Cynthia Villarreal, PRONAFIM, Mexico, Advancing Financial Access for SMEs

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Advancing Financial Access for SMEs

CYNTHIA VILLARREAL MURAIRAGENERAL COORDINATOR OF THE NATIONAL PROGRAM FOR FINANCING MICROENTREPRENEURS

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GLOBAL PERSPECTIVE of SMEs

Despite of the high % of microenterprises, the # of jobs created and their contribution to GDP is significantly low

% E

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DP

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% G

DP

% E

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Mexico* Spain Brazil Germany

0%10%20%30%40%50%60%70%80%90%

100%

LargeMediumSmallMicro

SME's Impact on job creation1 and countries GDP's 2

1 Microempresas y pymes en América Latina, Giovanni Stumpo, CEPAL.* Censo Económico del INEGI 20142 Unidad de Acceso a Servicios Financieros del Sebrae Nacional Brasil

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MICROBUSINESSES RELEVANCEIN MEXICO

94%2 of all enterprises in Mexico are

microbusinesses

Average monthly income : $313.555 U.S.

dollars*

1 INEGI, ENOE, 1er Trimestre2 Censo Económico del INEGI 20143 INEGI, Esperanza de vida de los negocios 20154 Censo Económico del INEGI 20145 INEGI, ENAMIN 2012

10.3 million1 microentrepreneurs. Larger than the entire

population of:

• UAE 9.0 M• Sweden 9.8 M• Honduras 8.7 M

Only 40%3 survives the second year of

operation,

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Lack of financial

education

<1%1 have received financial

education

MAIN OBSTACLES FACED BY MICROENTREPRENEURS

High interest rates

74.2%2 annual interest rate

Lack of access to traditional banking

62%3 do NOT have access to

traditional banking

Low Geographic

coverage

36.1%4 of Mexico’s

municipalities without financial

services

High Informality

80%5 in the informal sector

Lack of knowledge

about financial supply

20%1 have requested a loan

1 INEGI, ENAMIN 2012 2 Microfinance in Latin America and the Caribbean: The Sector in Figures, IDB 20113 Censo Económico del INEGI 20144 Consejo Nacional de Inclusión Financiera, CNBV, septiembre 20155 INEGI, ENAMIN 2012

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PRONAFIM National Program for Financing Microentrepreneurs• Federal program of the Ministry of Economy of Mexico

• Main objective: Promote the creation and consolidation of microentrepreneurs’ businesses.

• Seeking the graduation approach: a transition to growth and formality

WHAT WE DO

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2) FINANCIAL AND BUSINESS TRAINING

• Subsidies• Train the trainers• Workshops• Established methodology

4) PROMOTE TRANSPARENCY Online platform that will publish local costs and conditions of products and services offered by MFIs• Better decisions• More competition

3) IMPACT INCUBATIONS• Women-focused specialty

trainings• Link to value chain

PRONAFIM’S LINES OF ACTION

IMPACT

EVALUATION1) MICROCREDIT

• Conditioned credit lines to MFIs: Train 10% of beneficiaries Passing grade of Social

Performance Assessment Prevent over-indebtedness

• Strategic credit lines, conditioned to: Regional rates Training Strategic regions

1.17M microcredits

in 2016

80K trainings in 2016

1,625 incubations

in 2016

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Evaluations to make

Evidence-based

decisions

For a continuousimprovement

ofPublicPolicy

To consolidateMicro

BusinessesAnd improve

EconomicDevelopment

OUR MISSION

SEARCH FOR STRATEGIC ALLIANCES

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CYNTHIA VILLARREALGENERAL COORDINATOR OF THE NATIONAL PROGRAM FOR FINANCING MICROENTREPRENEURS

+521 5549 5054 68

[email protected]

@cmvillarreal1

cmvillarreal