glaciers and high Andean lakes or proglacial lakes, beginning with the Cordillera Blanca,” said Zapata.

That latest inventory was made using satellite images from 2003. If in 1970 the Cordillera Blanca glaciers covered 723 square kilometers, the results from 2003 showed just 535 square kilometers.

That range holds a quarter of the world's tropical glaciers, says the study “Alpine Lakes and Glaciers in Peru: Managing Sources of Water and Destruction,” published by Edward Spang in 2006.

The rivers of the Peruvian coast originate in the mountains and are fed by the glaciers, the yearly winter snowmelt and other precipitation at higher altitudes. “When the glaciers disappear, we will only have the water from rainfall,” warned the expert.

Peru has some 12,200 lakes and “those will have to be used, as will those valleys that have the conditions to store water during the rainy season,” he said.

Crops will have to be determined based on the availability of water, according to Zapata, adding that irrigation systems must be improved and leaks in the channels must be reduced, because that loss is 70 percent of the sierra's water.