Combining travelling and microfinancing

There are numerous micro credit institutes that provide funds for small tourism in developing countries. Many of them seek to create good relations and information flows between investors and the small business people. It is important for the investors that somebody is backing their projects both financially and morally.

The non-profit micro credit institute Investours has widened the offer to tourists. Investour organizes “microfinance tours” — a new brand of goodwill tourism that takes the whole small-loan concept and puts the power directly in the hands of the tourists. Instead of a bank making a decision about who gets a loan, strangers with a small vested interest do.

Oaxaca, Mexico is one of the places that have been targeted for this type of financing/tourism, and recently a location in Tanzania has also become part of the program.

The village Teotilan is known for its rug-making. Beautifully wrought rugs are produced, the colors dyed from the earth: The yellow colors come from chamomile, the red from insects and lime juice.

Potential investors are women carpet makers. The rugs take a week or two to complete, depending on the size and the design. The women are seeking loans for more materials; the  sheeps wool that they spin into yarn and the charcoal-like rocks that make the blue dye are expensive and come from a village pretty far away. Their aim is to expand their production.

Lenders want to know about the feasibility of the production. Where are rugs sold? How do potential customers learn about the product? What facilities are available for sale and promotion in the village?

A new organization has been established, where the producers are in charge, to help with marketing. It is essential to out-compete middlemen whose profits used to squeeze the incomes of the producers and hinder their expansion. Some successes have shown the way to increased self-sufficiency and collaboration, for example in catering and herbal plant production.

During the tour, the tour group will have to decide  how to invest. Ultimately, the tour group must select one of the two groups to receive the group’s loan. The loan consists of the tour group’s pooled tour fees, 100% of which go towards the interest-free loan.

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One Response to “Combining travelling and microfinancing”

  1. Johnexo Shah says:

    Micro financing has taken a huge step forward in not helping small and medium businesses to expand but also in tourism sector. Its making its presence felt.

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