Entrepreneurship as a tool for overcoming poverty: assessment by Bancamía

On the “International Day for the Eradication of Poverty”, Bancamía takes stock of its record in improving the living standards of low-income families.

17 October 2014
  • The disposable household income (DHI) of the bank’s customers in 2014 is up by 16.8%; assets by 20.6%, and savings balances by 15.7%.
  • Bancamía is part of the BBVA Microfinance Foundation Group, currently considered the philanthropic initiative with the greatest social impact in Latin America.

The National Statistical Department (DANE) reported that as of June 2014, the percentage of the population below the poverty threshold nationwide was 29.3%. In urban areas 25.6% of the population is in this category, while the figure for rural areas is 41.6%. For the same time period, the figure for Colombians living in a state of extreme poverty was 8.4% in the country as a whole, and 5.4% in towns and 18.2% in the countryside. This reveals that 13.5 million of the country’s inhabitants live in conditions of scarcity and uncertainty.

These statistics highlight the panoply of challenges that today are under the spotlight due to the International Day for the Eradication of Poverty, launched by the United Nations to promote greater awareness of the need to work to mitigate the difficult living conditions in countries all over the world.

According to data from the World Bank, 77% of people who have risen out of poverty have done so thanks to their own individual initiative (entrepreneurship), and financial exclusion is one of the primary obstacles. Convinced of the truth of this statement, Bancamía is working to deliver financial products and services to low-income entrepreneurs as a means of contributing to their productive development.

Bancamía does this by applying a methodology known as Responsible Productive Finance, a model that works to create economic agreements with entrepreneurs to assist them in meeting their objectives for development. It consists of a microfinance value proposal and an undertaking to deliver an offer that is specifically tailored to their capacity for repayment, focused on what they really need for their growth. All this is designed to contribute to improving the net present value of their socio-economic units, reinforce the accumulation of wealth and generate surpluses from their productive activity.

Over six years Bancamía has succeeding in transforming reality by contributing to the productive and economic development of its customers –which has been demonstrated by their evolution– though the use of loan and savings products.

– As of September 2014, it has been shown that 90.7% of Bancamía customers have had their business for over three years, which is evidence of employment and economic stability.

– So far in 2014, customer assets have grown by 20.6%, pointing to an increase in their working capital.

– The rate of sales of Bancamía entrepreneurs is up 3% in the last nine months.

– The disposable household income (DHI) of the bank’s customers in 2014 grew 16.8%, meaning that after meeting all their financial commitments, Bancamía entrepreneurs are producing surpluses to supplement their savings and improve their living standards.

– 2014 saw an increase in savings balances of 15.7%, testimony of the achievement of one of the aims of Responsible Productive Finance, namely the generation of surpluses as an instrument for tackling uncertainty through savings.

– 32% of Bancamía customers are below the poverty threshold*; in other words, the bank delivers its financial products to those most in need.

* According to the World Bank, a customer below the poverty line subsists on less than US$4 a day. For unmarried customers the whole income is considered, and in the case of other marital statuses the income is divided by four.