Berkley Center

Background: As part of the Education and Global Social Justice Project, in summer 2013 undergraduate student Sarah Baran interviewed Juan Carlos Miranda, one of the founders of Protagonizar, a microfinance lender in the lower class community of San Miguel, Buenos Aires, Argentina. In this interview Miranda, who currently serves as director of the organization's agencies in the neighborhoods of Mitre and Marilo, discusses the founding of Protagonizar, the process of obtaining a loan, and how faith is integrated into the agency's work.

Can you please tell me about the history of Protagonizar, its early founding, and its growth since then?

Protagnoizar began within the chapel Nuestra Señora de Lujan to address a need. In this area, there has always been very little work for the people. After Father Rodrigo, who was pastor of our chapel, went to Colombia, where he was first introduced to the theory of microcredit, he returned with the ambition to start an agency of microcredit here in San Miguel. The father in charge of the Jesuits of Buenos Aires gave permission and donated money in order to promote the organization, and a group of volunteers from the parish were organized to run the agency.

There are many things that have developed and improved with the way Protagonizar is now run in comparison with when we first started. At the beginning, none of us knew very much about microcredit, so we learned by testing—always with responsibility. Initially, there were five steps in the process to receive a credit, and it would usually take a month to approve an application for a credit, given our time restraints since we were only volunteers. There were initially some difficulties in the method of analysis for an approval as well since it was not as meticulous as it is now in accounting for the economic stability of the entire family. Moreover, we now reference the accountability of the person applying by asking a neighbor about their financial situation, but originally we did not do this. In terms of compiling and recording all the information, everything was written by hand, and it was difficult to keep track of all the data given the overlap of volunteers.

Yet with time we learned and improved by changing things and incorporating new ideas or ways of operating. Thus, we grew with time. Those who received credits gave us good reviews and passed along referrals by word of mouth, but our time was limited since we were only working on Saturdays from 10 a.m. to 1 p.m. as volunteers. The demand for credit was so high that in 2004 we needed to expand and hire employees. Right before this, we went to a microfinance institution in El Salvador for consulting and training. When we returned, Analía Burgos and I were hired as the first full-time employees, working eight hours a day. We worked in both agencies, Santa Brigida and Mitre. A year later, in April 2005, the foundation hired six more full-time employees.

Originally, we were only in the chapel, working out of a small back room, but now there are four agencies with four offices that have more space to receive people, two of which we opened recently about a year and a half ago. We offer better products of credit, and yet we never expanded with the intention or the operations to be profitable; that is not part of our mission, and our growth has never been about the money.

Can you please explain the process to apply for and attain a loan?

Those hoping to apply for a loan visit the office, and we explain our policies, primarily the purpose of solidarity groups and the requisites of a loan. Many people originally come as individuals looking for their own loan, but the structure is designed to encourage larger groups as an incentive to receive more credit. Solidarity groups consist of a minimum of four to a maximum of six people that agree to a loan for usually six months—it depends because there are different plans. Within the group, each member has to be no more than three blocks’ distance away from another, making communication among the group and staff evaluations easier. Within these groups, no member can be part of your family directly in this first step—later there are some cases where there is slightly more flexibility, but that is further down the road. No one can apply as part of the same family because we do not want them to have a shared income. Within the groups, only one person can be a street vendor, and the rest have to be local or within their houses. Finally, they have to bring a photocopy of their documents.

The second step is when the staff collects their personal data—name, where they were born, financial situation, marital status, the business they have now, and information regarding the business.

The third step is an economic evaluation of the house and the business, accounting for the debts and current loans they have in order to measure the margin of capacity. During this process, a reliable neighbor is always consulted as a secondary reference. The credit assessors perform this task.

In the fourth step, the group returns to the office to sign the petition of credit and a final analysis on their capacity to return the loan as a group and not only as individuals—in terms of how well they know each other—is done. Once this step is complete, each person receives credit for a period of 8 to 14 weeks. The first loan is always very low. Once all these steps have been completed, they sign the contract.

The process is broken by days. Monday is when people first come petitioning for a loan. Tuesday and Wednesday are evaluation days. Thursday is the day to sign, and they can collect the loans on Friday. In total, it takes about four days to complete the entire process. Eighty to eighty-six percent of those who apply for a loan are approved to receive a loan, mainly because the requirements are very clear from the beginning.

Can you elaborate more on the payment return process?

Friday, or the last day of the week when there is a holiday, is when credit is commissioned, and those who distribute it are always the administrators with the most seniority. When we consider the amount of the request, each group can only request up to 60 percent of what they are capable of paying, a number which is developed from a formula that accounts for all of the business costs and profits, their personal finances in terms of outstanding debts, and the cost of household bills, education, health, etc. Sometimes people will want to request a loan up to this 60 percent, sometimes it is less, but then when we consider different payment plans, we can see the quota of security based on the number of weeks and the weekly amount. This allows for a large, 40 percent margin of security in case something should happen.

Recuperations are the cases where people do not pay back their loan on time. The entrepreneurs are first contacted by telephone and, if the office is still unaware of the situation, then they will visit them.

What is the role of faith in the work of Protagonizar?

Faith is transmitted in the actions of Protagonizar. The entire process—the structure and the formalities as an institution—promotes cooperation, social awareness of people, and solidarity, values that are all implicit. The role of faith is not explicit but rather layered in the way the organization is run. We are not looking to offer assistance in the paternalistic mindset that if you are poor, you cannot pay. In fact, it is the opposite; if you are chosen to receive a loan, it is because we believe you can do this. We understand that there are always bad situations that can prevent a person from being able to pay. These people are given a grace period of one week, but this exception is granted only when necessary.

Given your involvement with Protagonizar since the beginning, can you please speak about the relationship between the foundation and the community?

As we have grown in size and numerically, we also have a more permanent presence in the community, and the importance of the family is integral to us. Protagonizar’s purpose also has a psychological aspect where we listen. They share with us stories of their lives, and sometimes people will come into the office for advice. Sometimes there are problems about their children’s education, and they will come into the office and ask for help with this or for something else. Our knowledge of the community is very important to us; we know which people are dangerous, the local area, and all of this contributes to the accountability of the entrepreneurs. We know the name of each person and whatever things are happening in his or her life. We are invited to birthday parties and family parties. We just received an invitation to the fifteenth birthday party of an entrepreneur’s daughter. We know about their health. We check up on them. The people speak well of us, and we have a good reputation. All of this is very different in comparison with the banks, very different. We are not only economical. We are always looking to the future and how to improve our negotiations with the people so that they can improve their health, education, and home. These three things are the most important. Some people have been with Protagonizar for many, many years, and you can see how they have improved in these three aspects over time. The goal for others who are just joining us now is to be independent by improving their business, and, once they are capitalizing more on their profits, they can then begin to invest in their house.

In your opinion, what are the impacts of Protagonizar on the community?

The impacts are very large—first in terms of the businesses. There are more markets and higher levels of production, achievement, land, expansion, and housing conditions, including installing floors or walls. It also has effects on the education of the community because the public schools, run by the states, are not very good here. If a family has the money to send their students to a private school or the Jesuit school in the area, they do. Protagonizar has also had impacts in helping people improve their health and buying necessities such as clothing. These are the impacts that are the clearest and significantly obvious. However, there are also impacts that are more implicit in helping people improve their lives and develop personally by learning and understanding how a better business depends on a better entrepreneur. In some cases, there would be someone who could produce a product very well but lacked experience in the market of selling the product.

Can you share some of the impacts Protagonizar has had on your own life?

Protagonizar is a part of my life. I not only work here eight hours a day but also have worked here for ten years contracted and fourteen years in total. It’s beautiful working as a team together. Beautiful. I love it. The offices are small enough that we often share responsibilities or cover for someone if there is an illness. Communication is fundamental, and we share information, comments, and advice on each other’s positions of expertise during lunch.

Besides everyone that works at Protagonizar, the contact with people is my favorite part. It’s a mountain of sentiments. I love going out on the bikes for visits. I will visit someone who doesn’t have the necessary conditions but is persevering, and it’s hard. I feel bad because I cannot do anything to help them, and yet in the same week I’ll encounter someone in a good position with charisma, and I will be able to see the growth and progress of their business. There will be the same type of business, but each one has its own personality. Some people are very happy while others are more serious. There is a lot of diversity. It’s a very rich experience.