Broadening Access to Finance

Smaller business and low income households across the region face significant barriers to accessing financial services. Improved access to credit and other financial services (savings, insurance, remittances, etc.) are crucial to economic development and improved quality of life at the bottom of the pyramid.

IFC Advisory Services in Latin America and the Caribbean (LAC) focuses its Access to Finance work on the following core areas:

• Encouraging formal financial institutions to move down market: Through its LAC Micro Small and Medium Enterprises Finance Program, IFC Advisory Services is working with financial institutions across the region to "downscale" their operations to serve micro, small and medium sized enterprises.
• Addressing quantitative and qualitative housing shortages across the region: IFC Advisory Services in LAC works with financial institutions, in a multi-product strategy, to: extend mortgages to lower and middle income households, extend bridge financing for the construction of low-income housing and design innovative housing microfinance products aimed at the lowest income segments, which tend to build progressively. IFC investment is accompanied by advisory services which helps these institutions to design and deliver appropriate housing finance products to their clients.
• Supporting the development of microfinance institutions: For mature MFIs to continue to grow and offer a broader range of services to their clients, it is important that they transform to a more formal structure, which is regulated by the relevant financial authority and licensed to offer a diverse range of products and services. IFC Advisory Sevices in LAC is working with a small group of MFIs to support their transformation from Non Governmental Organization to finance company and eventually to become specialized microfinance banks.
• Extending credit reporting to low income borrowers: Information asymmetry is one of the biggest problems facing financial institutions lending to MSMEs and low-income households, which typically do not have credit histories or formal financial statements. Credit bureaus can help reduce this information asymmetry and lower the risks and costs for lenders working with MSMEs and low-income households.