The Hustle

December 9, 2008

The socias have a lot going on – I know I’ve written before how impressed I am with their ability to leverage every opportunity and connection, no matter how slim or tenuous – but I feel like the topic deserves a little more attention. I mean, I can write “Senora so and so is hardworking” or “Senorita Tal y Cual is thinking of going into autoproducts to supplement her husband’s mechanic business”; but, I don’t think I’ve yet been able to describe the variety or ingenuity of their ventures.

For one thing, these women are not just borrowers – they extend credit themselves. I didn’t realize this at first. I would meet sellers of bedding, clothing, towels, beauty products, household goods and when it came time take their picture, they might have very little of their product to show me. I assumed the socias were using their loans to buy their wares in bulk from wholesalers or for travels to larger cities to buy directly from product makers – this is occasionally the case. But most times when I would visit their businesses, there was no sizeable stock of products to be found.

“Where are your blankets/blue jeans/teapots?” I ask.

“Oh, I don’t have any right now. When I need goods I just buy there at the down-the-block market and sell them here.”


“No, I don’t buy in bulk, I buy what people order from me and I just keep a few items to walk with door-to-door when business is slow.”

I would wonder why her customer wouldn’t just take the ten minute walk to the market herself.  I mean she’s already there buying teapots/blankets/blue jeans to sell from her own house.

Last week (I’m ashamed it took me so that long to ask the right questions), I realized: these women are running full-scale businesses based on extending credit and lay-away programs to their neighbors, families and friends. The socias negotiate payment plans with their customers: bargaining the price, whether Senor Shoebuyer will pay monthly, weekly or even sometimes daily; and, after the deal has been struck they purchase the agreed upon product using the capital from their microloan.  A pair of shoes or a set of sheets might be paid off in a couple of months.  A teapot or a week’s worth of groceries could be paid off in a matter of days.

Some socias keep running accounts for customers at their bodegas.  They tell me that even though the maintenance of these accounts can be time-consuming, it keeps their clients loyal to their stores.  And they are fully invested in the business of keeping tabs.  Socias visit clients on scheduled payment days to collect the equivalent of perhaps $2 or $3 per week.  If clients are behind, then they must make up their missed payment the next week or the week after.  In this respect it’s very similar to a loan officer’s work.  The socias tell me they must be very careful not to extend credit to clients who won’t pay; they can’t afford to absorb losses especially when – even after all their legwork – they are working on profit margins of just a few cents.

I’ve even come across a few instances where a socia will use part of her loan to become a money lender herself.  Granted, I have to wonder if this is bending the rules (I think it is) or if it borders on the unethical (here, I don’t think so quite so much). Still, when it comes to money-making, I’ve come to understand that the socias will adapt any opportunity they have to feed the families, build the extra bedroom, or pay the tuition.  Credit programs are just one of the many tools they employ to squeeze a living out of Peru’s drastically poor economy.

And, without these women, the customers would go without for lack of two five dollar bills to rub together.  With around half of the population living on less than $2 per day, their role as creditors is providing a vital service to their customers.  The socias in turn depend on Manuela Ramos to  continue to provide low cost capital to finance their endeavours.  And, finally, Manuela Ramos relies on international bulk credit providers like Kiva to help them increase their lending capital, and consequently, their reach.  And so the chain of capital and credit flows.  So , you Kiva lenders out there can be sure that your capital is going to good use.

In the words of a socia I interviewed last week, “Give a Manuela Ramos socia seven dollars and she’ll turn it into a hundred!”


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