Sustainability and Grassroots Tools Mexico 2025 v. Dec. 20 2024 posted

Introduction

• Grassroots tools for sustainable development with a focus on microfinance and fair trade.

• Presentation by Professor Paulette L. Stenzel, Professor Emerita, Michigan State University.

Professor Stenzel's Background

• Research areas include: Mexico, Guatemala, Cuba, Tanzania, Ecuador, Nicaragua.

• Focus on trade agreements: GATT (WTO), NAFTA, USMCA, and CAFTA-DR.

• Studies grassroots tools: Fair Trade, Direct Trade, Microfinance, Cooperatives, Organics.

• Research on B-Corporations.

• Personal website: www.tradeandsustainability.com.

• Collaborative research includes Jose Ortega, Rosio, Leonardo on a Maya Vinic Coffee Plantation.

Microfinance

Need for Microfinance

• Addresses the financial needs of low-income individuals.

• Usury defined as charging excessive interest rates.

• Background on Spartan Global Development Fund (SGDF).

• Intersection of grassroots tools.

Definition

• Microfinance offers financial services to help low-income individuals gain self-sufficiency through accessible capital.

• Initially focused on microloans with fair interest rates; currently expanded to include savings and insurance.

• Supports sustainable development through the Triple Bottom Line model: people, planet, profit.

Usury and Microfinance

• Usury laws protect borrowers by capping interest rates.

• Many developing countries lack usury laws, leading to exploitation.

• Example: Francisca Cano's loans from Esperanza en Acción, funded by SGDF.

Interest Rates in Microfinance

• Vary widely: no interest from organizations like SGDF to 20-30% typical range.

• Predatory lending exists, with rates up to 100% in certain countries.

• Example of Oscar Santillán from Ecuador highlights the extreme burden of high interest.

Case Study: Borrower Success Story

• Francisca Cano used loans effectively:

• First loan to build an oven.

• Second loan for purchasing a throwing wheel.

• Positive reinforcement from reliable repayment led to further credit support.

Spartan Global Development Fund (SGDF)

Overview

• Started with four loans through KIVA in 2009.

• As of December 2024, SGDF has made over $192,000 in loans, using repayments to fund new loans.

Structure

• Two main components:

• Registered Student Organization (RSO) since 2009.

• 501(c)(3) non-profit formed in 2011 with tax-deductible donations.

Intersection of Various Grassroots Tools

• Fair Trade, Direct Trade, Organics, and Cooperatives work synergistically.

• Many borrowers in microfinance sell Fair Trade products and are part of cooperatives.

Fair Trade Principles

Definition

• Fair Trade promotes equitable trade practices and sustainable development.

• Emphasizes a process rather than a final outcome.

Objectives

• Create a fair global economic system.

• Promote sustainability in trading practices.

• Address inequities from free trade agreements.

Recognition

• Look for certifications: Fair Trade Federation membership or product certifications.

• No U.S. federal law defining Fair Trade; organic standards are regulated.

Fair Trade and Organic Products

Certification Overlap

• Many Fair Trade products are also organic certified due to overlapping criteria.

• Suggestion for streamlined certification processes.

Understanding Cooperatives

Definition

• Cooperatives are owned by and operated for the benefit of their members.

• Common in both indigenous societies and modern contexts.

U.S. Cooperative Types

1. Customer-owned: e.g., MSU Federal Credit Union.

2. Producer-owned: e.g., Land O’Lakes.

3. Worker-owned: Steelworkers owning their mills.

4. Cooperatives owned by cooperatives: National Co-op Grocers.

Democratic Processes

• Members purchase shares to join, with profits distributed democratically.

International Cooperative Association

• Over 142 cooperatives in Mexico associated with the ICA, with over 5 million members.

Cultural Relevance of Cooperatives in Mexico

• Strongly tied to indigenous values of community ownership.

• Historical context supports cooperative models.

Direct Trade

Concept

• Similar to Fair Trade but without certification, leading to potential inconsistencies in standards.

Child Labor in Cocoa Industry

Overview

• Child labor is prevalent in cocoa production, particularly in West Africa.

• The International Labour Organization defines child labor as harmful to children's dignity and development.

Current Conditions

• Many children work in exploitative conditions, earning minimal wages.

Actions Against Child Labor

• Efforts are underway to address child labor in cocoa production with significant involvement from various stakeholders.

Impact of Microfinance Institutions

Case Study: Grameen Bank

• Founded by Muhammad Yunus in Bangladesh.

• Focus on lending to women and helping develop low-income communities globally.

Funding and Services

• Funds sourced from Fair Trade pricing, social premiums, and contributions from various organizations.

How to Get Involved

• Educate yourself and others about microfinance and fair trade.

• Join SGDF and contribute to Kiva loans.

Conclusion

Questions Addressed

• Whether microfinance institutions should profit - often unscrupulous entities.

• Importance of group-lending and community responsibility in microfinance.

Optional Slides

• Additional topics for further consideration.