Maria Fernanda Tamborini
Universidad San Andrés Argentina
This case describes the situation brought about by the severe economic and political crisis that struck Argentina at the end of 2001. With its economy deteriorating gradually since 1998, Argentina slipped into a growing recession, as poverty indexes started to climb steadily. The crisis came to a head when the federal government decided to freeze all bank accounts, further unnerving the general population.
The Foundation for Social Housing (FPVS, for its Spanish acronym) began to notice the repercussions of this crisis in its operations. The number of FPVS clients had stagnated in 1999, while its regular portfolio could no longer afford new loans. As the recession deepened, FPVS clients found it hard to make the required payments on their loans.
In December 2001, as a result of the social, economic and political crisis, the federal government decided to freeze all bank accounts in an attempt to prevent the partial fall of Argentina’s domestic banking system, besieged by growing capital leaks. Yet, this decision unleashed an overall economic paralysis that severely hit lower income sectors, who struggled for survival in informal economic venues. Cash-deprived, the informal economy came to a sudden stop, virtually wiping out FPVS customers’ repayment capacity. At that time, FPVS had a total of US$ 900,000 in current loans and a foreign debt of US$ 450,000. The organization faced dire financial distress, and Raúl Zavalía Lagos had to meet with its Board to discuss alternative solutions.
Next, the case focuses on Raúl Zavalía Lagos’ role as social entrepreneur, describing his family background, previous experiences, and his ability to lead the FPVS project and build a network with multiple actors who provided the necessary funding, advice and contacts. The case also offers a detailed account of FPVS’ origins, initial stages and impact. It highlights its intention to undertake a large-scale project, supported by the commitment of prestigious local businessmen who would guarantee a housing fund and join FPVS’ board to provide counsel and oversee its operations.
Finally, the case explains how FPVS rose to the challenge of worsening local social and economic conditions in 1998, developing alternative programs to appeal to new borrowers. As these initiatives proved ineffective, FPVS turned to other projects, based on the demands voiced by its target communities.