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Brazil’s Banco Gerador to expand banking services to low-income population with IDB support

A $5 million IDB loan will help boost credit to both micro and small business as well as the low-income population in the country’s northeast

The Inter-American Development Bank (IDB) approved a $5 million loan to finance the expansion of Banorte Todo Dia program in Brazil’s northeast. The resources will be used by Banco Gerador (BG) to expand banking services offered through a network of micro- and small- scale commercial establishments popularly known in Brazil as “mercadinhos”.

With the IDB loan, BG will be offering credit to the “mercadinhos” and to their clients. The establishments will be able to improve their managerial system and offer additional financial products to the low-income population, who, in turn, will have access to basic banking services, such as the payment of utility bills.

“Due the mercadinhos geographic location, the project will directly benefit the vase of the socioeconomic pyramid”, said Jonnhy Jirón, team leader for the project at the IDB’s Opportunities for the Majority (OMJ), the initiative responsible for the loan.

In Brazil’s northeast, the mercadinhos are often the only location where the low-income population can find basic household items such as food staples and hygiene products. Given their strategic location, these establishments are an important tool to provide banking services to the base of the pyramid. According to data released on the first quarter, 79% of BG’s customers monthly household income doesn’t exceed three minimum wages (the minimum wage in Brazil is R$540, which corresponds to $300).

Moreover, the IDB loan, in partnership with Sebrae (the Brazilian agency for micro and small business), will support a pilot project called Mercadinho’s University. This pilot program will help incorporate low-income citizens into the banking system through training and financial education workshops to the shop’s owners, their employees, and their customers.

Banorte Todo Dia

The Banorte Todo Dia program supports technically and financially micro and small business that also work as credit and banking services platforms for low-income populations.

Opportunities for the Majority

The Opportunities for the Majority (OMJ) of the IDB supports the development and expansion of innovative business models that can improve living conditions and earning opportunities for people living at the base of the socioeconomic pyramid in Latin America and the Caribbean.

 

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