Feature Articles from the Woodstock Report [Woodstock Report, October 1995, no. 43]
Copyright © 1995 Woodstock Theological Center
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Father Gasper F. Lo Biondo, S.J., senior fellow at the Woodstock Theological Center, coordinates the program area called the "North-South Dialogue." This program sponsors a series of collaborative international dialogues about integrated development strategies where deep-rooted poverty persists. In the following interview, James L. Connor, S.J., director of the Woodstock Center, speaks with Father Lo Biondo about his North-South project.
The program area you are responsible for at the Woodstock Center is called the "North-South Dialogue." Who are the "dialogue" partners and what do they talk about?
The dialogue partners are Jesuits, their colleagues, and other interested people in different countries of the Americas, North and South. The topic we discuss is development, sometimes called "Third World development." We choose dialogue partners on the basis of their expertise, experience, and concern for the morally urgent problems related to development and development strategies. Our dialogue partners are concerned for development in the fullest sense: personal, intellectual, moral, and spiritual, as well as economic, social, and political. All these dimensions go together.
Specifically, what is the expertise and experience you look for in your dialogue partners?
There are educators who work directly with the young and with adults, many of whom are illiterate. There are scholars, of course, who do research at every level of society on different aspects of development. There are development practitioners who deal with the technical aspects of development. There are pastoral ministers who build small Christian communities or who are working in church related development projects. Then you have foreign policy experts who take in information and devise policies at the international level to foster development. Finally, the major dialogue partners are the financial decision makers in the private sector, at the highest levels and at the lowest levels. The latter category includes the poor.
How did you become interested in this area? Is there something in your own background that prepared you to work in this North-South Dialogue area?
I taught in Chile for two years as a Jesuit scholastic back in the '60s and then, after ordination, spent five years doing urban pastoral ministry work and work at The Catholic University of America. I also lived for two years among the rural poor in the countryside doing research on basic demographic and economic data and conducting informal adult education sessions. Many of these people are still my friends. So when I left Chile over 20 years ago I carried with me a sense of the need for development from the viewpoint of people on "the underside" of development, you might say. When I returned to the United States from Chile I studied economics at American University here in Washington and received a Ph.D.
What was your area of interest?
The history of economic thought. My dissertation covered the history of the hundred years prior to the first expression of just price by Thomas Aquinas in 1270. It explored how economic thinking was embodied in the laws promulgated by the Catholic Church and in the civil laws developed at that time, the time of the commercial revolution in Western Europe.
What is the specific focus of your work in development at Woodstock right now?
For the past two years I have been doing interviews, consultations, research, and publication about programs that assist very small business people in Latin America. These people are popularly called "microentrepreneurs." The assistance they get is economic: capital is provided so that they can start and then run their small businesses. But, if well done, their development has many other dimensions as well. I am interested to see what makes good programs work well, and in the course of my analysis perhaps to make some constructive recommendations for their improvement.
Why did you decide to focus on small business people and microenterprise development?
I guess there are several reasons. The first would be my personal friendship with so many poor people in Chile. I wanted to hear their side of the story and learn from them what they were experiencing in their effort to alleviate their poverty and become self-employed with some financial stability.
Second, I have been concerned that many development strategies and technologies among economically poor small business people frequently result in the fragmentation of community and the promotion of individualism. That undermines true human development. Need that be so, I wondered.
My third reason for getting into microenterprise was my interest to find out, first hand and at the grass roots, how small businesses are being financed and capital provided. It is very difficult, as you know, for small businesses run by poor people to get capital financing directly from international lending agencies or commercial banks. Banks, even in our country, are having their own financial problems. And conventional wisdom says that lending to the poor is too risky a venture to undertake.
As an alternative, then, private microenterprise organizations have quite recently cropped up, not only in Latin America but all over the world, to develop financial instruments giving investment capital in small quantities to very small business people. How do they really work, I wanted to know. What is this process doing to and for the people? Is there anything to be learned on the local level that might be instructive for national and international development efforts?
You said your first project focused on microenterprise development in El Salvador. How did you happen to choose El Salvador as the site?
It was by very happy coincidence. I had been trying to familiarize myself with microenterprise programs in various countries in Latin America. People at Catholic Relief Services came to know of my interest and, after some consultation, invited me to do a project for them in El Salvador. They work through 11 non-governmental organizations that have microenterprise programs throughout the country. It was an ideal "mesh." The question they wanted studied was this: should you give people credit to start their businesses and then run a training program for them after they have had some business experience? Or should you run a training program first, and then give them credit when they are well enough educated to use it responsibly? Or should you do both at once, which Catholic Relief Services had been doing?
These seem like simple questions, but underneath them are issues that relate not only to business success but to personal and moral development. I'm interested, as I mentioned, in having all those dimensions included and considered as well. So I was happy to do the study because I wanted to see how one could design a dynamic, informal adult education program which is integral to the lending process.
How was the study designed?
Two of us worked out the design of the project. I was very fortunate to have as a collaborator a young lay professor at our Jesuit university in El Salvador, Rafael Pleitez. We first refined our goals and then developed a survey to help us get information from all the people involved. Under Rafael's direction university students conducted this survey, and the research center at the Jesuit University analyzed the results. It was a big job for me to interpret these results, after I got back to the United States. Besides this relatively technical survey, we also developed an interview process to use in conversation with the people running small businesses. Face-to-face interviews are invaluable because many of these people cannot read, and it is only in the course of doing business that they learn to count in their heads, instead of on their fingers or with beads.
Did you visit and interview the small business people yourself?
Yes, I spent a month in El Salvador and interviewed a total of 112 people. That was a lot for one month. I met with some of them in groups, since they worked as a group. But I conducted 62 personal interviews in six different geographical areas of the country.
What kind of businesses were these people in?
The majority of them sell vegetables--about fifty percent, I would say. Others sell things like shoes, buttons, clothing, especially children's clothes. Some are in the "restaurant business," if by that you understand that they sell lunch to shoppers in the marketplace from a tabletop supported by sawhorses. Others do hairdressing in the front room of their small houses. These are very humble "businesses," as you can imagine. These people are just a step above the "poorest of the poor."
Do these people make or produce what they sell?
Very few are producers. Most of them buy from a source and then sell their product to others. But in order to buy, they first need some capital. They also need financing for the system, however simple it seems, of transporting and delivering the items to be sold. The money may not seem much by U.S. standards, but it can mean life or death for the business and the livelihood of the poor entrepreneur.
How do they get the capital? How does the "microenterprise development" system work?
In the study I made in El Salvador the system would typically begin with a field worker from Catholic Relief Services identifying the individuals who appear ready to take the risk to "go into a business." They have the interest, the ideas, the basic competence, and initiative. The field worker introduces them to one another, if they aren't already acquainted, and asks if they want to form a group in a microenterprise development program. If there is willingness and commitment to the process, as explained, then non-governmental organizations financed by Catholic Relief Services provide the initial modest outlay of capital to enable people to get started in business.
Is capital given to each individual?
Yes, but their savings are pooled. The group then covers the defaults of its members. Therefore, each member has a responsibility to the whole group and to all the other members for the success of the process. Each microentrepreneur or small business person does his or her own borrowing from the group fund, and returns a percentage of their income back to the fund. They gather together, they learn together, they discuss together, and they pool their savings together. The "collateral" for the loan is in the relationship that these six to ten or fifteen people have with one another. They will pool their resources to make up anyone's default. There is a trust between the lender and the lendee, not just a pure contract, that the other person is going to tell the truth about the situation. So these people are bonded within a community. They are related on a level of cooperation that means that they will cover for each other in the event of default. When you hear or read about "village banking" in the Third World, it is these small communities you are learning about. Arrangements like these are also called "microenterprise poverty lending methods."
Does it work? Do people pay back their loans?
Its success is extraordinary. The return on investment is in the high 90 percent range. This system was started in Bangladesh by an economist named Mohammed Yunnus some years ago. The success of his "Grameen Bank" is what has motivated others to start up these microenterprise groups all around the world. Their success gives you a completely different view of and respect for poor people who want to help themselves to become self-supporting.
What kind of questions did you ask these people in your interviews? What were you trying to find out?
My interest was multilayered, as I mentioned. I wanted to learn how they were doing financially, and therefore how well they had come to understand the technical aspects of running a small business (purchasing, marketing, accounting, pricing, and so on). I was also interested in how they were handling decisions which had moral implications--"moral" in the broad sense, as well as "ethical" in the business sense. I wanted to learn what was happening to them, to their families, to their communities and neighborhoods, to their culture, as they worked away at becoming small business people and made the decisions they inevitably faced. Finally, in light of all this, I wanted to find out what kind of training would be helpful for them, and how that training could best be provided.
That's a big order. How did you go about it? Specifically, how did you conduct your interviews?
I would invariably start with the technical, not the personal or much less ethical, aspects of their work. I would ask them about their credit, the various aspects of their actual credit activity, their savings and so on. They receive credit in four or six month cycles, with progressively more demanding stipulations for renewal. So I would ask them what cycle they were in and how long they had been in it. "Do you plan to continue?," I would ask.
My questions were all couched in relational terms because Latin Americans, like many people in the Third World, view their world in primarily relational terms. And they would understand my questions better in terms of relations. So I would talk about their relations with other members in their little solidarity group. I would ask a little bit about how the group was formed and their trust level. I asked if they have had problems and how the group has helped or not with the solutions of those problems. I asked them if they have a responsibility in the group. For instance, each group has a treasurer. They learn to take responsibility that way. It is a kind of leadership formation in the doing of business activity.
Then I ask about their relationship with the people to whom they sell their goods. Most of them are merchants, as I said. A few are producers but they also sell. They don't have very complex marketing techniques, but I find out about how often they sell and what their commercial activity is. I also asked about their relationship to the public sector, the local government, for instance, the mayor of the town.
Finally, I asked what important decisions they had made. What decisions did they feel were key? And what did they learn from that experience?
These are important questions if I am going to understand the dilemmas they face in making their decisions. I have to know their world. Amazingly, the people were very open to the questions. Of course, their willingness to receive me into their home or their workplace in their very busy schedule was based mostly on their trust in their field worker. He or she would have told them I was coming and that they could trust me. Finally, the field worker personally introduced me to each one.
What kind of problems or dilemmas do these people typically encounter?
Problems have to do with having their merchandise stolen or losing their money or a disaster at home. Someone gets sick or has an accident. In the world of the poor these situations come up frequently and unpredictably.
I'll give you a few examples of dilemmas where decisions are demanded. They are small from our point of view but they are major life decisions for these people. In one particular town many of the microentrepreneurs are producers. They sew and make towels, tablecloths, and things, because that was in the culture of that town from way back. They all bought their thread from a particular seller in a big city far away, but the big seller of thread upped the price so that many of them were unable to buy the thread. When I arrived they had a big decision to make: whether to stay in that business and, if so, how to go about getting the money to buy thread.
This involved making judgments, from their point of view, about relationships with people. So they not only had to make hard business decisions, but had to weigh other factors as well.
Another decision for someone at the very lowest rung of the ladder is whether to continue after the first cycle even when they have been successful. They sometimes feel that they have accomplished enough and don't need to go any further. They may not have an entrepreneurial mentality of making more and going beyond. For many of them there is the fear that going on will change their lives in a bad way: putting them on a treadmill of "more and more and more."
They realize that they will be able to buy clothes, allow their children to go to school, be able to pay for medical care, especially for their children, and maybe better their situation at home. But if they go on to borrow higher and higher sums of money, they might default, and then their situation could be disastrous. So decisions about borrowing more money to expand business can have serious implications for them.
Based on these interviews with people and the survey results, what conclusions did you reach about their educational needs and the way to meet them?
If their businesses are to survive and succeed, the people clearly need to increase, step by step, their technical understanding of the way business works: capitalization, production, marketing, accounting, pricing, and all the rest. But education in these skills must take their concrete situations into account, and not simply be "imported" from a U.S. business context. For instance, none of these people can make it individually. Only as members of a microenterprise group or community do they have the access to funding, the shared resourcefulness, and the continuing encouragement to succeed.
So any program which is purely technical is a formula for failure, even from the business or economic aspect, let alone the human and the humane aspect. The people have to learn, simultaneously, how to live healthy, interdependent community lives together. They have to learn how to make decisions for their own progress within the larger good of their microenterprise community. Moreover, since they are such family-based people, they need to weigh, in their decisions, the values of family within the context of business and of the microenterprise community.
How in the world do you teach these skills? Do you run workshops? Seminars? Send people away to school?
Some formal training, adapted to the tight time limitations of the people and their level of formal education, is a good idea, and necessary. But what is essential is that the training be concurrent with the doing of business and the decisions required. It is sort of in-service training. You don't learn how to make good, ethical, responsible decisions in abstraction from actual, concrete decisions themselves. We learn responsible decision-making in the making of responsible decisions--upon which we reflect, hopefully before and during, but certainly afterwards, to see how well we have done, so we can do better in the future. Good decision-making is the art and exercise of practical prudence, not an abstract theory or science.
In the developing Third World, where community membership is essential for business success, technical education and what I would call "moral" education have to go hand in hand. They can't be regarded as two discrete educational compartments.
As you talk, I have been having an odd feeling of unreality. Capitalism is supposed to be based on individualism and competitiveness. And here you are telling me that community-building and capitalism have to go hand in hand. What's going on here?
We get trapped in stereotypes of capitalism or the free market economy. Capitalism isn't and need not be a single, monolithic, ever-the-same kind of system. It can, should, and invariably will vary from culture to culture. There is a book on the subject that I have found instructive. It is called The Seven Cultures of Capitalism, written by Charles Hampden-Turner. It makes the point that the free market system will have different emphases and tendencies depending on the values, symbols, and meanings that are imbedded deeply in different cultures.
For instance, in our culture time is money. We are very jealous of time, we are in a constant hurry, we equate a short time with efficiency. Other cultures prize leisure, conversation, and interpersonal relations more highly. Their brand of capitalism will invariably reflect these unquestioned preferences. Some cultures are delighted to have a monarchy and find a hierarchical social order very consoling. In the United States we want to call our boss by his or her first name.
Finally, in the United States we prize individualism, so naturally it shows up strongly in our kind of capitalism. In other countries, community is a prime value, so their capitalism will incorporate it.
So capitalism doesn't have to be one thing. A question facing all of us today is what "face" or form of capitalism is more conducive to full human development for all of us, whether we live in the Third World or in developed industrialized societies. Given the fact that the economy is becoming more and more global, we are all in a process of development, and each of us has responsibility for all of us.
Is there a "Woodstock signature or impress" on your work in development? I mean, does it make a difference to your work that you are at Woodstock?
We have a characteristic approach to our work at Woodstock. It is concrete and pragmatic, as well as theological. It is rooted in the method St. Ignatius leads us through in the intensive "formation program" he designed, which is called the Spiritual Exercises. In itself it is a "praxis-reflection" model. We have updated it at Woodstock with the modern method of knowing and deciding diagnosed by the late philosopher-theologian Father Bernard Lonergan, S.J. The method seeks to stay very close to the hard, concrete data. It is an empirical, inductive process, very congenial to the social sciences. But it is also explicit about the context or "culture" of values and meanings in which the investigator works. That helps investigators to notice and clear away "hidden agenda" in a research project.
So in this project, we let the people have their say and teach us about their needs, aspirations, and desires. At the same time, by encouraging and allowing the people to express themselves that way, we are leading them through an educational and formation process without them even noticing it, perhaps. They are learning in the doing, just as we are! And when we come to making recommendations, it will be on the basis of shared experience in the doing, not just on some abstract ideas or principles.
Has your study been helpful to the Catholic Relief Services?
In light of our work, the Catholic Relief Services program in El Salvador has been redesigning its informal education program. Moreover, Catholic Relief Services has designed a workshop for the training of field workers in Guatemala using some of the ideas that came out of our study. New educational tools for adults have been forged, as well.
The most gratifying result is the fact that training and formation programs are beginning to integrate the technical with the moral, personal, and community aspects of development programs. These programs can be a model for full human development. This is relatively new in Latin America, where stress has been placed principally on the economic and the political.
How do you fund your work?
I received a $15,000 grant from the North-South Center of the University of Miami to provide partial funding for the project in microenterprise in El Salvador. Most of my expenses were simply absorbed by unspecified donations to the Woodstock Theological Center. Thank God for general support! It is hard to get grants for my kind of work, namely research in favor of the poor. Foundations tend, rather, to give money to the actual, on-site, hands-on development projects themselves. I'm biased, of course, but I think it is equally important to stand back and take a reflective look at, even make a theoretical analysis of what's really going on, so that future action can be better focused and directed.
What is your next project? Is there anything on the drawing board?
I have been invited to investigate the possibility of doing a similar study in Peru. The Jesuits in Lima run an enormous parish with a variety of social service programs, one of which is a community-based microenterprise program. When they learned of our work in El Salvador, they wanted me to discuss the possibility of doing a similar study for them. I am looking into it right now.
Thank you so much. We are looking forward to developments in the North-South Dialogue program.
If you are interested in more details you can check the two short articles I've published on the El Salvador Study: "Microenterprise Development in El Salvador: Changing Values, Village Banking, and Informal Education," published (in Spanish) in the March-April 1995 issue of Realidad by the Jesuit Universidad Centroamericana in El Salvador; and "Microenterprise and the Common Good," published by Catholic Relief Services in the summer 1995 issue of Innovation and Transfer, the Small Enterprise Development Newsletter for project managers around the world.
Feature Articles from the Woodstock Report