RIO DE JANEIRO – Inter-American Development Bank President Enrique V. Iglesias and Banco do Nordeste President Byron Costa de Queiroz today signed the contracts of a $30 million loan that will support the expansion of CrediAmigo, the leading microlending program in one of the poorest regions of Brazil.
Brazil’s Procurador da Fazenda, Marco Antonio Boiteux Alvarez, also took part in the signing ceremony held during the 5th Inter-American Forum on Microenterprise, which is taking place here on September 9, 10 and 11.
The IDB resources will help CrediAmigo, a program launched by Banco do Nordeste in 1997, to increase its support for microentrepreneurs in 10 northeastern Brazilian states. Under its four-year expansion plan, the program is expected to give some 120,000 additional businesses access to short-term loans of up to $500.
According to Brazilian government estimates, about 61 percent of northeastern Brazil’s workforce is employed in microenterprises, modest businesses that have between one and five workers. There are more than 2,2 million microenterprises in that region, home to half of Brazil’s poor.
Traditionally, these businesses have lacked access to the formal financial system and have been burdened with exorbitant interest rates charged by suppliers and informal moneylenders. CrediAmigo seeks to expand the availability of formal credit in the northeastern region and boost microentrepreneurs’ productivity and income.
The program is also expected to have a demonstrative effect and encourage other financial institutions in the region to offer similar credit services to low-income entrepreneurs.
The program will also provide technical assistance for microenterprises and resources to strengthen CrediAmigo, which could eventually become an autonomous agency. The technical assistance will help Banco do Nordeste make improvements in such areas as risk management, marketing, loan officer productivity and credit portfolio management, as well as to expand coverage of its program, identify new products, bolster environmental protection measures, carry out studies and promote mechanisms to channel resources through private sector institutions.
This program reflects the IDB’s strategy of assisting Brazil in its efforts to reduce poverty and promote private sector development.