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Microfinance in South America: funding and education

  • 04.12.2017

In South America, BNP Paribas lends its support to various microfinance institutions that have the unique advantage of offering both funding and robust social assistance through training and education.

A flagship region for microfinance

With 42.5 billion dollars in loans issued to over 23 million beneficiaries, South America accounts for almost half the world’s total microfinance portfolio. Active in 17 countries worldwide, the BNP Paribas Group operates in South America and invests in local microfinance. 

In Brazil, BNP Paribas became the first foreign bank to issue a loan to the Microfinance Institution (MFI) Banco Da Familia, which now accompanies more than 14,000 entrepreneurs

In Colombia, the bank delivers funding to Contactar, an MFI that assists more than 73,000 low-income customers. In this country, where only a third of the population uses banking services, BNP Paribas relies on a local representative office instead of a traditional banking network. Since it does not have access to the local currency, the Group also utilizes sophisticated financial tools to fund Contactar while protecting against foreign exchange risk.   

In the near future, the Group plans to expand its network to Argentina.

Funding… as well as education and training

As in other parts of the world, loans issued by BNP Paribas aim to fund entrepreneurs who lack access to the necessary resources for obtaining traditional bank loans. But the ties that bind the MFIs supported by BNP Paribas to their customers are more than just financial. Funding is seconded by a full line of actions and services in favor of education and training.

For example, the Brazilian MFI Banco Da Familia has organized financial education workshops since 2008, while it even supplies accounting books to help its customers keep track of their spending. Similarly, between 2011 and 2016, the Colombian MFI Fundacion de la Mujer (Women’s Foundation) trained nearly 133,000 customers in two main topics—financial education and microenterprise management

As for Contactar, the institution delivers hands-on training and financial education in agriculture, livestock farming, and food packaging. These are crucial lessons in light of the fact that 83% of the MFI’s customers live in rural areas

For BNP Paribas, the social assistance an MFI offers to its customers is a key criterion in its decision to allocate funding. Just like financial aspects, social assistance activities receive close inspection, while the Group conducts regular studies to measure performance and social impact.

Alina - Promujer in Argentina

Claudia and Maria - Grameen in USA

MFIs committed to protecting the environment

In addition to their social performance, MFIs are focusing more and more on their environmental performance. In Brazil, Banco da Familia is currently rolling out a loan to ensure access to safe water and sanitation, in partnership with the NGO Water.org created by Matt Damon and Gary White. 

In the case of Contactar, the MFI integrates the loan’s environmental impact into its criteria for loan allocation. In addition, it issued nearly 3,000 green loans between 2013 and 2016. Some of these loans notably finance solar dryers for coffee beans, since Colombia is one of the world’s largest coffee growing countries. They also offer a diversified line of services including biodigesters, water filters and organic fertilizer.

Along with these green products, MFIs also organize initiatives favoring responsible practices. Fundacion de la Mujer developed a program for recycling office paper and used home appliances. With this program, over 50 branches have helped the Lito green points collect 4.1 tons of old electronics that would otherwise go to waste.

And elsewhere in the Americas ? 

In addition to South America, BNP Paribas is also present in the United States, by financing the Grameen America Incorporation (GAI) in New York. But the bank’s support also extends from coast to coast. BNP Paribas NY and Bank of the West, BNP Paribas’s branch network in California, both lend their support to the MFI. Created in 2006 by Muhammad Yunus, in the same year he won the Nobel Peace Prize, GAI issues loans to individual women entrepreneurs, as well as female entrepreneurship groups. 

Since its creation, Grameen America has helped to create and maintain 99,750 jobs. Moreover, 40% of their customers went on to start their first company. At the same time, GAI’s micro-borrowers build their credit history, which is the gateway to the traditional banking circuit.

Banco Da Familia - Fabricio

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