“Banco Occidente, Banco Caja Social, Citibank, BBVA…” Don Hugo listed off the banks he had taken loans from in the past. A microentrepreneur, José Hugo Beceira runs a construction shop in a neighborhood on the outskirts of Bogotá, and as he described, there is no shortage of credit for small business owners in the city. Entrepreneurs can walk into any number of NGOs, Colombian banks, or multinational banks, and walk out with a loan.
So if a microentrepreneur like Don Hugo can get the loans he needs to grow his business from so many providers, can’t we just consider this microfinance business a success and pat ourselves on the back?
Not so fast.
Though credit is widely available in major Latin American cities like Bogotá, we’re still very far from universal access, and moreover, easier access doesn’t necessarily guarantee better results for individuals or at the macroeconomic level. So, why do we need a continued focus on microfinance? Continue reading