SAN SALVADOR – Latin America and the Caribbean should redouble their efforts to expand access to formal financial services for their low-income majorities, IDB President Luis Alberto Moreno said here.
Moreno, El Salvador President Antonio Saca and Queen Sofia of Spain on Thursday officially opened he 10th Inter-American Microenterprise Forum, which brought together more than 1,200 participants.
In his speech the IDB’s president acknowledged the achievements of the microfinance industry, which started nearly three decades ago as an experiment of non-governmental organizations and today is a sector with more than six million borrowing clients and $6 billion a year in microcredit in Latin America alone.
“But I don’t want to talk about the six million entrepreneurs in our region who have obtained access to credit; I’d like to talk about the 60 million who still lack such access. Notwithstanding the work done by donors, governments and lenders, millions of microentrepreneurs still cannot get the financing they need to sustain and grow their businesses,” he said.
The microfinance industry, Moreno added, must redouble its efforts and adopt technologies to expand coverage, improve services and lower costs, developing new distribution channels to reach people excluded from the formal financial system.
President Saca underscored the key role microenterprises play in Latin America, where they generate nearly half of all jobs. This sector, he added, needs more access to financing to be able to flourish.
“Despite the progress, many Latin American microenterprises are still shut out from the financial system. Millions of microenterprises perish due to the lack of liquidity. We still need governments and private sectors with more sensibility, creativity and resolve to commit ourselves unquestionably to this broad sector,” said the Salvadoran president.
Queen Sofia said: “Microfinance is, with no doubt, one of the most effective means to achieve more social equality and an exemplary instrument to fight effectively against poverty, a task in which the Inter-American Development Bank has been distinguishing itself for decades.”
In recognition of the Spanish queen’s longtime dedication to promoting microfinance and women entrepreneurs, President Moreno presented her with a statue of a Salvadoran peasant woman made by a local craftsman.
Favorable signs for microfinance
Moreno highlighted as a significant fact for Latin American microfinance that a major international bank such as Spain’s BBVA this year established a 200-million euro foundation that will build a global network of microfinance institutions.
The IDB and Fundación BBVA para las Microfinanzas (BBVA Foundation for Microfinance) signed an agreement to cooperate on activities such as promoting the microfinance industry in general as well as individual microfinance institutions, training for microfinance institutions’ staff, good governance practices and improvements in regulatory frameworks for microfinance.
In order to attract more private capital to the microfinance industry the IDB will work with Standard & Poor’s to define a methodology for assessing credit risk for microfinance institutions, allowing investors to better measure and compare their performance.
To encourage countries to implement policies to improve the business climate for microfinance, the IDB and the Andean Development Corporation commissioned the Economist Intelligence Unit to devise a scorecard that compares the regulatory frameworks, institutional development and investment conditions of Latin American countries. The index was presented here on Tuesday at a meeting of banking regulators and microfinance practitioners.
The 10th Microfinance Forum will close on Friday. Next year’s forum will take place in Asunción, Paraguay.