Chile’s indigenous microenterprises receive government support

Paola Poblete Huenchumilla, national chief of CONADI’s Indigenous Development Fund, said the program has given financial assistance to 1,450 this year. The program was created in 2000. (Courtesy of CONADI)

Paola Poblete Huenchumilla, national chief of CONADI’s Indigenous Development Fund, said the program has given financial assistance to 1,450 this year. The program was created in 2000. (Courtesy of CONADI)

By Matías Ristenpart for Inforsurhoy.com—06/12/2010

VALPARAÍSO, Chile – The National Corporation for Indigenous Development (CONADI) expects to have 830 indigenous microenterprises aimed toward improving the quality of life among the country’s natives in 2011.

Paola Poblete Huenchumilla, national chief of CONADI’s Indigenous Development Fund, said the main goals in supporting indigenous microenterprises are strengthening the social development and boosting the productivity and economic growth of the country’s indigenous.

The last national census, taken in 2002, documented that 95% of the population self-identified as not belonging to any indigenous culture, whereas 4.6% said they belonged to one of the eight indigenous ethnic groups, among which are the Mapuche, Aymara and Atacama. Chile has about 17 million residents.

CONADI invested US$2,593,422 to develop the indigenous urban and rural economies in 2008, with the budget increasing to US$4,715,291 in 2009, Poblete said.

Applicants receiving financial assistance must demonstrate they belong to one of the indigenous ethnic groups by different means of identification, such as showing proof they are the child of an indigenous father or mother, which includes through adoption, Poblete said.

Descendants, she said, must have at least one last name that belongs to an indigenous ethnic group.

The microenterprise application process begins when CONADI holds its annual application process, during which those seeking assistance submit a formal proposal of their project to the institution.

Applicants must fund 10% to 20% of the project’s budget, Poblete said.

Héctor Cayufilo Huina, a 50-year old Mapuche, said the financial aid he received from CONADI in June 2009 was key to his continuing his small business that sells wooden instruments.

Cayufilo said he’s been doing this work for 20 years but has struggled to access credit. And when he finally got a loan 10 years ago through a private financial institution, he ended up accumulating US$10,000 in debt. He owes US$4,100 and makes monthly payments of US$200.

CONADI approved his project and gave him a grant of US$6,211 a month after he applied for funding.

“The money you receive is a grant, which does not need to be returned, since it falls within the program of microenterprises,” said Cayufilo, who is married and has four children between the ages of 13 and 25. “Thanks to this help, I can plan many future projects, because I know that by doing things well, everything will come out right.”

Cayufilo said he invested the money in tools and woodworking machinery to improve his products’ overall quality.

“It used to take me one week to finish each instrument,” he said. “Now, it takes me up to two days.”

Microenterprises in Chile

The National Institute of Statistics’ 2006 Annual Survey of Small and Medium Businesses revealed there are 83,347 small and medium-sized firms in Chile.

Large businesses have more than 201 employees, medium businesses have between 51 and 200 employees, while small businesses have 50 or fewer employees, according to Chile’s Internal Tax Service.

Patricio Centeno, dean of the Business Engineering program at the Universidad Andrés Bello, said Chile does not have a culture that encourages entrepreneurship. He said those who want to start their businesses must persevere through bureaucratic obstacles.

“It is very complicated to be entrepreneurial in this country,” he said. “The law makes prospective entrepreneurs go through a series of bureaucratic steps that are estimated to take 35 days, to get permission, invoices with ID and the firm’s tax identification number.”

An entrepreneur can drive social mobility and economic growth within his own community by generating employment and raising the income of the area’s residents, Centeno said.

Ximena Clark, head of the Division of Smaller Size Businesses at Chile’s Ministry of Economy, Development and Tourism, said the government is helping small businesses through a public bank called BancoEstado, which has about 400,000 customers nationwide.

BancoEstados’s share of the market last year was 16.1%, with a 32% growth in loans to businesses, according to its 2009 annual report.

The ministry also is helping boost entrepreneurship through state-owned entities such as the Corporation of Production’s Promotion (CORFO) and the Service of Technical Cooperation, Clark said.

“There is an avenue of government support for microloans that is very important to this industry,” Clark said. “The government can also help indirectly by promoting a proper environment for business, facilitating the creation and operation of companies.”

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1 Comment

  • elizabeth aro pincol | 2013-01-25

    Hi. I would like to tell you that I am a micro business owner in the tourism sector, specifically in transportation, I have new ideas about innovations in this area, but I have run into innumerable problems with financial support, specifically with regard to micro businesses from the state bank, it was supposedly created to help new projects but above all to provide access to loans for innovation in new areas or for investment to have access to machine equipment. I have felt completed shunted by this entity when the resources are for new projects or to help micro businesses reach even higher. The number of obstacles they put in front of me is impressive, to have access to a loan as a micro business owner, therefore I wonder and I ask you how we are going to move forward and grow and above all create more work. I urgently need to get working capital to invest in a new tourism project, but frankly with regard to seed money and other entities aren’t useful to me for the capital I need, only a loan would be the most feasible. Sincerely, Elizabeth Aro Pincol Puerto Natales Magallanes Region.