GUATEMALA CITY – Latin America and the Caribbean need a “revolution in microenterprise” to take full advantage of opportunities arising from integration and adapt to the profound changes the region is undergoing, Inter-American Development Bank President Enrique V. Iglesias said.
In a speech at the opening of the 6th Inter-American Forum on Microenterprise, Iglesias said on Thursday that microenterprise, a source of income and employment for millions of poor people in Latin America and the Caribbean, has become a stabilizing force for Latin America and the Caribbean, especially in times of crisis.
Nevertheless, he added, Latin America must do more to bolster these businesses, creating adequate conditions for growth and expanding access to financial and development services that can help microentrepreneurs become more productive.
“Microentrepreneurs need this revolution,” Iglesias told the forum’s 1,000 participants. “We cannot dodge the challenge of modernizing microenterprise.”
According to IDB estimates, there are some 50 million microenterprises in Latin America. These businesses, which usually employ fewer than 10 people, help reduce poverty, generate employment, improve income distribution and create opportunities for progress for people in disadvantaged groups, particularly low-income women and youths.
The IDB holds these forums annually to bring together delegates from microfinance institutions, credit unions, banks, investment funds, foundations, non-governmental organizations, government agencies, bilateral aid agencies and multilateral organizations that support the development of microenterprise and microfinance in Latin America and the Caribbean.
During the two-day meeting participants will discuss the latest ideas, tools and experiences derived from programs to make financial and business development services tailored for microenterprises more effective and accessible. They will also analyze ways to eliminate bureaucratic barriers that hinder microentrepreneurs, as well as social entrepreneurship programs that improve living standards in poor communities.
In his speech, Iglesias underscored the growth microcredit has experienced in Latin America and the Caribbean over the past few years. According to IDB estimates, there are now some 184 financial institutions in 17 countries of the region serving about 1.8 million clients, who have taken out loans totaling around $1.2 billion. The institutions range from NGOs operating in remote rural areas to commercial banks in the region’s major cities.
This growth, he added, shows that private capital is starting to flow into microfinance. Iglesias urged the forum’s participants to continue working to “seduce the formal financial markets so they may see that there is good business behind these microenterprises.”
Microentrepreneurs also need help to gain competitiveness, especially in light of the free trade negotiations underway in the region and its increasing degree of economic integration, Iglesias said.
IDB support for microenterprise
The IDB, which has invested more than $800 million in microenterprise-related programs over the past 25 years, will strive to make its support for these businesses more effective by financing innovative initiatives that can expand access to more and better services for microentrepreneurs.
The IDB’s support ranges from large global credit programs for tens of millions of dollars to fund national microcredit programs to grants worth a few hundred thousand dollars to finance economic and community development projects through its Social Entrepreneurship Program.
Through its Multilateral Investment Fund, the IDB makes investments, loans and grants to strengthen microfinance institutions and organizations that provide productivity-boosting business development services.
Microenterprise Development Prizes
During the forum, the IDB will award its annual prizes for outstanding institutions and individuals that support microenterprise and community development. This year’s winners are the Peruvian credit union CMAC Trujillo, Nicaraguan microfinance institution Fundación José Nieborowski, Guatemalan foundation FUNDEMI/TALITA KUMI and Moema Cunha Leão, president of a Brazilian foundation that offers job training and income-generation opportunities to women in prisons.