OneWorld.net (U.S.)

OneWorld.net's take: When Argentina weathered its own financial crisis six years ago, Pablo Ordóñez found a way to help people in need build their own businesses.

• Pablo Ordóñez, founder of ASEM. © Changemakers.net

  Argentina's "neo-liberal and structural adjustment policies sanctioned by the IMF and the World Bank ... destroyed the country's industrial base leaving millions out of work, rendered agricultural products uncompetitive in the face of falling world prices, privatised essential public services with highly unpopular results, cut expenditure on health and education, and brought about a general economic meltdown. By 2001, Argentina had the highest rates of poverty of its history, with over 50% of the population living below the poverty line," writes OneWorld UK in it's Argentina country guide.

• While the Argentine economy remains frail, the people Pablo Ordóñez works with are not the only ones in this South American nation to use innovation and entrepreneurship to pull themselves out of the cycle of poverty. In 2006, a group of Bolivians who had escaped slave labor in the Argentine fashion industry founded a clothing co-operative that is now set to launch its own brand.

'Financial Crisis = an Opportunity to Innovate'

From: Changemakers.net

September 29, 2008

Six years ago, Argentina faced its own financial crisis when its traditional banking system was dismantled. Where others saw disaster, Pablo Ordóñez found an opportunity to create jobs for those most vulnerable to financial hard times. 

By Shirly Said

Ordóñez responded to the crisis by launching the Entrepreneurship Association of Mendoza (ASEM), an organization that creates jobs by helping unemployed young people and adults build their own self-sustaining, entrepreneurial businesses. The financial crisis pulled the rug out from under most citizens while those in power scuttled out a back exit, unharmed by the economic meltdown. But ASEM gave people-who were neglected by Argentina's business sector for decades-a way to improve their lives despite the unfolding social, political, and economic tensions.

It has proved such a successful model that ASEM's El Arca, a coalition of small producers, "solidarity" investors, and responsible consumers, is expanding from the suburbs of Mendoza, a provincial capital in northwest Argentina, to other parts of Argentina and Latin America.

Rather than offering a hand out, ASEM's School of Entrepreneurship provides personalized education for creating productive businesses. "At first, people viewed our work with disbelief because we didn't give things away as most other social assistance programs did," Ordóñez said.

"Families in this area have, for the most part, worked in jobs created as a form of social assistance. Children of these families have yet to witness the added benefits of formal employment.

"Instead, we focused on building on people's skills and capacity, supporting the choices that people made to better their own condition. We focus our work on supporting a culture that is based on education."

The School of Entrepreneurship goes a step further, building on a person's capacities and fostering their self-confidence to build a community of trust. "It is slow, difficult, and involves many steps, but the entrepreneur begins to perceive that it is possible," Ordóñez said.

More than 200 people have gone through the School of Entrepreneurship, where they learn to reverse the pattern of instability and unemployment that dominates the suburban labor market. Ordóñez applies a method he has learned from years of teaching: "Before speaking of a business plan, we must first raise people's self-esteem and get youth and adults to believe in themselves.

There are 72 El Arca entrepreneurs working in food enterprises. They do catering, produce tomato sauce, marmalade, honey, and bakery goods, and prepare lunches and take-out brunches for businesses.

"Many of our participants have low self-esteem, having had unsuccessful attempts to finish school. Commonly we are asked: 'Why will education help me this time?' or 'Why should I believe that I will be able to go through school this time?' That's why we tell people to focus on education, not only as a means to enter the labor market, but even more as a way to better themselves as people."

After observing how owners of small and medium enterprises operate successfully, ASEM created El Arca in 2005 as a separate a non-profit organization that would field test the idea of uniting the common interests of small producers, "solidarity" investors, and responsible consumers by giving access to fair trade for working men and women, businesses, and state institutions. "Although it emerged from ASEM, today El Arca has an independent executive body, made up solely of producers and consumers," Ordóñez said.

"El Arca is not based in (separate) communities that are producers and consumers. We usually keep in mind that producers are always looking to reduce costs and sell goods at high prices, while consumers are looking to pay the least possible amount for the greatest quality of goods. We understand both groups are acting with opposing interests. So here we work to put both parties' interests on the table and come up with an agreement that is beneficial for all parties."

El Arca has 29 entrepreneurs working in agriculture. They raise livestock, honey bees, alfalfa, and operate nursuries and greenhouses for vegetables.

The notion of investing in solidarity comes from Inversol, the alternative financing system that sustains El Arca initiatives. Here, social benefits are merged with the economic ones. Inversol's "objective is to generate capital for small producers, but it is also challenged to inspire trust among producers," Ordóñez said.  

El Arca is getting closer to its goal every day. At first, "a person rarely trusts that he will get returns on his investment. But when a producer calls the investor after a few months to tell him that he can go by to pick up his initial investment plus the benefits, a strong relationship is formed," Ordóñez said enthusiastically.

When an enterprise is ready to sell goods, responsible consumers buy the finished product at fair trade prices. While you might suspect that the communitarian characteristics of El Arca prevent thinking on a grand scale, its tomato producers have become providers for sauce made by La Marquilla, one of Mendoza's biggest pasta chains.

"On one hand, this meant we found a market," Ordóñez said. "But the bigger value was the evidence that trust was established in a sector that had none at one time, and it demonstrates that small producers can make quality goods, be committed, meet delivery dates, and sustain a long-term relationship with consumers."

El Arca has proved that its model works for producers of food, textiles, agriculture, cattle, crafts and services. By producing efficiently, it is beginning to expand beyond Mendoza and even filtering out beyond Argentina's borders.

  Fourteen El Arca entrepreneurs work in textile manufacturing, producing work uniforms, jackets, overalls, tablecloths, and sheets.

"We have discovered that-between ASEM's work (in the social sector) and El Arca (in the economic realm)-an interesting and replicable cycle has formed and is expanding," Ordóñez said. "El Arca counts on the School of Entrepreneurship to support youth and adults in creating and perfecting their abilities as producers through technical assistance, support and networking."

There is an El Arca group in the town of La Rioja and plans to expand into three suburbs of Mendoza over the next year. "We are also doing capacity building for organizations in Rosario, La Plata, Córdoba, and in other Latin American countries that will allow them to adopt the same model," Ordóñez said.

Ordóñez, an agronomist by training, is an Ashoka Fellow. He has stepped down as head of ASEM to work in the networking and strategic development department where he helps direct the long-term plans of the project. He defines his role as "empowering other sectors, and creating conditions so that a determined sector of the population can act as decision makers-putting the emphasis on building the conditions but not making decisions for others."

By challenging the traditional rules of the market and reversing the logic behind business networks, not only is it possible to improve the rules of the game, but a new set of rules has been created, allowing participants to trust in human relations and come out winners, without leaving the losers behind.