Fondo Esperanza and BBVA Microfinance Foundation join to help low-income small entrepreneurs

  • The newly-created company will be positioned as a leader in the Chilean microfinance sector with community banking methodology.
  • The goal is to bring financial products and services to the low-income population that does not access the conventional financial system and sees its opportunities for development as being limited.
  • In Chile, 15% of the population lives below the poverty line, according to CASEN.

BBVA Microfinance Foundation and Fondo Esperanza have signed a memorandum of understanding to create a new microfinance institution that aspires to lead productive microfinance in Chile.

The agreement was signed by the president of BBVA Microfinance Foundation (FMBBVA), Manuel Méndez del Río Piovich, and the president of Fondo Esperanza, Luciano Magnet Ferrero, and will allow both institutions to work together to bring products and financial services to the majority of people in poverty.

The deal marks the continuation of Fondo Esperanza into a new entity that 51% of which will be owned by the BBVA Microfinance Foundation, and 49% by Fondo Esperanza. It will also be designed under the criteria of sufficiency and sustainability. Any profits generated will be reinvested to improve and develop its activity and in strengthening its capital base.

For the president of BBVA Microfinance Foundation, “both institutions share a common social mission, and together we hope to support a large group of people currently living in poverty, by promoting economic and social development among the poorest people in Chile“.

“Therefore, in addition to capital and resources to ensure the entity’s sustainable growth, the Foundation will contribute its experience in models, technology, processes, procedures and management schemes that will enable innovative and efficient growth and expansion, in order to serve more people with better and more products” Méndez del Río said.

In turn, Luciano Magnet stated that “the step taken by Fondo Esperanza is extraordinary news for Chile. The partnership that we have established with FMBBVA is not only recognition of the work done so far by Fondo Esperanza, but also an enormous opportunity to very significantly increase our presence in the poorest communities in the country, accompanied by a renowned Foundation, with a strong presence in Latin America that will provide us with resources, technology and vast experience in the microfinance field, focusing on the poorest sectors of the population”.

With this partnership, BBVA Microfinance Foundation consolidates its expansion into the microfinance market in Chile, which it initiated in 2009 with the establishment of the company Servicios Microfinancieros. Apart from Chile, the Foundation is present in Colombia where it operates with Banco de las Microfinanzas Bancamía; in Peru with Caja Nuestra Gente and Financiera Confianza; in Puerto Rico with Corporación para las Microfinanzas; in Argentina with the company Servicios Microfinancieros S.A; and in Panamá with Microserfín.

Through these entities, the Foundation currently serves more than 800,000 low-income customers who have been able to undertake a productive activity and improve their living conditions and that of their families.

Fondo Esperanza

Fondo Esperanza is a non-profit foundation that supports the entrepreneurship of 42,000 people living in poor areas through the provision of small loans and training.  It is present in 140 towns in the country, with 30 branches from Iquique to Chiloé.

Its mission is to support male and female entrepreneurs from vulnerable sectors through financial services, training and networks, with the aim of contributing to improving their living conditions, that of their families and their communities.

FE offers to finance economic activities through community banks, groups of between 18 and 25 people living in the same sector and join to obtain microcredit. The objective of this methodology is to promote organization and solidarity in families to achieve common goals.