Bolivia has been the success story in microfinance in Latin America in the last twenty years. I decided to spend one week in La Paz to better understand the business model of the Bolivian microfinance institutions. During the six day stay in La Paz I had the privilege of meeting the Executive Director of Bolivia’s Financial Services Supervisory Authority (ASFI) Ernesto Rivero, the former President of Bancosol and Prodem Fernando Romero Moreno, the President of the Bolivian Academy of Economic Sciences Gerardo Gonzalez, and the Country Director of Promujer Vivianne Romero.
Ernesto Rivero was appointed Executive Director last 8 May 2009 in a shift many argue grants the Morales Administration more control on the supervision of financial institutions. ASFI was previously named Superintendencia de Bancos. I asked Ernesto if the change in name and in Executive Director carried a change of approach. He mentioned he was determined to shift the focus of microcredit in Bolivia to more productive activities, away from commercial activities. He identified as productive activities agriculture and farming. Ernesto is concerned that the rural poor are not being reached by the microfinance institutions of Bolivia, some of which, including Bancosol, are among the most profitable in the whole of Latin America.
Fernando Romero Moreno shares Ernesto’s vision. He is concerned that the mainstream microfinance institutions, ie the more commercial institutions, are not serving the bottom of the pyramid, but have rather focused on higher incomes that are typically urban, although informal. Fernando was the President of Fundacion Prodem until the microfinance institution was sold to Venezuelan investors.
Gerardo Gonzalez is the President of the Bolivian Academy of Economic Sciences. Along Gerardo I met with Luis Ballivian, an economist and a member of the Academy. I presented the economists who attended the meeting my forthcoming book The Monfort Plan, where I present a new architecture for a redefined capitalism that prioritizes the interests of the developing world.
On Friday 19 June 2009 I met with Vivianne Romero, the country director of Promujer for Bolivia. We met at the Promujer Headquarters in La Paz. Promujer Bolivia is part of the larger Promujer International, headquartered in New York City with subsidiaries in Argentina (recently opened), Bolivia, Mexico, Nicaragua, and Peru). Promujer Bolivia has a portfolio of about $24 million, with about 200,000 microcredits and 100,000 microborrowers, 85% of whom are women. At a cost of under $0.60/month per microborrower Promujer Bolivia delivers basic preventive maternal healthcare through the branch network. Along the microfinance agents a microborrower can typically access a medical doctor and a nurse. Average wait time is 15 minutes. Promujer Bolivia’s approach to microfinance is similar to that of Freedom from Hunger’s Crecer, but more focused on the delivery of a wholistic package.
I am confident there is much to learn from the Bolivian microfinance. Promujer Bolivia is an outstanding example of an efficient institution that is fulfilling a well-needed role. The extreme poor that live in rural, remote areas are not being reached. This remains the challenge going forward. Ernesto is concerned that the penetration rates among the rural poor are still low. Fernando is concerned that the larger microfinance institutions including Bancosol and Prodem are forsaking the ultimate goal of serving the bottom of the pyramid. Vivianne believes the rural poor will be gradually served, but it will take time so long as there is no infrastructure and the rural poor continue to live in remote areas in a country that is not densely populated. With a population of about 10 inhabitants per square kilometer Bolivia remains one of the least populated countries in the world. I will return to Bolivia to continue learning from some of the finest microfinance managers in the world.
Jaime Pozuelo-Monfort is the multidisciplinary European and author of The Monfort Plan