Menu ENN Search

Micro-finance as livelihood support in urban Argentina (Special Supplement 3)

By Claudio Freda, Marcela Gonzalez and Marta Valdez, ACF Spain (ACF-E)

The December 2001 Argentinean crisis highlighted the serious social and economic problems faced by the population. Several years of negative growth and an increase in unemployment led to social collapse. The dramatic increase in poverty had important consequences in terms of lack of access to food, health care and other basic needs. ACF-E started interventions by supporting community canteens with food aid. Once the emergency was over, ACF-E identified income generation as an intervention that would address the root causes of the crisis and improve the community's capacity.

The food security intervention

In Argentina, more than 80% of the population live in urban areas and are dependent on the market to meet their food and livelihood needs. A significant part of the population coped with the crisis through community canteens. However, the organisations implementing these were not able to cover all the food needs of the population through this programme.

To meet their basic needs, the unemployed developed IGAs within the informal sector. ACF-E's food security strategy was to combine food aid through canteens with income generation support. From November 2002 up to December 2004, a joint food security and nutrition project was implemented in the partido Moreno, a suburb of Buenos Aires. The project consisted of community IGAs and micro credit support for the individual IGA.

The microfinance approach

The objective of the microfinance project was to provide financial services to the poor. ACF-E decided to collaborate with IDEB (Instituto de Desarrollo Empresarial Bonaerense), a non-profit making association specialising in microfinance and working in the targeted area. It was hoped that working with this local agency would lead to a sustainable financial service once the project ended.

The objective of the loans was to finance productive initiatives through investment in productive assets, such as consumable inputs and fixed assets, (like machinery and tools), and strengthening the infrastructure needed for developing the activity.

Collaboration with IDEB

The agreement between ACF-E and IDEB envisaged the creation of a revolving fund of 80,000 pesos funded by ACF-E for:

IDEB was in charge of the financial management, while ACF-E reinforced the training component for the beneficiaries. A micro-credit committee formed by members of both ACF-E and IDEB was created for making decisions about the loans.

Characteristics of the micro-credit scheme

Underpinning the programme was the establishment of 'solidarity groups'. Here, a group of previously uncreditworthy people receive a loan but each one provides some form of collateral loan or loan guarantee through a group repayment pledge, i.e. if one group member defaults, then the other group members make up the payment. The minimum amount of credit was 100 pesos and the maximum 900 pesos . With a monthly interest rate of 6%, the reimbursement was based on weekly instalments with a maximum of 12 instalments.


The first step involved information dissemination regarding the scheme. In order to request a loan, individuals had to form a 'solidarity group' comprising from three to five members. Members from the same group could ask for different amounts and therefore would have different weekly instalment amounts. Training was provided on financial management of the IGA, e.g. calculation of costs, accountancy and commercialisation.

After one week of grace, the weekly instalments began. ACF-E reinforced technical aspects of the IGA through business training and facilitating the exchange of experience between the IGA groups. ACF also negotiated with the municipality to allow the groups access to commercial fairs. Where groups successfully reimbursed credit, they were able to request new microcredits for larger amounts.


Between February and December 2004, a total of 442 microcredits were approved for a total of 116,750 pesos - the estimated average loan was 264.14 pesos. A total of 314 persons benefited from the fund while 40% of the beneficiaries renewed their fixed capital or consumables through a second and, in some cases, third loan.

Overall, 78% of borrowers were women and only 22% men. Table 9 shows the type of activity for which credit was made available, which were mainly based on previous skills and knowledge of the beneficiaries. Most credit was provided for trade activities (72.17%) followed by production (21.95%) and then services (5.88%). One third (30%) of the supported IGAs were newly created activities. The rate of default for the implementation period was low - approximately 5% of borrowers had difficulties repaying, which mostly involved those setting up new IGAs.


A number of strengths and weakness of the initiative have been identified. Microfinance Institution (MFI) IDEB have ensured fund sustainability, while adapting eligibility criteria which allow access of the most vulnerable through more information, more credit agents in the community, and in providing canteen space for sensitisation. ACF-E has improved the capacity of IDEB to cover a broader range of the population while ensuring good financial performance (only 5% default rate). The approach was well adapted to financial capacity and needs, and borrowers began to perceive MFI as a useful support institution.

However the beneficiaries had to rely on their own knowledge and abilities to develop their IGA based activities. Also, market access for the IGA was generally in the close neighbourhood where there were many poor, so that income generation was on the low side. Finally, it was observed that only 11.8% of borrowers were enrolled on the community canteens programme, indicating that many of the most vulnerable still did not benefit from this scheme.

Table 9 Type of IGA supported in micro-credit scheme
Activities n Activity % Proportion by class of activity
Trade Shop (dry food, dairy products, gas, charcoal, beverage, etc.) 117 26.47%  
Sale of clothes 98 22.17%  
Kiosk 58 13.12%  
Articles of cleanliness 26 5.88%  
Sale of prepared food 13 2.94%  
Greengrocer's / butcher's shop 7 1.58% 72.17%
Production Bakery 46 10.41%  
Textile activities 19 4.30%  
Handcrafted activities 19 4.30%  
Food production (not bakery) 13 2.94% 21.95%
Services Hairdresser, electricians, mechanic, repair of domestic appliances, etc. 26 5.88% 5.88%
Total of provided microcredits 442 100% 100%

More like this

FEX: Income and employment support (Special Supplement 3)

5.1 Introduction The provision of cash as an emergency response has the potential to impact on all elements of the livelihoods framework by providing the means to protect or...

FEX: Cash supported income generation activities in Southern Sudan

By Emily Sloane and Silke Pietzsch Emily Sloane was a Food Security and Livelihoods Trainee at ACF-USA supporting the evaluation of the project's income generating activities...

FEX: Lessons From a Microfinance Pilot Project in Rwanda

By Tamsin Wilson Tamsin Wilson is an independent microfinance consultant. She coordinated Concern Worldwide's qualitative research on microfinance in Angola, Mozambique,...

en-net: What are the range of livelihoods interventions?

What are the range of livelihoods interventions? Are ;cash for work' and 'food for work' major interventions to deal with livelihoods? I am currently developing research issues...

FEX: Market-led Livelihood Recovery and Enhancement Programme and integrating ENAs

By Andrew Simons, Daniel Gebeyehu, Getachew Gemtesa and Markos Kidane Andrew Simons is the National Programme Director for Food for the Hungry (FH) Ethiopia. He holds an...

FEX: Income generation in Guinea Conakry (Special Supplement 3)

By Alexandros Yiannopoulos, ACF Spain (ACF-E) Since the 1990s, Liberia, Sierra Leone and later on the Ivory Coast, have been embroiled in conflict. This has led to a mass...

FEX: Letter on microfinance project in Rwanda, by Elisabeth Nyffenegger

Dear Editor I would like to comment on the article in the November issue of Field Exchange, concerning the microfinance project in Rwanda. Those involved in such projects...

FEX: Use of cash in the tsunami response

As part of its Cash Learning Project, the Humanitarian Policy Group (HPG) at the Overseas Development Institute (ODI) is undertaking research into the use of cash in the...

FEX: Impact of urban livelihood intervention post Haiti earthquake

By Philippa Young, Emily Henderson and Agathe Nougaret Philippa Young is Emergency Food Security and Livelihoods Adviser for Oxfam GB Emily Henderson is Emergency Food...

FEX: British Red Cross urban learning scoping study

Summary of report1 The British Red Cross has undertaken a scoping study to better understand the challenges posed by humanitarian action in urban areas, and how the Red Cross...

FEX: Microfinance institutions and a coastal community’s disaster risk reduction, response, and recovery process in Bangladesh

Summary of published research1 A mother and child in Gopalgan, Bangladesh Location: Bangladesh What we know already: Microfinance programmes generate income opportunities...

FEX: Emergency Food Security and Livelihoods Project in Amhara and Oromia regions

By Shekar Anand, Oxfam Shekar is Programme Director for Oxfam GB in Ethiopia. Past experience includes working with OXFAM, CARE, CIDA, and Government in Aceh, India, Zimbabawe...

FEX: REACH OUT food assistance in Uganda

By Peter Paul Igu, Reach Out and Mary Corbett, ENN Peter Paul Igu has been a full-time volunteer with the organisation, Reach Out, since Jan 2002, and is the food programme...

FEX: Introduction (Special Supplement 3)

Glossary AAH Action Against Hunger ACF Action Contre la Faim ACF-E ACF-Spain ALDEF Arid Lands Development Focus AREN Association pour la Revitalisation de l'Elevage...

FEX: Micro-credit in refugee situations

Summary of published research1 Micro-credit and other types of loan programmes have not been widely attempted within refugee and internally displaced population (IDP) contexts...

FEX: Feasibility of private micro flood insurance provision in Bangladesh

Summary of research1 Women head for a nearby flood shelter established by the government in Bangladesh A recent paper describes a study to test the viability of a flood...

FEX: Improving minimum dietary diversity for children aged 6-23 months when household affordability is a major constraint in northeast Bangladesh.

View this article as a pdf Lisez cet article en français ici By Md Masud Rana, Sheikh Shahed Rahman, Md Al-Amin Shovan, Bazlul Kabir Joarder and Mohammad Raisul...

FEX: Crop failure in Dalocha, Ethiopia: a Participatory Emergency Response:

Howell. P (1998), Disasters, Volume 22, No 1, March 1998, pp57-76 The following is a summary of a paper recently published in Disasters. The views expressed are those of the...

NEX: Supporting nutrition and protecting livelihoods

Zenebe Desta Zenebe is working as the Communication Advisor for at Save the Children Ethiopia. He has experience as reporting, editing and communications...

FEX: The RAIN programme

By Miriam Christensen and Todd Flower Miriam Christensen was the Documentation and Information Officer with the RAIN programme. She specialises in communications and knowledge...


Reference this page

Claudio Freda, Marcela Gonzalez and Marta Valdez (). Micro-finance as livelihood support in urban Argentina (Special Supplement 3). Supplement 3: From food crisis to fair trade, March 2006. p34.



Download to a citation manager

The below files can be imported into your preferred reference management tool, most tools will allow you to manually import the RIS file. Endnote may required a specific filter file to be used.