According to the Economic Commission for Latin America and the Caribbean (ECLAC), 18% of the population in Latin America live in rural areas, a segment more exposed to poverty due to the lack of infrastructure and basic services such as connectivity or financial services. In fact, ECLAC also shares that 29% of the people living in poverty and 41% in extreme poverty, live in the countryside. Because of this, bringing financial inclusion to these areas is a priority for BBVA Microfinance Foundation, especially to the five countries where it is present (Colombia, Peru, Dominican Republic, Chile and Panama). A priority reflected in its latest Social Performance Report.
In 2019, 33% of the entrepreneurs who joined one of the six microfinance institutions of BBVAMF live in rural areas, a total of 320,000 people served by the end of the year. Of all of them, 43% live on agriculture. To support these small-scale farmers, who face climate change risks and unstable income, the Foundation implements various programs that help them improve their position in the value chain, through partnership with distributors, as well as to strengthen their resilience with sustainable agriculture techniques and the diversification of their crops.
Particularly in Colombia, where more than 30% of the entrepreneurs who have a loan from the BBVAMF’s local institution are farmers, the MEbA program, developed in partnership with UN Environment, is there to support them (Microcredit for Ecosystem-based Adaptation). Through this initiative, the institution offers green loans and has implemented, together with other local institutions, a demonstration farm to teach them sustainable farming techniques such as greenhouses, family orchards, drip irrigation or solar dehydrators. Aside from the training in this demonstration farm, they also receive technical support to apply these methods in their own lands. Since 2019, Bancamía also offers a climate insurance especially designed to cover entrepreneurs’ losses due to torrential rains, extreme drought or strong winds. The severity of these events are measured with satellites and the disbursement is automatically made in cases where thresholds are crossed.
Lastly, and to encourage savings, which has proven to be fundamental to face a crisis similar to COVID-19, BBVAMF in Colombia created a program that includes workshops on financial education, climate change awareness and an offering of financial products.
Aside from Colombia, BBVAMF also develops farming and livestock initiatives in Dominican Republic. In fact, the Finanzas Rurales y Ambiente (Rural and Environmental Finance) has been recently added to MEbA, and includes Ecrocrédito or Agromujer (Ecocredit or Agrowoman), a loan aimed to overcome the barriers faced by rural women, such as the lack of land title. The terms of agricultural loans are adjusted to the crops’ productive cycle , including those who have longer due dates, like macadamia. All of these loans also include the necessary technical assistance to strengthen value chains.