Solidarity Economy and Recycling Co-Ops in São Paulo: Micro-Credit to Alleviate Poverty

Development in Practice Vol. 19, No. 6 (Aug., 2009), pp. 737-751

Jutta Gutberlet, agosto 2009

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Co-operative recycling is a form of social economy which helps to build human, social, financial, political, and natural assets. Social or solidarity economy is defined as a bottom-up initiative, holding business ethics of solidarity and collaboration rather than being primarily profit oriented. In the context of Brazil, social or solidarity economy is seen as new forms of production, distribution, finance and/or consumption emerging out of a scenario of poverty, encompassing the voluntary sector, cooperatives and associations as well as new institutional social and economic experiences. Common values found within the social or solidarity economy are related to co-operation and sharing. Other key attributes include autonomy or self-determination, co-operation and reciprocity, which are seen as building blocks for social cohesion, decentralization and deliberation, and transparency. These attributes create the potential for social innovation, for effective social cohesion, and for collaborative work spaces to function efficiently.

In Brazil, informal recyclers, or catadores, have built livelihoods around selective collection and commercialisation of recyclables from the waste stream. The material is collected daily, and is usually sold to an intermediate business. In 2005, many of these recyclers in the São Paulo region collaborated in the PSWM project, which aimed to strengthen the capacity of the recyclers and local governments in the interests of inclusive waste management through organizing and strengthening the recycling groups in the region.

One particular initiative of the PSWM project was to build collective commercialisation and micro finance schemes for the recyclers. The recyclers typically had sold materials to intermediaries for lower prices, which exposed them to exploitation. Microfinance schemes allow recyclers to expand the scale and scope of their practices through higher levels of organization and increased capacity, and to collaborate directly with the industry. An issue with this scheme is that selling directly to industry requires large volumes of material, access to transport, and persistent quality. Networking and collective commercialisation were key tools in allowing the recyclers to overcome these hurdles. Trustful relationships between different recycler groups allowed their members to collaborate amongst themselves to collect sufficient quantities of materials to sell directly to the industries. On average, groups earned 55 per cent more through the networking scheme (Gutberlet, 2009).

In 2006, PSWM launched its first workshop on micro-finance. Many of the groups which were a part of collective commercialisation networks participated with the objective of creating a micro-credit fund. Collective commercialization involves a high level of uncertainty in the conduct of financial transactions, which had often caused delays in payment and resulted in feelings of insecurity and frustration for the groups involved. Further, many groups did not have transportation facilities, and thus were still dependent on local intermediaries to pick up the material. Micro-credit was identified as a solution to the time delay in collective commercialization, as well as to the issue of transportation. In 2007, two used trucks were bought through a new project to assist in collective commercialisation.

From this process, it was determined that collective commercialization and micro-finance are essential and complementary tools within social and solidarity economy. They are solutions which help address issues of poverty and inequality, by contributing to transform the roles of informal recyclers into environmental service providers.