Sector creates jobs for more than 110 million people in the region; requires greater access to financial and business services, better legal frameworks
RIO DE JANEIRO – Latin American and Caribbean countries must make greater efforts to improve business conditions for microenterprises, which employ millions of people in the region, Inter-American Development Bank President Enrique V. Iglesias said today.
“Some countries in our region are going through difficult times,” he said at the opening of the 5th Inter-American Forum on Microenterprise. “However, crises also create opportunities.”
“Support for microenterprise is crucial now, in order to generate opportunities and harness this force that can aid our countries during this difficult times, while trying to attend to the needs of the poorest people in our societies. The challenge for those here is to expand the financial and nonfinancial services for these entrepreneurs,” he added.
The three-day forum has brought together more than 1,200 participants, including delegates from governments, NGOs, banks, credit unions, community groups, consulting firms, philanthropic foundations, investment funds, aid agencies and multilateral institutions that support microenterprise.
More than half of the region’s businesses fit in this category of enterprises that employ up to 10 workers. Around 110 million people in Latin America and the Caribbean make a living through microenterprise. However, most of them lack access to formal financial services and training to raise their productivity and their incomes.
Iglesias pointed out that microfinance has made remarkable progress over the past decade, especially in countries like Bolivia and Peru. However, others still have regulations that hinder their development.
This forum, he added, should help governments take notice of how microenterprise can serve both economic and social goals, especially during crises.
Also attending the forum’s inaugural ceremony were Brazil’s Development, Industry and Trade Minister Sergio Amaral, who represented President Fernando Henrique Cardoso; Planning, Management and Budget Minister Guilherme Gomes Dias, who presides the IDB Board of Governors; and Rio de Janeiro State Governor Benedita da Silva.
During the event, which was organized by the IDB’s Micro, Small and Medium Enterprise Division and sponsored by Brazil’s Banco Nacional de Desenvolvimento Econômico e Social (BNDES), Serviço Brasileiro de Apoio às Micro e Pequenas Empresas (SEBRAE) and Banco do Nordeste, participants will discuss how countries can create adequate conditions for microenterprise.
Different panels and workshops will analyze issues such as:
- how legal and regulatory reforms can help – or hinder – microenterprises,
- how governments can reduce bureaucracy and bring businesses into the formal economy,
- what institutional and social factors encourage entrepreneurship,
- how larger financial institutions can work with microentrepreneurs, and
- how microlending can be used to improve housing in low-income communities,
On Monday evening President Iglesias, Governor Da Silva and Mayor Maia will present the Inter-American Awards for Microenterprise Development and Social Entrepreneurship, the IDB’s annual prizes for outstanding individuals and institutions that promote microenterprise and community development in the region.
This year’s winners are Peru’s Caja Municipal de Ahorro y Préstamo de Arequipa, Nicaragua’s Fundación para el Apoyo a la Microempresa (FAMA), Brazilian NGO Visão Mundial and Brazil’s Oded Grajew, a champion of corporate responsibility and children’s rights.
Microenterprise and the IDB
The IDB sees microenterprise as a key instrument for stimulating economic growth reducing poverty in Latin America and the Caribbean. As the leading source of multilateral financing for the region, it has invested more than $800 million over the past two decades in microenterprise-related initiatives.
IDB support has been instrumental in helping build Latin American microfinance institutions. Earlier this year it approved a $30 million loan for Banco do Nordeste to support the expansion of a microcredit program in one of the poorest regions of Brazil.
Through its Multilateral Investment Fund and its Social Entrepreneurship Program, the IDB supports projects to improve financial and business development services for low-income entrepreneurs.
The IDB and the MIF also support legal and regulatory reforms, supply technical assistance and disseminate best practices to help beneficiary countries create the necessary conditions for microenterprise to flourish.