Closing gaps, creating opportunities
Data from the Social Performance Report, that measures the development of 3 million vulnerable people, show that 15% of the entrepreneurs who take out a loan with one of the foundation’s institutions create jobs.
Women start off with fewer resources with which to become entrepreneurs: 46% of those borrowing for the first time are in poverty, compared to 29% of the men
Entrepreneurs’ perseverance, hard work and adaptability have been critical in achieving outcomes in which six out of ten have managed to overcome poverty within five years. This is just one of the findings of the 2022 Social Performance Report published by the BBVA Microfinance Foundation (BBVAMF), which also highlights that 69% of the entrepreneurs in poverty served are women in precarious circumstances: no savings, no family support, living in the countryside and with several mouths to feed.
Measuring to improve employment, education and housing
In order to understand their needs and deprivations, more than a decade ago BBVAMF developed a proprietary model for measuring social impact that enables it to learn about the social characteristics (gender, educational level, type of housing…) of every entrepreneur, the surroundings in which they live (rural or urban), the kind of business they run, their relationship with the microfinance institution (amount and duration of their loan, savings, insurance, etc.), their financial health and, most importantly, their progression over time. This methodology has made the Foundation a worldwide benchmark. Furthermore, it is the first private institution to use the University of Oxford’s Multidimensional Poverty Index to measure the shortfalls facing the households of clients served by its microfinance institutions: Bancamía in Colombia, Financiera Confianza in Peru, Banco Adopem in the Dominican Republic, Fondo Esperanza in Chile, and Microserfin in Panama.
The detailed information revealed in this report’s integrated measurements means that products such as loans to improve access to water and sanitation can be personalized, as can insurance against weather events and “women’s” microinsurance with specific healthcare provision (mammograms, pediatric and geriatric care advice …) and for maternity leave to optimize each client’s progress.
In 2022, the number of entrepreneurs with some kind of insurance cover grew by 62%. Farmers like Rumaldo, who grows flowers in the Dominican Republic, are particularly vulnerable to inclement weather. However, with the support of Banco Adopem, the Foundation’s institution in the country, he has succeeded in making his business grow and gives employment to another 12 people. He is not an exception: according to the 2022 edition of the SPR, 15% of BBVAMF institutions’ clients create jobs.
Rumaldo Álvarez, in his farm, with a Banco Adopem microcredit analyst who teaches him how to use mobile banking
Resilient entrepreneurs
Another of the report’s conclusions is that 53% of the entrepreneurs served by the Foundation across five countries in Latin America have recovered their sales levels or raised them compared to 2020. Outcomes that Stephanie García Van Gool, director of Impact Assessment & Strategic Development at BBVAMF, attributes to entrepreneurs’ capacities: “The people we serve are resilient. They have the capacity to implement measures to recover and even better their initial situation. We see this in the growth of their businesses and in the data of this year’s report on how the people we serve escape poverty.”
The annual report indicates that social media have become a significant ally for the Foundation’s entrepreneurs. Whereas before the pandemic only 19% of all clients used it for their sales, that percentage currently stands at 28%. This is the case of Celia Mosquera, owner of a small natural cosmetics business. She is a member of the Emprendimientos Productivos para la Paz (EMPROPAZ) program run by Bancamía, the BBVAMF institution in Colombia. She took out a loan to buy packaging, a dehydration oven, and an industrial kiln …She also received digital marketing training: “If you know how to use social media, you can do great things”, she says confidently. Those entrepreneurs who have used digital tools have seen their businesses grow by 30%, according to recent research from Accion.
Celia Mosquera, Colombian entrepreneur, manufactures natural cosmetic products
A close, agile, simple and flexible support
For years BBVAMF has been promoting digital transformation, which makes service provision easier, more flexible and less costly, as well as enabling greater progress for the people it supports. One example of this is that 86% of loans last year were formalized via the app used by the loan officers on their visits to entrepreneurs in their homes or businesses, and thanks to which they can carry out the same operations as in a bank branch. What’s more, in 2022, progress was made on facial biometrics and electronic signatures which have been rolled out with entrepreneurs. More than 14,000 used it to register for the first time and 265,000 signed their documents digitally.
BBVAMF provided training to around 700,000 entrepreneurs last year, people like Edith Elgueta, a Chilean entrepreneur who produces and sells honey from the Atacama desert. Thanks to technology and her internet connection, she is doing courses on administrative management, stock control and accounting. She connects to the free online training platform and to the School for Entrepreneurs that Fondo Esperanza, the BBVA Microfinance Foundation’s Chilean institution, makes available to the 112,000 plus entrepreneurs it serves.
Promoting the independence of women, who account for 57% of its entire client base, is a priority for BBVAMF. In 2022 the Foundation continued working on products and services with a gendered approach to strengthen women’s businesses. One example is “Emprendiendo Mujer”, an innovative pioneering financial product in Peru that has supported nearly 34,000 women with loans and digital financial education.
Nevertheless, there is still a long way to go. In the face of this challenge, BBVAMF made the public commitment to disburse more than 7 billion euros over the 2021-2025 period in financing for 4.5 million low-income entrepreneurs. Reinforced by digital solutions, providing development programs in financial and digital competences, internet access and transactional services, it plans to have an impact on 14 million people in Latin America. Since it was founded, through its institutions BBVAMF has supported more than 6 million people and has delivered over USD 18 billion in loans to low-income entrepreneurs.