According to BBVA Microfinance Foundation’s Social Performance Report, which includes results from its Chilean institutions Fondo Esperanza and Emprende MF, microfinance does an important part in financially empowering women and boosting their enterprises. This was the main conclusion at the report’s presentation held at the ‘Ave Fénix’ village bank, hosted by the two MFIs.
Almost two million people from Latin America, belonging to the poor and vulnerable sectors of the population, currently approach a branch of one of the six institutions of the BBVA Microfinance Foundation (BBVAMF) in Colombia, Peru, Panama, Dominican Republic and Chile, seeking for financial support for their businesses to improve their lives. However, according to the report, there are still 184 million people who are excluded from accessing the formal banking system.
To place this figure in perspective, the number of clients in the region served by the Foundation by the end of 2017 (1,941,232 people) is very similar to the sum of microentrepreneurs and self-employed persons in Chile, according to the latest EME Survey of the Economic Ministry (1,992,578). Fondo Esperanza and Emprende MF, the Foundation’s Chilean institutions, serve nearly 120 thousand and 10 thousand clients respectively in the country, reflecting the wide range of people that still need this kind of support.
These are characteristics of enterprising people in the vulnerable sectors of Chile and Latin America, and to make these known, BBVAMF publishes an annual report, “Measuring what really matters”, where it shares the profile of its clients (whose features are quite similar across the continent), as well as the impact of productive finance in their lives.
The figures shown in this report are proof of the effect that microfinance generates on people and their businesses. For example, in Chile, of all the microentrepreneurs that work with Fondo Esperanza, 44% start to register incomes above the poverty line after two years with the institution. Likewise, their sales increase by 42% annually. In the case of Emprende MF, 4.4% of its clients are able to create employment after two years.
Gender gap in economically vulnerable enterprises
One of the more remarkable aspects of enterprises in vulnerable segments consists in women’s role in developing them, given that a large proportion of them are heads of household and are the main breadwinners in their families. For example, in Fondo Esperanza and Emprende MF, women make up 82% and 57% of their total clients, respectively.
It should be considered that incomes from businesses led by women, are considerably lower than those from businesses handled by men. According to the EME Survey, 68.2% of female microentrepreneurs earn less than CLP 257,000 monthly, while only 36.2% of males are present in this bracket. This is because businesses developed by women are less productive, due to their domestic obligations, which hinders them from focusing on their projects.
The gaps increase, more so, when we approach the more vulnerable segments: among the clients that started with Fondo Esperanza in 2017, 74% of the poor and 86% who live in extreme poverty are women.
A significant part of the figures that appear in the Foundation’s report reflect that entrepreneurs from Latin America’s vulnerable segments share common aspects that determine their businesses’ degree of progress. For example, the low levels of education, gender and the enterprising environment all have an effect.
Of all the people who avail of microfinance services from the BBVAMF, 70% of them live in rural areas where poverty concentration ranges from mid to high. Additionally, 60% of the entrepreneurs are women, 43% possess primary education at best and 80% live in vulnerable socio-economic conditions.
The data published in the report indicate that the main problem of entrepreneurs within the region, and in Chile, is access to financial resources. This makes granting microcredits highly relevant, as well as the work methodology offered by MFIs like Emprende MF and Fondo Esperanza.