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.
The Office for Advisory Services in Latin America and the Caribbean (LAC Facility) 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, the LAC Facility is working with financial institutions across the region to "downscale" their operations to serve micro, small and medium sized enterprises (MSMEs). By growing lending volumes and carefully managing costs and risk, financial institutions around the world have discovered that the MSME segments can be profitable. The significant reach of formal financial institutions supports much higher levels of access to financial services for poor borrowers, which in turn contributes to economic development at the bottom of the pyramid.
- Addressing quantitative and qualitative housing shortages across the region: IFC is supporting projects which address housing constraints for low-income households across the region with a multi-product strategy. The LAC Facility works with financial institutions 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: Microfinance institutions (MFIs) play an important role in the financial sector in many LAC countries. The region is also home to several of the best performing MFIs in the world. 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. The LAC Facility 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.
COUNTRY | PROJECT | DESCRIPTION |
CURRENT PROJECTS |
| Regional | MSME Finance Program [pdf] | Improving access to financial services for MSME's in the LAC region through the provision of investments and advisory services to financial institutions. |
| Bolivia | Leasing Development Program [pdf] | Working with the financial sector in Bolivia to promote regulatory reforms necessary for developing a stronger leasing market. |
| Mexico | Mortgage Sofols [pdf] | Enhancing the operational capacities of second-tier sofoles, financial institutions specializing in housing finance. |
| Nicaragua | Findesa Upgrade [pdf] | Helping financial institutions serving MSMEs to become full-fledged banks. |
| Peru | BBVA Banco Continental [pdf] | Working to help financial institutions develop renewable energy and sustainable forestry projects. |
| Peru | Improving Operational Efficiency of a Microfinance Institution [pdf] | Enabling microfinance institutions boost their efficiency by reducing operational expenses. |
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PREVIOUS PROJECTS |
| Honduras | Leasing Map [pdf] | Legislative review and market study to evaluate possibilities for leasing development. |
| Nicaragua | Leasing Map [pdf] | Legislative review and market study to evaluate possibilities for leasing development. |
