We are the Bank- Will social banking change the world?
Marco Crescenzi | 15th September 2015
“How much is it?” asks Dona Raimunda, widow and mother of 8 kids. “Six palmas”, replies the cashier. At this point, the woman takes out some strange money from her purse. The trader collects the money and the woman walks away with her shopping bags.
Brazil, one of the poorest neighborhoods in Fortaleza. Here, in the community of Palmeiras, people do their shopping –and not only that- like this. Dona Raimunda and the other members of the community hardly remember anything about the official currency, the Brazilian real.
“I buy medicines and anything my family needs and I pay my bills with palmas; I don’t have “real money”. I don’t even know what it looks like”, says the woman. The Palmasè Bank is an example of Community Credit Banking that was created six years ago from an idea and with the support of some major NGOs. It is an innovative project, based on supportive economic systems and its aim is to overcome and fight against urban poverty, allowing wealth to circulate in the favela.
Families that have no access to lines of credit and to national currency can buy whatever they need with Palmas (1 palma = 1 real), the currency coined by the same bank that pays salaries. Even tradesmen who were sceptical at first, had to change their mind: “I can pay my collaborators, I can develop my business”. Access to lines of credit has increased income and tradesmen can now ask for loans and give back the money in 6 instalments at a lower interest rate. And this is only one of the many benefits. There is a special credit card, a sort of microfinance, valid only for purchases within the neighborhood. This represents a double advantage – both for tradesmen and customers – it has no costs and has an initial credit of 20 reais, that can become up to 100 reais if the holder pays on time.
“In other words – explains Joaquim de Melo Neto, coordinator of the Palmas Bank – those who are not supported or are not trusted by loan agencies, can turn to us and get a compensation for their work.” It is a commitment/project that creates concrete employment opportunities thanks to investments in small independent entreprises:
A group of women got a loan of 15000 reais with which they bought a number of sewing machines. With the machines they started producing female and male outfits with their own brand called Palma Fashion. In order to develop and improve their collection, they were supported by SEBRAE (a Brazilian agency which supports little entrepreneurs) with specific courses on design that helped them balance quality and price in their products, meeting the market’s needs. Outfits are sold outside and within the community and tailors make about 270 reais per month. Today, after months of hard work and commitment, they are proud to have their own brand, their own business and to be independent entrepreneurs.
Another business that became successful thanks to the support of Palmas Bank is that of the young of Palmeiras, who since they couldn’t find a proper job, found a valid alternative. With the help of a chemist, they developed a line of products for housekeeping. They started distributing these products in Palmas and this created a cooperative network and everyone in the neighborhood became a fervent supporter of the project.
Can a favela become a brand? Anything is possible in Brazil these days. Brazil is so rich in social innovation and even the Palmas is beginning to go beyond the boundaries of the community in which they were created. Palmas are beginning to be accepted and recognized even by traditional loan agencies.
The cooperative JAK Bank, a member-owned financial institution based in Sweden, is following a similar model. JAK (an acronym for Jord Arbete Kapital,which means Land Labour Capital in Swedish), aims to promote environment, men and its resources by going back to a the real economy. It seemed as impossible as coining a new currency, but approximately 38,000 Swedish members (as of November 2011) assembled for this initiative and are now the owners (for real!) of the bank. Each member is only allowed one share in the bank and has the same decisional power in the executive board.
JAK banking employs the “Saving Points” system: members accumulate Saving Points during saving periods and use them when applying for a loan. The concept is that one is allowed to take out a loan for oneself to the same extent as one allows other people to be granted loans, saving into one’s account.
Savers for Savers. With a new approach to entrepreneurship based on a cooperative and ethic approach. Social innovation begins with small bets that can make big differences. In Brazil as well as in Sweden.
And what about Italy?
I would like to thank my friends at Istituto di Tecnologia Sociale, Gerson da Silva Guimaraes, in particular, for the contributions on Brazil and Elisa da Silva Guimaraes and Antonella Andriuolo of Social Change School for their editing support.