Venezuela’s Women’s Development Bank – Creating a Caring Economy

What makes Banmujer unique is that it loans only to women; in fact, it is the only state-sponsored women’s micro-credit bank in the world. Since its inception on March 8, 2001, Banmujer has been commended for its successes in helping women escape poverty and in instilling a new economic model of cooperation instead of competition.

Venezuela’s Women’s Development Bank, abbreviated Banmujer, joins a
long line of micro-credit institutions intended to alleviate poverty by
encouraging small-scale entrepreneurs. What makes Banmujer unique is
that it loans only to women; in fact, it is the only state-sponsored
women’s micro-credit bank in the world. Since its inception on March 8,
2001, Banmujer has been commended for its successes in helping women
escape poverty and in instilling a new economic model of cooperation
instead of competition.

Women’s Rights in Venezuela

Over the past decade, the Venezuelan government has been consistently
supportive of women’s rights. For example, the Bolivarian Constitution,
adopted in 1999, uses non-sexist and gender-neutral language
throughout. Instead of “all men are created equal,” as is stated in the
U.S. Constitution, Venezuela’s constitution holds that “all persons are
equal before the law.”1 When discussing the role of the President, it says “Presidente o Presidenta,” instead of using only the male form.

The Venezuelan Constitution also explicitly prohibits discrimination
on the basis of gender: “no discrimination based on race, sex, creed,
or social standing shall be permitted.” Moreover, it prohibits not only
intentional discrimination, but also any actions with discriminatory
effects. Gregory Wilpert, a researcher at VenezuelaAnalysis.com,
commented that “what this means in practice is that public policies
must be reexamined for their possible discriminatory effects. For
example, if women were under-represented at public universities, the
state would have to examine the causes for this and eliminate any
barriers that exist that cause fewer women then men to attend the
university.”2 In contrast, the U.S. Constitution has no
language explicitly forbidding even intentional gender discrimination.
Although a coalition of feminist groups fought to add such a provision
to the Constitution, the Equal Rights Amendment narrowly failed being
ratified by the necessary three quarters of the states after passing
Congress in 1972.

Finally, Article 88 of Venezuela’s 1999 constitution recognizes
housework as a valuable job that, like any other vocation, entitles the
worker to social security benefits. This provision has substantially
furthered the cause of women’s rights because it allows many women to
receive social security and other protections which when in the past
were denied to them. This and other provisions on women’s rights have
led expertsto conclude that Venezuela’s new constitution “is now among
the most progressive in the Western Hemisphere on gender issues.”3

The government’s effort to support women’s rights has not been
limited to the constitution. Starting in 1998, the Law of Violence
Against Women and Families increased legal penalties for domestic
violence, an effort which in recent years has also included a
government-sponsored television campaign and the 2007 Organic Law on
the Right of Women to Live Free of Violence. Under the Chávez
administration, the National Institute on Women (Inamujer) has been
very active, coordinating activities such as educational workshops on
reproductive rights, lobbying congress for more protection of women’s
rights, and supporting women campaigning for office.4

BANMUJER: Encouraging Female Entrepreneurs

It was in this context that President Hugo Chávez launched the Women’s
Development Bank on International Women’s Day in 2001. The bank, led by
economist Nora Castañeda, issues micro-credit loans to small groups of
women to help them start small-scale local business projects. Typical
loan projects range from a cooperative farm to a craft workshop to a
bakery to a hair salon. The credits average between 500,000 and
1,000,000 bolívares (US$260 to $520) and are subsidized by the
government, allowing the bank to charge interest as low as 1 percent.5

Unlike most banks, Banmujer does not have regional offices but
instead employs women who travel to rural communities to help develop
loan proposals. Castañeda explained that this decision was made to
facilitate the bank’s ability to assist poor women. She questioned,
“How can the poorest indigenous women in the state of Amazonas, the
southernmost state in the country, come here, if they are so poor, to
ask for a credit?”6 Thus Banmujer is able to reach women with no access to typical banks.

In addition to helping develop loans, regional workers of Banmujer
provide “non-financial services,” or training, to women in rural
communities. The training, which is the bank’s secondary purpose after
issuing credits, typically focuses on basic business principles such as
teaching women how to develop an entrepreneurial idea, use the loans,
and manage their business.7 Banmujer also offers workshops
on broader issues such as women’s health, leadership, community
organizing, and prevention of domestic violence.8 Thus far, the bank has provided training to more than 100,000 women.9

Banmujer was initially criticized for its high default rates. After
its first year of operation, 41.6 percent of its loans had not been
paid back, leading some analysts to conclude that the bank had failed
financially.10 Yet after only two years, almost 23,000 credits had been repaid and the default rate had dropped to 26.3 percent.11
In strictly economic terms this is still far from successful, but the
Women’s Development Bank is far from a traditional economic
institution. Rather than measure success by profits alone, the bank
prefers to focus on the progress it has made in empowering women and
helping to break the cycle of poverty. In the pursuit of these goals it
has indeed been successful; according to one estimate, the credits
issued by the bank have created more than 260,000 jobs and assisted
more than 1.3 million people.12

Combating Poverty by Working Collectively

Almost 45 percent of Venezuelans live in poverty and 70 percent of
these are women, so targeting women can be an effective approach to try
to reduce poverty in general.13
Banmujer’s micro-credit loans are specifically designed to reduce
poverty in a sustainable manner. Castañeda explains, “If we just gave
them money the women would continue to be poor, but … with debts.”
Instead, the bank strives to help women form businesses that will
provide them with a long-term source of income, allowing them to escape
the cycle of poverty. By helping women become entrepreneurs and lead
their own businesses, Banmujer actively encourages them to step outside
their traditional roles and claim more respect in society.

Another of the bank’s overarching goals is to encourage women to
work collectively. Although the loans are issued individually,
recipients must belong to a group of five to nine women working
together on a project. Men can receive loans, but only if they are in a
group comprised of a majority of women; to date, women have received 96
percent of Banmujer’s loans. The groups must work collectively to
develop a proposal and apply for a loan, and the ultimate goal is to
encourage them to continue working collectively in the business even
after the loan has been repaid.

“Creating a Caring Economy”

At the center of Banmujer’s philosophy is an economic model that is
very different than the accepted version in the United States.
Castañeda told VenezuelaAnalysis.com that “we are creating a caring
economy, an economy at the service of human beings, not human beings at
the service of the economy.”14

Perhaps what the United States so intensely dislikes about Venezuela
is not so much its political system (which is, after all, democratic –
Chávez won 56 percent of the popular vote in 1998, compared to Bush’s
48 percent in 2000), but rather its rejection of free-market capitalism
as the ruling economic paradigm. Instead, Chavez is using programs like
the Women’s Development Bank to encourage the formulation of what
Castañeda terms a “popular economy.” This economy is intended to serve
average people instead of large corporations by mirroring on a larger
scale the cooperative work that Banmujer encourages for the groups of
women with whom it collaborates.15 Just as the individual
women work together to run their business or workshop, the “popular
economy” promotes larger economic actors to work together,
complementing each other instead of competing for resources. An article
in The Guardian commented that “the mini-entrepreneurs [given loans by
Banmujer] are encouraged to cooperate with other small business rather
than competing with them. If one group is given money to rear chickens,
another nearby will be given a loan to slaughter the chickens.”16
Thus, Banmujer uses financial and non-financial services to empower
women, enabling them to overcome poverty sustainably, while also
promoting Venezuela’s vision of a “popular” or “caring” economy.

1 http://www.analitica.com/bitblioteca/venezuela/constitucion_ingles.pdf
2 http://www.venezuelanalysis.com/analysis/70
3 http://www.rethinkvenezuela.com/downloads/Revolutionizing%20Women’s%20Roles%20in%20
4 http://www.venezuelanalysis.com/analysis/877
5 http://www.venezuelanalysis.com/analysis/918
6 http://www.inmotionmagazine.com/global/nc_wdb_int.html
7 http://www.inmotionmagazine.com/global/nc_wdb_int.html
8 http://www.banmujer.gob.ve/view/serviciosList.php?parent=3&id=7
9 http://www.banmujer.gob.ve/view/galeriaList.php
10 http://www.venezuelanalysis.com/analysis/918
11 http://www.gerenciasocial.org.ve/bsocial/bs_03/bs_03_pdf_point/jueves/banmujer.pdf
12 http://www.greenleft.org.au/2006/686/35614
13 http://www.ruralpovertyportal.org/english/regions/americas/ven/index.htm
14 http://www.venezuelanalysis.com/analysis/918
15 http://www.inmotionmagazine.com/global/nc_wdb_int.html
16 http://www.guardian.co.uk/money/2005/mar/24/accounts.venezuela

This analysis was prepared by COHA Research Associate Kristen Walker