NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, October 28, 2014

Mexico’s financial reforms could help the country’s microfinance industry fulfill its “huge potential” for growth, rating agency S&P said in a report.

Mexico is an ideal place for microfinance to thrive as traditional lenders are reluctant to provide credit to low-income segments of the population.

The country has one of the lowest microfinance penetration rates in the region, at 0.5% of GDP.

But despite the low penetration rate, the segment is highly competitive, as new players tend to target the same, highly indebted client-pool because of difficulties accessing new customers in remote areas.