News Releases

Sep 9, 2004

IDB'S Iglesias calls for stronger support for microenterprise in Latin America and the Caribbean

At the opening of international forum in Colombia

CARTAGENA DE INDIAS, Colombia – At the opening of an international forum on microenterprise, Inter-American Development Bank President Enrique V. Iglesias on Thursday called for stronger support for these minute businesses, which generate nearly half the jobs in Latin America and the Caribbean.

Microenterprises are the main source of income for tens of millions of families in this region. Despite their major economic and social impact, only a fraction of these businesses has access to formal financial services.

In his speech at the 7th Inter-American Forum on Microenterprise, Iglesias underscored the urgency of giving microentrepreneurs the tools they need to take advantage of the opportunities and face the challenges posed by globalization, trade integration and new technologies.

“An investment in microenterprise is not charity, it’s an investment in human dignity,” he said. “It’s an investment in people so they may be able to pull themselves out of poverty and become better citizens for our democracies.”

Iglesias noted that commercial banks are getting interested in microfinance, a field where the foremost practitioners are not-for-profit institutions and companies with strong social commitments.

 “The key issue is to prove that microcredit is profitable, as well as socially beneficial,” he said. “If we manage to persuade banks, which have an enormous financial capacity, we will have achieved something truly important for microenterprise.”

The forum also marks the 25th anniversary of the IDB’s first program for microenterprise. A pioneer in the promotion of microcredit and business development services for microentrepreneurs in Latin American and the Caribbean, the IDB has devoted more than $800 million to microfinance-related programs in the region.

In his speech welcoming the forum’s 1,300 participants, Colombian Vice President Francisco Santos detailed the ambitious program his country is carrying out to support micro, small and medium-size businesses.

There are some 487,000 formal companies in Colombia, as well as 1,460,000 informal businesses. Of the total, more than 90 percent are microenterprises, which generate nearly half the country’s jobs.

“Given these statistics, it’s clear where we Colombians should target our efforts to strengthen our economy so that there may be a prosperous future and quality jobs for all,” he said.

Colombian Finance Minister Alberto Carrasquilla, Bancoldex President Gustavo Ardila and Cartagena Mayor Alberto Barboza also took part in the opening ceremony of the forum, which had brought together delegates from microfinance institutions, credit unions, commercial banks, foundations, social investment funds, consulting firms, research centers, non governmental organizations, international agencies and government institutions that support microenterprise development.

During the two-day meeting participants will share information and analyze successful experiences and lessons learned in the fields of microfinance, business development services, business climate improvement and social entrepreneurship.

Agreements and awards

On Thursday afternoon Iglesias signed documents on financing from the IDB’s Multilateral Investment Fund and Social Entrepreneurship Program. The IDB will help Bancasol expand into microfinance in Guatemala; assist Finarca in the launching of a leasing service for microenterprises in Nicaragua; and cooperate with Fundacion Copesa of Spain in establishing a fund for small productive projects in Honduras.

The IDB will also support a program of Paraguayan NGO Alter Vida to improve the work conditions and living standards of trash recyclers in Asuncion. Using resources from a Swedish trust fund, it will help INDACO of Peru improve the production, processing and marketing of cacao in Cuzco’s Amazonic region.

Colombian President Alvaro Uribe joined the forum on Thursday evening to award the IDB’s annual prizes for institutions and individuals who excel in their support for microenterprise and community development in Latin America and the Caribbean. Uribe also held a brief townhall-style exchange with participants, responding to various questions.

IDB and Colombia

After the opening ceremony, Iglesias and Carrasquilla held a news conference where they announced that the IDB expects to approve some $1.8 billion in loans to Colombia for the period 2004-2005. The financing will focus on two of the Colombian government’s priorities: social programs and competitiveness.

Among other loans, the IDB has recently approved or expects to approve financing for Colombia’s network of public hospitals, a vaccination program, rural housing, highway improvement, a mass transport system in Cali, the national census and statistics system and public sector modernization.

In a parallel ceremony, Uribe, Carrasquilla and Iglesias signed the contract for a $10.3 million loan for a program to modernize the national public administration. The program will reorganize government agencies; improve the management of the civil service, of lawsuits brought against the public sector and of state-owned properties; as well as increase transparency of public information and government procurement.

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