The challenge
The Latin American and Caribbean region continues to be the most unequal in the world. Of the 652 million people who live there, 28%, 190 million are in poverty. 63% of adults are working or looking for a job (for every 100 men, 67 are women). Furthermore, obtaining financing in Latin America continues to be out of reach for many, with the negative consequences that this has for the progress of the economy and society.
Individual initiative and the development of small businesses are the main option for many people to escape poverty. Financial inclusion is key to the progress of the businesses of vulnerable entrepreneurs since it allows them to access economic-financial resources. The BBVA Microfinance Foundation is present in Colombia, Peru, the Dominican Republic, Chile and Panama where 37% of adults do not have a bank account.
The opportunity
Latin America is the most entrepreneurial region on the planet: 33% of women and 37% of men intend to start a business. 21% of women and 25% of men in the region is creating or has a new company, according to data from the latest report Global Entrepreneurship Monitor (GEM).
The success of entrepreneurship is highly influenced by a series of dimensions such as access to financing, training, digitalization in innovation… At BBVAMF we measure the vulnerability of entrepreneurs in multiple dimensions to obtain a more complete vision of the challenges they face and be able to offer them tailored financial and non-financial solutions.
The people the Foundation serves live in precarious environments and have different needs; they require frequent, almost daily control of their finances, specific goals and immediate liquidity. They therefore need constant support and agile, simple care that adapts to their home as it progresses.
The commitment
Since its creation in 2007, the entities of the BBVA Microfinance Foundation Group have disbursed more than $20 billion in loans to low-income entrepreneurs. The BBVAMF is committed to creating solutions that provide timely, sustainable, responsible care at an affordable cost to the people we support. We are committed to measuring social impact, training and innovation as levers to reduce poverty and move towards a more sustainable and inclusive world. We support entrepreneurs by offering them financial and non-financial services, training and support, adapted to their needs so that their businesses, their families and their communities progress, a methodology we call: Productive Finance.
Through this model, the BBVA Microfinance Foundation has allowed millions of people who did not have access to the conventional financial system to be able to undertake and improve their quality of life and that of their families. .
Digital inclusion
Poverty is not limited solely to the lack of economic resources; It extends to deficiencies in dimensions such as housing, education, health and digital poverty, which go beyond access to devices and internet connection, manifesting itself in various forms and combinations of these:
•Limited access to technology, see lack of devices (computers, phones) or limited internet access, especially in rural and marginalized urban areas
with insufficient infrastructure for high-speed internet.
• Poordigital skills to use technology effectively can limit opportunities for education, employment and civic participation. This includes basic skills such as surfing the Internet, sending emails, using word processing programs, or participating in social media.
• Economic limitations that prevent the purchase of the device or the costs associated with internet services, with the purchase of a data plan or the installation of a Wi-Fi.
•Digital gap that becomes a generational gap as older people may feel overwhelmed or excluded by the rapid evolution of technology
The BBVA Microfinance Foundation has been immersed for years in a digital transformation, making technology available to the most vulnerable so that the services offered by its entities are easy, fast, flexible and less expensive for the people it supports. In the five countries in which the Foundation works, the majority of adults have access to a mobile device (89%) but not all have access to the internet (68%). In terms of financial use, only 47% make online transactions, a figure that drops to 23% in the population in poverty. 52.4% of entrepreneurs in the five countries have some degree of digital poverty and 29% have extreme digital poverty (they do not have equipment or Internet access). Colombia and Peru are the countries with the greatest digital poverty and Chile the least.
The Foundation works to eradicate the digital divide in two dimensions:
On the one hand, make means of internet connectivity available to the population. Since 2020, 93 correspondents have been added with connectivity in remote areas, offering connectivity to nearly 4,400 homes. On the other hand, the commitment to digital literacy becomes crucial to improve the efficiency of entrepreneurs, and brings them tangible benefits to be able to use technologies in their businesses and also online banking, with time savings in bureaucratic procedures, allowing obtain accurate information in real time and improve your communication with third parties.
To the extent that digital access is massive and affordable, it allows the development and use of digital finance to be promoted, an important tool for financial inclusion.
Migrants and displaced people: a group in search of opportunities
At BBVAMF we serve migrants as a way of contributing to the development of a country. Large internal migratory flows and movements between countries, especially from Venezuela, are an important part of the social reality in the geographies in which we operate. More than six million Venezuelans have emigrated to other Latin American countries, with Colombia being the main receiving country: 2.3 million. It is increasingly necessary to identify and empower these segments to help them progress.
BBVAMF entities in Colombia, Peru, Chile and Panama served more than 161,38116 displaced persons, migrants and refugees through specialized programs and initiatives such as Empropaz and the UNHCR program, as stated in the 2023 BBVAMF social performance report. In addition, we carry out studies to know the status of financial inclusion of the migrant population in Colombia and Peru.
Among the challenges these people face are documentary barriers when verifying their identity; the absence of a credit history; the non-acceptance of alternative identity documents by insurers (which limits them when it comes to obtaining credit, since credit life insurance is necessary); the lack of adaptation of technology and the internal processes of financial institutions and the biases against this group that often occur among commercial teams when serving them. Thanks to this study, adaptations have been made to be able to offer financial and non-financial services to this group.