By Maria Alejandra Moreno
Business News Americas
Bolivia's microfinance sector remains in a good position to cope with the economic slowdown and is set for slower but solid growth this year, the executive secretary of Bolivia's microfinance institutions' association Asofin, Fernando Prado, told BNamericas.
"Fortunately, we haven't felt the [financial] crisis in the microfinance sector in Bolivia," said Prado, speaking on behalf of the eight microfinance institutions associated with Asofin, which control 90% of the total loans held by the country's specialized microlenders.
In 2008, Asofin members expanded their loans 42%, three times the rate reported by banks, which grew lending by 14%.
While banks have seen demand for their products decline, demand for microcredit remains very high, Prado said.
Corporates are postponing or reducing their expansion plans, but micro entrepreneurs cannot afford to do that, Prado said. "Micro entrepreneurs can't stop working, because if they do, they can't eat, their children can't go to school".
Although credit demand remains robust, it is likely microlenders will ease the growth in loans to 20-30% this year as a prudent response to the current economic environment. "It's not adequate at this time to maintain annual growth rates of 40%," said Prado.
Funding to support expected growth this year is not an obstacle at all. "Today 89% of total loans are financed through deposits," he said.
Loan quality is not expected to deteriorate significantly this year despite the country's economic downturn, Prado said. Loans that are 30 days or more past due accounted for 1.2% of total loans at end-February.
Asofin members held US$1.31bn in gross loans and US$1.17bn in deposits, while serving 512,542 loan clients and 1.46mn deposit customers at end-February.
Bolivia has the second best business environment for microfinance in Latin America and the Caribbean, according to the Microscope on the Microfinance Business Environment in Latin America and the Caribbean. The report from the Economist Intelligence Unit surveyed conditions for microfinance in 20 countries in 2008.
Bolivia scored 74.4 points out of a maximum 100 for its microfinance business environment, behind Peru, which scored 76.6.
In Bolivia, there is very good regulation for microfinance that certainly has helped the sector's growth, said David Kruijff, IFC coordinator for microfinance in Latin America and the Caribbean.
The country's microfinance sector also stands out for offering the lowest loan interest rates in the region, Kruijff said.
The average interest rate on loans charged by Asofin members currently stands at 19.5%, Prado said.
In Mexico, the country's largest microlender Banco Compartamos charged an average annual interest rate of 78% in 2008.
CHANGES IN THE SECTOR
Asofin members comprise two banks, BancoSol and Banco Los Andes ProCredit; five non-bank deposit taking institutions, Ecofuturo, Fassil, Fie, Fortaleza and Prodem; and Agrocapital foundation.
Prodem and Fie have applied for banking licenses, which are expected to be granted this year, Prado said.
Agrocapital, for its part, has been waiting for many years to obtain a license to operate as a non-bank deposit taking institution - or fondo financiero privado - that has been delayed for political reasons. If Agrocapital is not granted the license soon, it will probably merge its operations with another of ASOFIN's members, Prado said.