Microenterprises - Macro Important

The initiative of a nun, Nuevo Paradiso offers an alternative to the poverty many of the families, encountered as part of a rural exodus to cities.

Residents work in four small factories which have been established in the community. There is a brick-making factory and a tile-making factory, both of which take advantage of the clay-like soil in the region. There is also a bakery and a carpentry shop.

Each family has an average of five children. The women work in the factories while the children are cared for in the day care and elementary school in the community. With their earnings, families are able to build their own homes and the maturing youths have employment waiting for them when they are ready to work.

"Here, families are building their own homes. If they were in the city, they would be living on the street," says Benjamin Gelfenstein, an industrial engineer, expert on small business development and lecturer at the Golda Meir Mount Carmel International Training Centre (MCTC), in the northern Israeli city of Haifa.

Gelfenstein visited Nuevo Paradiso in July, 1995, as part of an on-the-spot course he and his teaching partner Marcelo Firstman were giving on Women and Management of Microenterprises (small businesses). Flipping through the notes he wrote during that visit, Gelfenstein points out how much the community epitomizes the basic philosophy of the courses: to help rural population groups apply self-help technology to generate jobs and income and improve their standard of living.

Since 1987, Gelfenstein and his colleagues from MCTC - in 1995 it was Yehoshua Erlich, Shulamit Ferdman, both teachers of the income generating and community development courses given by MCTC, Marcelo Firstman, whose speciality is accountancy, and Beatrice Barmaimon, an expert on industrial design and product promotion - have travelled to Latin America several times a year to offer on-the-spot courses in microenterprises and community development and related subjects.

His living room is decorated with wall-hangings and artifacts from El Salvador, Ecuador, Argentina, Peru and Honduras, just a few of the places where the courses have been given.

Rapid population growth in many of these countries, combined with high inflation and a lack of basic services have led to an increase in poverty and unemployment. In the face of these difficulties, microenterprise can be viewed as one possible means of alleviating poverty through the creation of employment for income generation.

A microenterprise can be "almost anything which produces goods or services. It is often family-run," says Gelfenstein. This could be a jewellery workshop operated out of a room in a family's home; a leather workshop which fashions belts and handbags from leather scraps; or a lunchstand providing meals for local workers, or any other service.

The courses are usually offered at the request of a governmental or non-governmental organization which works with local communities, industrial organizations and with small enterprises and is seeking ways to broaden its activities.

The courses vary in content and length, usually running from one to three weeks. But they are loosely structured in the same way. Participants study how small businesses are established, learn more efficient ways to run them, identify available resources and talent, and use these resources in the most efficient manner. These participants, men and women, are marketing experts, social workers, economists, administrators, agronomists. Sometimes they are owners of small businesses themselves and sometimes they work for the Ministry of Commerce and Industry or a non-governmental organization encouraging such income-generating projects.

The courses focus on learning through hands-on experience. To this end, participants are broken up into work groups of roughly 5 people - about the size of the average small business. Each group must come up with an idea or project, conduct market research to determine the amount of future demand and level of competition, determine the best and most efficient means of production in relation to available financial resources, deal with marketing and promotion schemes and devise a system to program future activities. Use of foreign technology is discouraged since it may hinder local initiative. "The key is to identify local potential and encourage innovation," Gelfenstein says.

Since microenterprises lack the resources available to larger urban industries, most produce food items, clothing, shoes or wood and metal implements. This is reflected in the projects of course participants, as well. "In every course, there is always one group which decides to provide some sort of food service for the rest - preparing and selling sandwiches and drinks," he says.

Gelfenstein walks to the bookshelf, where he has displayed some of the items which have been made in various courses. He returns with two brightly painted stone paperweights, the first made by a group during a course in the Dominican Republic and the second made by a group during a course in Venezuela. Both courses took place in rural regions near rivers, which were the sources for the cost-free water-smoothed stones. Another item is a bamboo desk organizer, made by a group in Panama, which took advantage of an abundant supply of the fast growing wood-like grass. Other groups in the same seminar made dolls and key rings. In El Salvador, a group purchased cloth and designed and produced bed linens. One course group in Lima and another in Arequipa, Peru, produced jams with no artificial additives. All of these were produced in order that the participants should experience the actual running of a microenterprise.

Courses on community development focus on assessing a particular community, identifying problems, proposing solutions. The establishment of a microenterprise could be one solution, for instance. In one community near Cali, Colombia, many women in the community worked in a small ceramics factory. There was no day-care centre for children. There were also limited employment opportunities for young adults. A proposed solution was to establish a kindergarten, which would provide employment opportunities while freeing parents to work or start their own microenterprise.

Visits to communities and small businesses underscore how much local potential is already being realized. In a community near Cali, Colombia, one young man, a participant in an on-the-spot course a number of years

ago, purchased matches, candles and salt in bulk, then sold them in smaller quantities to other members of his community. In El Salvador, a husband and wife operate a bakery from their home. In Chile, one individual fashions jackets from scraps of denim. In Lima, Peru, an on-the-spot course on income generating visited three family-run small industries, which respectively produce athletic shoes, plastic products and leather goods. In Arequipa, in southern Peru, one family operated a silver jewellery workshop out of one of its bedrooms. These visits serve ascase studies for analysis in the classroom.

With managerial skills and entrepreneurial drive, careful administrative and production organization, utilization of available government funding or other assistance, microenterprises can develop into stable and profitable entities.

In Juliaca, Peru, some 200 microenterprises joined forces to form a textile cooperative that produces cotton clothing. The combined capital, along with assistance from non-governmental agencies, has made it possible for the cooperative to lower production costs, increase production levels, and purchase equipment which will improve the quality of the clothing for export to other Latin American countries.

Gelfenstein regrets that because the microenterprises he has visited are spread across Latin America, follow-up is difficult. He adds that each course and visit to another country brings new examples of local innovation.