See what Joe Blatchford's Accion is doing today
ACCION International was founded in 1961 to address the desperate poverty in Latin America's cities. Begun as a student-run volunteer effort in the shantytowns of Caracas, ACCION today is one of the premier microfinance organizations in the world, with a network of lending affiliates that spans the hemisphere. Over the last three and a half decades, ACCION has built a tradition of developing innovative solutions to poverty. Though ACCION's approach has changed over the years, the driving force behind its mission remains the same.
It is still the people we serve - the women and men of our impoverished communities - who shape our work. It is their courage and ingenuity, and the tremendous power of their dreams, that continues to inspire us and to renew our dedication to the search for new and better solutions to poverty.
A Retrospective
Building a new community center in Valencia, Venezuela. ACCION International was founded in 1961 by an idealistic law student named Joseph Blatchford.
An amateur tennis player, Blatchford had just completed a goodwill tennis tour of 30 Latin American cities. He returned haunted by the images of Latin America's urban poor the crowded shantytowns and open sewers, the hungry, hopeless faces.
Determined to help, Blatchford and his law school friends raised $90,000 from private companies to start a new kind of organization, a community development effort designed to help the poor help themselves.
In the summer of 1961, Blatchford and 30 volunteers flew to Venezuela and set to work. Initially greeted with skepticism, the fledgling "ACCIONistas" were soon working closely with local residents to identify the most pressing community needs. Together, volunteers and residents installed electricity and sewer lines, started training and nutrition programs, and built schools and community centers.
Over the next ten years, ACCION started programs in three more countries: Brazil, Peru and Colombia, placing over 1,000 volunteers and contributing more than $9 million to development in some of the poorest communities of Latin America.
Microlending Begins
An ACCION microborrower in Recife, Brazil (circa 1974). By the early 1970s, ACCION's leaders were becoming increasingly aware that their projects were not addressing the major cause of urban poverty in Latin America: lack of economic opportunity.
"We began to sense that a school or a water system didn't necessarily have long-term impact. We were simply reorganizing the resources that a community already had within it, rather than increasing their resources," former ACCION director Terry Holcombe said.
The employment situation in the urban centers was dire. Drawn by the mirage of industrial employment, thousands of rural migrants were flocking to the cities each year. Once there, however, they found jobs scarce. The few that were available often did not pay a living wage. Unable to find work, and lacking a social safety net, many of these urban poor started their own small enterprises. They wove belts, banged out pots and sold potatoes. But they had no way to grow their tiny businesses. To buy supplies, they often borrowed from local loan sharks at rates as high as ten percent a day. Most of their profits went to interest payments, leaving them locked in a daily struggle for survival.
In 1973, ACCION staff in Recife, Brazil noticed the prevalence of these informal businesses. If these small-scale entrepreneurs could borrow capital at commercial interest rates, they wondered, could they lift themselves out of poverty? ACCION's Recife program coined the term "microenterprise" and began issuing small loans. To our knowledge, these first loans launched the field of microcredit.
The experiment in Recife was a success. Within four years, the organization had provided 885 loans, helping to create or stabilize 1,386 new jobs. ACCION had found a way to generate new wealth for the working poor of Latin America.
Microlending: One Woman's Story
Celestina Quispe Rafaele de Tuiro
San Juan de Miraflores
Client of Mibanco When Celestina Quispe first began borrowing from Mibanco (then ACP) twelve years ago, she supported her four children by selling vegetables on the streets of her neighborhood, a sprawling urban shanty-town on the outskirts of Lima. Today, she is the proud owner of three small businesses.
Celestina's first $50 loan from Mibanco allowed her to buy higher quality produce at lower cost. With the additional profits she earned, she was able to save enough money to open a candy stand in San Juan's principal market.
Since then, Celestina has taken out 68 more short-term loans, ranging in size from $50 to $2,000. With that capital and some basic business training provided by Mibanco, Celestina expanded her candy stand and opened two businesses for her daughters: a vegetable stand and a book shop. The increased income has transformed the family's home life. Today, they live in a house with a concrete floor, electricity, running water and a sewer hook-up — "luxuries" they had never had.
Expanding Opportunity – Building a Model
BancoSol has more borrowers than any other bank in Bolivia. Its clients are market vendors, sandal makers and seamstresses; first loans average $125. Over the next decade, ACCION helped start microlending programs in 14 countries in Latin America.
ACCION and its affiliates developed a lending method that met the distinct needs of microenterprises. Small, short-term loans built confidence and a credit record; site visits replaced paperwork.
With a loan repayment rate of 98 percent, ACCION's clients soon shattered the myth that the poor were bad credit risks. Given access to affordable capital, they could and would improve their lives.
ACCION soon found that microlending had another revolutionary quality, it paid for itself. The interest each microborrower paid helped cover the cost of lending to another.
The ability to cover costs, augmented by ACCION's new loan guarantee fund, the Bridge Fund, enabled ACCION's affiliates to connect with the local banking sector and dramatically increase the number of microentrepreneurs they reached. Between 1989 and 1995, the amount of money loaned by ACCION's Latin American Network multiplied more than twenty times. Yet ACCION was reaching less than two percent of the microentrepreneurs in need of its services.
ACCION remained convinced that microlending had the potential to transform the economic landscape of Latin America. To do so, however, ACCION knew that microlenders would need access to a much larger pool of capital.
In response, ACCION helped create BancoSol, the first commercial bank in the world dedicated solely to microenterprise. Founded in 1992, BancoSol is a bank of the poor: its clients are typically market vendors, sandal makers and seamstresses. Yet today, BancoSol has the largest number of borrowers of any bank in Bolivia, serving nearly 40 percent of the country's 170,000 banking customers.
In 1994, ACCION helped BancoSol sell certificates of deposit in the U.S. financial market, certificates backed by nothing more than the good word of a woman selling oranges on the streets of La Paz. For the first time, the world's premier financial institutions invested in microenterprise, not out of charity, but because it was good business.
BancoSol is no longer unique: several ACCION affiliates are now regulated financial institutions and others are on their way. With the power to access the financial markets, they have the potential to reach not just thousands, but millions, of the poor.
Bringing Microlending "Home": The U.S. Initiative
George Sabbagh used to work long hours to cover the high cost of leasing a taxi cab. A loan from ACCION Texas allowed him to buy his own taxi, cutting his expenses in half. In 1991, concerned about growing income inequality, unemployment and urban alienation in the U.S., ACCION brought its microlending model home, starting a program in Brooklyn, New York.
Over the next five years, ACCION worked to adapt its lending model to the very different social and economic context of the U.S. Today, ACCION is the largest microlender in the country, with sites in Albuquerque, New Mexico; Atlanta, Georgia; Brooklyn, New York; Chicago, Illinois; San Antonio, Texas; and San Diego, California. By the end of 1999, the ACCION U.S. Network had loaned more than $19 million to 3,200 low-income entrepreneurs.
In 2000, ACCION USA was launched. Its goal is to serve microentrepreneurs throughout the United States - regardless of location. To reach more low-income business owners in need of credit, ACCION USA began work on centralizing loan processing, exploring Internet-based lending and call centers, and opening new lending offices.
