The Cooperativa de Ahorro y Préstamo Tosepantomin, which means "everyone's money" in Nahuatl, won the European Microfinance Award 2017 for its support to marginalized rural communities through housing construction projects, which include savings products, mortgages, and technical assistance. Álvaro Aguilar Ayón, Chair of the cooperative's Board of Directors, spoke with Portal de Microfinanzas about the cooperative's launch, their clients, sustainable housing product development, and the lessons learned along the way.
Gateway: Could you tell us about your institution, your mission, and the clients you serve?
Álvaro: The Cooperativa de Ahorro y Préstamo Tosepantomin was founded in 1998 and certified in 2013 by the National Banking and Securities Commission, which is the institution that regulates savings and loan cooperatives. This cooperative is located in the Northeastern Sierra of the state of Puebla, Mexico, and provides financial services to residents of the area, who are mainly indigenous Nahuatl and Totonac people. The cooperative currently has 35,000 members, of whom 78% are indigenous and 64% are women. We are also promoting the culture of saving among children, and we currently have 9,000 children who are saving. Though they are not yet members, the goal is for them to adopt a culture of saving from a young age so that, when they are older, they will be able to save, as well as benefit from other financial services from the organization.
The mission of Tosepantomin is to offer its members financial services that help them improve their quality of life and live "the good life," which we call Toyeknemilis in Nahuatl. The population in the area is largely indigenous, with no financing alternatives. When the cooperative was created, there was already a bank in the area, but it never offered loans to the residents, it only collected savings. The cooperative began to offer these services. Today, savings deposits stand at around USD 20 million and our loan portfolio is between USD 18 and 19 million.
Gateway: Your institution has just won the European Microfinance Award 2017 for its support to Mexico's marginalized rural communities through residential housing construction projects, offering savings products and mortgage loans, as well as technical advice. What are the features of these products? And why did you decide to launch them?
Álvaro: We decided to launch the savings and loan products for housing because we believe that all financial institutions should offer services based on the needs of the populations they serve. In our region, most of the population lacked adequate housing. That is why, since the cooperative was created, it has offered loans for those who want to improve their homes. However, since 2006, we set out to go beyond financing for home improvement and also offer financing for complete home construction, given that most of our members lacked adequate housing for the climatic conditions in the area.
To do this, we first suggest that those who can, should open a member savings account. We then offer a loan, and once we have the savings and the loan set up, we make arrangements with government institutions for a subsidy to ensure sufficient resources to build the house. We have been doing this since 2006, and so far more than half our members have benefited from this housing program.
In this program, the cooperative doesn't build the house for the families, but rather we work together on a "social construction of the home," where the family decides where to build, what materials to use, and what the design will be, and also hires the people they want to build the house. What we want to ensure is that the house is built in good condition, that the construction is of high quality and that, in addition, the family saves as much as possible on the building materials. This is why we offer technical assistance through a group of architects who help the families with discussions and the house design. They complete the architectural plans and the budgets. Once these are ready, construction begins. We have supervisors who, week by week, visit the masons who are building the houses to see that the construction is being done in accordance with the plans. This follow-up process is maintained until the house is finished.
Gateway: Could you explain the environmentally friendly construction techniques used by your cooperative?
Álvaro: When we launched the housing program we aimed to recommend to members that they transform their homes into "sustainable homes," as we call them. What does this concept mean? We call it a "home" because we do not want to give the impression that the house is only four walls, a roof, and a floor, but rather that there is also harmony among those who live there, who are the family. That human warmth, in our opinion, is what transforms a house into a home.
"Sustainable" because we would like them to take advantage of some of the natural resources in the area. Our region is one of the rainiest in the country, so we thought, if it rains so much, why not use the roof of the house to capture the rainwater and then use this water in the house? Then have it properly treated so that once used, the water does not contaminate streams and rivers. This water is treated using filters and biodigesters.
Then we also wondered, why not make energy usage more efficient? We try to use energy efficiently in two ways. One is the energy used to prepare food, as firewood is often used for fuel in our area. We proposed the installation of "clean stoves" in homes to decrease the use of firewood and prevent families from inhaling the smoke that is released from the firewood through open stoves. The other energy source is using sunrays to provide the electrical energy that the family needs through solar panels.
We also propose that agricultural waste - most of the families work in the fields and have agricultural or kitchen waste - be used as organic fertilizer to grow food. This is another element that we incorporate into the concept of sustainable housing.
So, the concept of sustainable housing means taking care of the environment, and we do that through the use of rainwater, wastewater treatment, efficient energy usage, transforming waste into organic fertilizer, and producing food so that we depend less on bringing the food that we need from other places.
This is all currently put into practice, and the last thing we are installing are the solar panels. In the future, this is the work on which we are planning to place the most emphasis, both to install solar panels in the new houses to be built and for the homes that were already built without solar panels.
Gateway: Do you believe that other cooperatives and/or microfinance institutions in Mexico could also offer similar products to their low-income clients? What lessons learned would you share with them?
Álvaro: What we have learned in the almost 20 years of working as a savings and loan cooperative is that an organization dedicated to microfinancing must ensure that its products are adapted to the needs of its members. And a very significant need in the Mexican countryside, in the indigenous areas of Mexico, remains having adequate housing for families. As this is a critical need, I believe that all organizations operating in Mexico, on indigenous issues or in big city neighborhoods, must also focus on offering housing finance. Incorporating the concept of sustainability is very useful. In Mexico, we still have close to 9 million families who lack adequate housing. There is still a lot to be done in Mexico.
What we have learned is that offering loans along with savings to build homes is very appropriate for families; it is something that families can do. It is not simple, it is not easy, because when we talk about finances, it is typical to offer a service that is disconnected from the rest. In the case of sustainable housing, we include savings and loans for housing, for food production, and for solar panel installation. It is a much more comprehensive service than is usually offered on the market.
Just as we must transform the house, where each family lives, into a sustainable home, so too must we see the land on which we all live as everyone's home, belonging to all of us who live here.
Álvaro Aguilar Ayón
We aim to ensure that, throughout the region, the culture of saving, payment, and caring for the environment becomes much more deeply ingrained. We are heavily promoting the idea that, just as we must transform the house, where each family lives, into a sustainable home, so too must we see the land on which we all live as everyone's home, belonging to all of us who live here. That's why we must ensure that this "greatest home of all" be properly conserved.
Gateway: How does the cooperative plan to use the prize money?
Álvaro: When we prepared the proposal to compete for this award, we planned to use it in two ways: first, to develop an evaluation of the housing program from the perspective of the cooperative, focused primarily on the social impact it has had. So far, we have not completed a full assessment of this impact. We would like to find out the members' level of satisfaction and their opinion to see if we can improve this service. The other aspect would be to promote the training of young people and, if possible, open a plant to assemble solar panels and offer some type of loan product for those who want to install solar panels in the area.
Gateway: What was your reaction to receiving the award? Did you think the cooperative had a chance?
Álvaro: For me, it was unexpected because although we were among three finalists, the other two were banks. We were just a savings and loan cooperative. One was a bank offering loans to finance housing in Afghanistan, in a war zone. The other bank, from Peru, was offering thousands of loans a month to people across the country.
As a cooperative, our scope of action is smaller, and we thought we didn't have much chance of winning. However, when they announced the award, and that the cooperative was the winner, we were very happy. It represented acknowledgment in Europe of a cooperative that does not have clients, but rather members, who are the owners of the organization. I was very happy about that, not just for the recognition of the work done by Tosepantomin, but also of the work that cooperatives do in the area of microfinance and the important role they play in the world.
The pay-as-you-go (PAYGo) solar industry has attracted a lot of interest among impact investors. But complex business models and a lack of reporting standards may be putting off large-scale investment. PAYGo PERFORM says it is time to change that and standardize financial reporting in this sector.
Peter Surek, European Microfinance Network (EMN) Board Member, delves into key questions on human resource challenges and disruptive technology ahead of their upcoming conference, which is shaking things up with a new format designed to inspire and bring together participants.
Should all financial service providers climb on the digital bandwagon to stay relevant? In this Gateway Guide, we share our main take-aways from the latest research and practical lessons across the sector.