Martin Naranjo Landerer holds a Bachelor of Social Sciences and a Bachelor of Economics from the Pontificia Universidad Católica del Perú. He later earned a Master's Degree in Economics from the University of Pennsylvania, where he was a Fulbright Scholar and Ford Foundation Fellow.

"If a small business owner sees it as more red tape, time, and control, it won't be appealing. On the other hand, if it opens access to financing, broader markets, and state services, it will become a worthwhile investment"

He is a former General Manager of Banco de Desarrollo del Perú - COFIDE and former Superintendent of Banking, Insurance, and Pension Fund Administrators. He has also held key leadership positions at renowned international organizations and institutions such as the World Bank, the Inter-American Development Bank (IDB), Bancolombia, and Financiera Confianza. 

Currently, he serves as Chairman of the Board of Directors of ASBANC, President of the Red de Estudios para el Desarrollo (REDES), Vice President of CONFIEP, and Director of inPERÚ and the Consejo Privado Anticorrupción (CPA).

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According to the World Bank, micro, small, and medium-sized enterprises (MSMEs) are the driving force of the Latin American economy, representing over 90% of all businesses in the region and generating the bulk of formal employment. However, they face significant challenges, from informality to limited access to financing and technology.

In Peru, Congress recently approved the Law for the Formalization, Development, and Competitiveness of Micro and Small Businesses (MYPE) last May. The law aims to enable their formalization and give them access to tax benefits. To analyze the impact of this type of action and explore what can be done to boost the competitiveness of MSMEs throughout the region, we spoke with Martin Naranjo, Chairman of the Board of Directors of the Association of Banks of Peru (ASBANC).

• MSMEs drive a large part of the region's economy, but many struggle to grow. From your experience, what are the most urgent barriers that need to be overcome for these businesses to be more competitive?

MSMEs account for the majority of employment in many economies. In developing countries, their potential is constrained by clear obstacles. The most crucial is the high cost and low benefits of formality. This is not a gradual process: no matter how small the company is, its budget must cover national taxes, local contributions, municipal licenses, and relatively sophisticated compliance and financial management costs.

This discontinuity becomes a wall that many businesses cannot climb, especially if, in return, they receive little from the State in terms of basic services and infrastructure. The result is informality and the low productivity that comes with it.

Formalization and productivity go hand in hand when good institutions, reliable infrastructure, and macroeconomic stability are in place. Strong institutions—in education, health, justice, and security—along with quality basic infrastructure—roads, telecommunications, energy, water, and sanitation—in a stable environment reduce uncertainty, operational risks, and transaction costs, including those associated with formalization.

The competitiveness of MSMEs cannot be solved with isolated programs. It requires a comprehensive environment that combines macroeconomic stability, strong institutions, reliable infrastructure, and tools designed to support the growth of small businesses within formality from the start.

• In Peru, the MYPE Law was just approved, which seeks to accelerate formalization and grant tax benefits to these types of businesses. What tangible effects do you think this law can have on a micro-entrepreneur's daily life, and what lessons could it extend to other countries?

The law incorporates several mechanisms aimed at facilitating the formalization of MYPEs. These include initiatives such as an order for the Executive Branch to implement an online system to establish a company in just 48 hours; the declaration of national interest in granting loans with preferential rates to formalized MYPEs and the mandate to COFIDE, Banco de la Nación, and Agrobanco to promote financing through financial intermediaries.

The MYPE Law represents a significant step forward, but its real impact will depend on how it translates into practice for the small entrepreneur. In the end, formalizing is a rational calculation. If a small business owner sees it as more red tape, time, and control, it won't be appealing. On the other hand, if it opens access to financing, broader markets, and state services, it will become a worthwhile investment.

The success of the MYPE Law will depend on its ability to lower the discontinuity in the costs of formalization. The more it succeeds in simplifying procedures and offering real-world incentives, the greater its chances of becoming a blueprint for other countries.

• In an increasingly digital environment, a small business's competitiveness also depends on technology. How can financial institutions help MSMEs embrace digital tools and new ways of working to drive their progress?

Today, digitalization is critical for survival; a small business's ability to compete depends heavily on it. In this process, financial institutions have a decisive role. Digital financial tools are increasingly reliable, accessible, and allow for better risk management. A digital payment system generates a verifiable history; an electronic wallet reduces dependence on cash; an online loan managed with alternative data expands the customer base. Each digital innovation in finance facilitates formalization, improves productivity, and provides efficiency, better information, and greater planning capacity.

But adopting these tools requires reliability and security. With inclusive products, lower access costs, and secure digital services, banking can become the bridge that allows MSMEs to transition to formality and consolidate their growth.

• At the Foundation, we collaborate with international development and microfinance organizations. By fostering alliances, could MSMEs in Latin America achieve more sustained growth or even help with their internationalization?

Undoubtedly, strengthening alliances between local actors and international development and microfinance organizations can decisively boost the growth of MSMEs and even open up opportunities for them in international markets.

These alliances not only provide financing but also knowledge, networks, and standards that accelerate learning and strengthen capabilities. By facilitating the mutual exchange of ideas, tools, and institutions, they connect and disseminate best practices. This way, they promote innovation, the adoption of new tools, and the possibility of scaling with greater productivity and sustainability.

• Final Message

I'd simply like to congratulate the BBVA Microfinance Foundation for its commendable initiative. Beyond removing barriers, passing laws, innovating, forging alliances, or achieving impressive impacts, it is an exemplary effort for one fundamental reason: recognizing the dignity of each person by creating real opportunities to lift them out of poverty will always be the right direction.