If she hadn’t belonged to an innovative financial co-operative, Nicole Ramírez would have had to postpone surgery, or borrow from a loan shark at 20% interest rates. Fortunately, she avoided both as a member of the General Union of Informal Economy Workers (UGTI) which prompted her to join the Corporación Fomentamos, a form of cooperative banking in Colombia.

Nicole, who has been a street vendor for eight years and now sells socks, underwear and umbrellas, said she knows of many colleagues who have become indebted to loan sharks, who are known to resort to violence.

“It’s common,” said Nicole, 35. “When it rains, we have no sales. And sometimes we don’t sell anything in a day. We need to make sure we have products and food and everything. We have to get these loans from the loan sharks.” Some vendors do manage to access traditional banking, but even so, interest rates are very high.

Nicole has never had to resort to this usury because of her husband’s earnings in security work. But the risk was always there. Three of her seven siblings and her mother are also vendors in Medellín. One sister and her mother signed up with Fomentamos 15 years ago. Swayed by explanations from UGTI about the low interest rates, savings plan and life insurance, which covers funeral costs, Nicole signed up about four years ago.

Fomentamos, which means to forment or expand, was set up in 2003 to provide financial services and educate vulnerable people excluded from traditional financial systems; this includes both workers in and outside the formal economy. Its members join via various entities and social organizations, including UGTI, which is an affiliate of StreetNet International. Based on Fomentamos and three similar models internationally, SNI will present guidelines for a Solidarity Saving and Credits Bank at its April meeting.

The idea behind Formentamos, said Guillermo Giraldo, UGTI president nationally and in Medellín “is for people with a negative credit history to have a chance to access credit and stop paying high interest rates.” UGTI has 35 Fomentamos members in Medellín and 115 in total.

Fomentamos offers two services: savings and solidarity credit. New UGTI members in Formentamos receive a loan of up to 300,000 Colombian pesos (COP) with an interest rate of only 0.9%. The system is self-regulating through circles of up to 12 members who meet weekly for training and to hold one another accountable. They ensure that loans are paid back, new loans are available thanks to the group’s compliance and to help with monitoring.

Nicole used her initial loan “to grow my business with more products and buy a large umbrella.” She also sent her son for swimming lessons.

Once that first loan is paid, members can gradually borrow higher amounts. Nicole started a side-business, selling clothing on WhatsApp, to supplement her vending income. When times are particularly lean, the ever-resourceful woman also makes and sells puddings to friends and fellow vendors.

Fomentamos members also put aside savings of at least 10% of their initial loan. “This way they will gradually save,” said Guillermo. “It helps to reduce trauma to have a small savings. People are grateful for the program.”

Nicole is a case in point. She had managed to save COP1.2 million, before finding out that she needed surgery. Colombia has a public health service, but users pay a portion. She was hospitalized for one day, then needed a week’s rest. She paid for everything without borrowing, and she still has COP700,000 left in her account.

“Without those savings, I wouldn’t have been able to get the operation, or I would have had to go to a loan shark,” said Nicole. “That’s probably what I would have done, because if you lose the appointment… it takes a long time.”

During her convalescence, Nicole was supported by her family and close community of vendors on Calle Maturín. Her sister still wheels Nicole’s trolley out of storage each day. A cook in a nearby restaurant helps her set up the giant umbrella.

Nicole also finds support at her weekly circle meetings in the UGTI office. They learn together, celebrate birthdays and other important days and hold one another accountable. There are penalties for missing meetings, or payments twice in a row. Extenuating circumstances, such as illness, are discussed within the group and allowances made.

“It’s all based on trust,” says Guillermo. He encourages every vendor to join “but most don’t like to be in a collective group or go to meetings.”

Nicole, though, is an adamant supporter.

Joining the co-op and union has brought unexpected benefits too. “I’ve learned to speak in public a bit more. Before I was nervous. And I am starting to know myself as a leader within my circle.”

For example, she strives to find collective solutions among the vendors on her street. “We work together and look out for one another.” If the local authorities come, she calls UGTI to help them. “They will protect our rights,” she said. “They are everything.”

Guillermo smiles broadly. “She’s going to be the next national president of UGTI.”

“See?” she quips in return. “He wants to give us all a chance to grow.”