Although Bolivia is the poorest country in South America, microfinance is more highly developed there than anywhere else on that continent. The reason is simple: almost all the country’s banks view microfinance as one of their key products, and the provincial branches of those banks are dedicated exclusively to serving a low-income clientele with a need for microfinance. The country has three micro-finance institutions (MFIs): FIE, CRECER and Ecofuturo.

We began our research in Villazón, on Bolivia’s border with Argentina, where taking a simple stroll is enough to give you a sense of the effects of microfinance on Bolivian society. Through FIE we met three micro-traders: one selling toys in a shop, one selling shoes in a market stall and a third running a small grocery store. All three owe much to FIE for believing in them when their future businesses were still only in the plan stage.

In Uyuni, we met another three micro-traders through Ecofuturo. One was running a restaurant, the second a small hotel and the third a travel agency. Once again, even as mere tourists, the importance of microcredit in the area was striking to us.

Finally, in La Paz, we met the directors of the MFIs themselves: FIE, Ecofuturo, and ANED. FIE and Ecofuturo are microfinance banks, and can therefore collect savings, while their capital enables them to reach a large number of customers.

ANED, on the other hand, is an NGO. As a smaller structure, it cannot fulfil all the applications it receives. However, it is closer to its customers–both geographically and personally–and is more inclined to take risks involving financial innovation, like new products, due to its not-for-profit status. It focuses on the rural environment and differs from the MFIs because of its financial inventiveness.

ANED’s Executive Director, Gerardo Mendieta, views financial innovation as one of the cornerstones of the NGO’s activities in rural communities. The organisation is constantly seeking new financial products to ensure that its offering matches the needs of its customers as fully as possible. A culture of innovation is instilled into its staff as a part of the institution’s mission, and each developed product is tested according to an extremely precise plan.

Thus, in addition to basic services (loans, money transfers, foreign exchange, government aid payments, etc.), it offers a number of specific products which we shall describe in greater detail below. Readers, beware: the following section is somewhat technical, but is intended to give an overview of a system that goes beyond standard microcredit. Microcredit is of course essential, but on its own is insufficient to fulfil all needs, and the future of microfinance depends above all on its capacity to innovate and renew itself…like anything else!

Savings and Loan Boards (or communal banks): an association of people who want to apply for credit and set up savings so as to carry out joint, self-managed work projects. ANED is a pioneer in this type of scheme, which is now very widespread in Bolivia. The MFI aims this product principally at women who are seeking an opportunity to earn extra income for the family, in addition to the money derived from the agricultural and stockbreeding activities traditionally performed in rural areas. Thanks to the commercial banks, mothers can use that extra family income to buy food and pay for education and health care.

Moreover, group membership between women favours the development of mutual assistance, training and friendship. The communal bank thus benefits the whole community.

Micro-leasing: machinery or equipment acquired by the entity and supplied to a customer in exchange for the payment of contributions, which, when they reach maturity, lead (as an option) to transferring the ownership of the equipment or machinery from the entity to the producer: “We buy cows, goats and llamas and lease them to producers. We do the same with solar panels and agricultural machinery”.

Micro-warrants: a system that enables a producer to obtain a loan for which his produce serves as collateral. The produce is stored in a safe place under the producer’s supervision.

Micro-venture capital: ANED invests in capital (rather than in debt) in a company, so as to strengthen it. Thus, a micro-trader can gain access to funds designed to improve his business by setting up a temporary company. ANED’s investment will not exceed 50% of the company’s value.

Micro-invoicing: With this tool, ANED buys back its customer’s invoices, thus providing the customer with access to financing or a cash advance.

In Gerardo Mendieta’s view: “We are developing all these financial services because we think that credit on its own does not enable a customer to live. Customers need more than credit; they need a more comprehensive range of services”.

Now, the great discovery of our trip to Bolivia: Micro-justice.

In a café in La Paz, we met with Maria Choque, of Microjusticia Bolivia, who was kind enough to grant us an interview in the middle of the weekend. She explained to us the workings of a system that still unknown in Europe, where admittedly there is less need for it than there is in Bolivia, where it helps the most disadvantaged to fight poverty with the proper legal tools.

The first objective of Microjusticia Bolivia is to guarantee access to fundamental rights for Bolivian citizens, notably those from the most disadvantaged backgrounds. Among South Americans, Bolivians have the most limited access to basic legal services, microfinance, education, health and family allowances, all because they lack access to information, because the virtual distances between the country’s cities and its rural areas are enormous and, above all, because their civil status and documents are often not in order.

The first barrier to those services is identity: many Bolivians have no papers and have never really tried to acquire any. This makes it difficult for them to apply for microcredit—or even attend a hospital.

The other major problem is ownership. Proving you are the owner of your own property without having signed a deed of sale or a construction permit is not easy, so it is impossible to apply for a sizeable sum of microcredit, which would require the pledging of property as collateral. If a person wants to leave his house to his children when he dies, then something that had been disconcertingly simple all his life – “I live in it, so it’s mine!”—turns into a real headache.

Most of Microjusticia Bolivia’s work concerns these two problems.

In exchange for a relatively small compensation, these specialists in Bolivian law normalise the situation of people in legal difficulties and give them access to services that can change their lives profoundly – and, as we have seen, microcredit is one of those services. According to Maria Choque, in this way micro-justice helps the most disadvantaged people to escape from poverty.

The examples Maria Choque encounters are staggering: a woman had five children and when one of them died, she didn’t register the death. To make matters worse, she gave the dead child’s papers to another of her children, eight years younger than the first. The boy is ten years old, but on paper he is 18. It is easy to imagine the problems he will have later on, especially when seeking to apply to high school.

“Society views these people as mere lost souls roaming about the countryside,” says our interviewee. Indeed, some people aged 70 or 80 have never had an identity document. Their names have never been known to society and some of them do not know even approximately how old they are. How can they appear before an official, a notary or a banker?

As we have said, Microjusticia Bolivia works alongside microfinance and hence offers the opportunity to open a shop and earn a steady income. Thus, in addition to its independent branches in strategic places where demand is high, Microjusticia Bolivia hopes to set up offices in MFI branches. To this end, it has formed a partnership with the MFI FIE and set up 30 information desks in FIE branches. These information desks are open to both MFI and non-MFI customers. Microjusticia has gained a foothold in places where there is enormous demand, and FIE is winning quantities of new customers in those branches, who initially came in to approach Microjusticia, and who leave with a brochure about a microcredit.

Microjusticia has grown since it was first established in Bolivia, and the foundation now has offices in Peru, Argentina, Spain and even Uganda.

Microjusticia’s worldwide platform has also played a part in this development: its role is to regulate, provide information about Microjusticia’s actions and distribute international investors’ funds to the various local offices. In future, Microjusticia Bolivia will seek to develop new products, including assistance in setting up companies. Our interviewee ended by saying: “So, a person came to see us. She regularised her situation. She went to see the MFI, obtained microcredit, and then? She wanted to set up a company legally, but didn’t know how to begin. In future, we hope to be present during this phase and to support and assist the person until their projects have been achieved, so that can achieve complete success”.

All these interviews in Bolivia profoundly enriched our understanding of microfinance and we want to share our experiences by making them accessible to as many people as we can.