Major financial inclusion players gather in Mexico to chart a path forward for individual lending

October 23, 2014

Women’s World Banking and UNIFIM A.C. host a roundtable to bring better loan opportunities to low-income Mexican microentrepreneurs

MEXICO CITY – On October 28, Women’s World Banking, in partnership with UNIFIM A.C. and supported by McGraw Hill Financial, is hosting an exclusive roundtable in Mexico City to discuss how well-designed individual microenterprise loans can grow Mexico’s financial services sector, extending much-needed credit and growth opportunities to low-income microentrepreneurs.

“Women’s World Banking has followed the microfinance market in Mexico for years and, like many of our industry colleagues, we wonder why microenterprise lending has not taken off despite such a clear need in this populous market,” said Harsha Rodrigues, Chief Strategy Officer at Women’s World Banking. “This roundtable is an opportunity for the local industry to kick-start the process of introducing well-designed microenterprise loans to a massive market of underserved clients long limited by their loan options, especially women who make up 80 percent of microfinance clients in Mexico.”

With six million borrowers, Mexico is the largest microfinance market in Latin America. However, despite having more than double the number of clients as regional peers like Colombia, the average loan size in Mexico is US$542 compared to Colombia’s US$2,536 due to the dominance of group lending. Also known as solidarity lending or village banking, group loan members guarantee each other’s loans, which are limited by the members’ capacity to repay. While group lending provides an entry point for the unbanked into the formal financial sector, it does not serve microenterprises well as they grow.

About 8.4 million small businesses with 10 or fewer employees in Mexico require capital to grow or maintain their businesses, yet microenterprise lending has not taken off. With support from McGraw Hill Financial, Women’s World Banking conducted research to examine this issue and published findings in the report Individual Lending to Microenterprises in Mexico: A Survey of Constraints and Opportunities.

“We share Women’s World Banking’s commitment to expanding microenterprise lending in the Mexican market,” said Louise Raymond, Vice President of Corporate Responsibility at McGraw Hill Financial.  “We hope the findings from this research will promote a better understanding of ways to improve access to credit for low-income microentrepreneurs in Mexico and ultimately offer exciting new growth opportunities for these businesses.”

The roundtable will share findings from the research – gathered through individual interviews, focus groups, and data analysis – and facilitate discussion about introducing microenterprise individual lending in Mexico. Participants will include financial institutions, Central Bank representatives, regulators and other key players in financial inclusion in Mexico.

“There is a great interest in expanding individual lending in Mexico. Recently, the Comisión Nacional Bancaria y de Valores (National Banking and Securities Commission) provided the elements to define microenterprise lending, an important step to create policies that promote its expansion. In that regard, the timing of this research is perfect,” said Adalberto Palma, UNIFIM A.C. Executive President.