Monday, June 29, 2009
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.