Microenterprises generate over 3,000,000 jobs in Chile –around 40% of national employment– according to the latest survey by the National Statistics Institute (INE) on microentrepreneurship. Nevertheless, the survey also indicates that the stagnation rate is 76.1% while the growth rate is at 18.4%. Although these figures look better than they used to, they still show how important it is to create more opportunities to drive development for these microenterprises.
Against this backdrop, Fondo Esperanza, the BBVA Microfinance Foundation’s institution in Chile, provides an integrated service that focuses on entrepreneurs in vulnerable conditions, delivering the tools they need to enhance their businesses, to support their growth. As Mario Pavón, general manager of Fondo Esperanza points out, “in 2018 more than 45,000 new entrepreneurs joined us, of whom 94% were socially and economically vulnerable and 74% are women. These figures show that our aims are specific and are focused on raising the living standards of the entrepreneurs we serve and who are at the core of our work.”
According to the Economic Ministry’s 5th Microentrepreneurship Survey and the National Statistics Institute, the gap between men and women is very significant: 60.8% of all small businesses are run by males. That is why reaching women and supporting their progress is a building block of Fondo Esperanza’s purpose.
Every year, BBVA Microfinance Foundation publishes a report measuring the social performance of the more than 2 million people it serves in five countries across Latin America through its six microfinance institutions. The 2018 Social Performance Report “Measuring what really matters”, presented today in Santiago de Chile, shows how 87% of the more than 124,000 entrepreneurs served by Fondo Esperanza improved their income. Entrepreneurs’ earnings (revenues minus costs) increased by an average of 55% and their sales by 43%.
Fondo Esperanza measures entrepreneurs’ outcomes in social terms. According to this analysis, clients have advanced their social development, empowerment, social capital and family welfare, generating confidence, skills and a higher sense of security regarding their businesses.
The integrated service provided by the institution is based on three concepts: financing entrepreneurs, skills training and support networks. It is executed using group and individual lending methodologies.
Group lending boosts the enterprises of people living in vulnerability. Once they access microcredits, the unity and trust among neighbors working in the same sector become fundamental in achieving progress for the group.
Individual loans provide growth for entrepreneurs at a more advanced stage of their business’ life cycle, adapted to increase their current commercial capacity and to consolidate their enterprises.
So that their livelihoods can survive and be sustainable over time, Fondo Esperanza gives skills training to its clients. As of the moment, more than 172,000 have taken part in assessment and training sessions.
BBVA Microfinance Foundation further serves 8,700 entrepreneurs in Chile through another MFI, Emprende Microfinanzas. Of these, 30% live in rural areas and 53% are women, out of whom 90% are vulnerable. “We serve microentrepreneurs in areas with higher levels of poverty, particularly women who want to improve their small businesses. Their sales and assets are 22% and 44% lower than those of men, respectively”, shares the general manager of Emprende Microfinanzas, John Corredor, during the presentation of the report. The institution supports entrepreneurs’ growth and contributes to their social development.