The first microcredit program in Bolivia under innovative schemes of guarantees, such as solidarity group, was started in the early 80s. This was driven by the Confederation of Private Businessmen of Bolivia, Calmeadow Foundation and ACCION International, which promoted the creation of the Foundation for the Promotion and Development of Microenterprise (PRODEM) in 1986.
After two years of work, success was evident PRODEM, insomuch that it was difficult to meet the growing unmet demand in a sustainable manner. This, among other factors, were crucial to undertake the creation of Banco Solidario, a project that began in 1988 and culminated in 1992. Since then, BancoSol Bolivia is the only bank with services targeted exclusively to the microenterprise sector.
PRODEM Besides, other NGOs have been created to address this market by applying different methodologies microenterprise credit. Examples include the Foundation for Development Alternatives (FADES), founded in 1986, geared exclusively to rural areas and especially known for using his methodology of “credit associations and the Center for Promotion of Economic Initiatives (FIE) was founded in 1985 as a pioneer in the use of the methodology “individual”, which in turn was integrated with non-financial services.
On the other side there is the Institute for Support to small production unit (IDEPRO), created in 1986 with the aim of providing “business development services as a complement to its financial services. IDEPRO, as some institutions, financing activities beginning years since its foundation in 1991.
Also in 1986, I think PRO-CREDIT organization working in urban areas with the methodology of such “individual”. The enormous success of this institution was motivated to create a specialized financial institution under the guise of Private Financial Fund (FFP) in 1995, called the Savings Bank and Loan Los Andes, FFP. Similar decision takes to create FIE FIE, FFP in 1997.
In 1991 national Women’s Programs (PRO WOMEN), institution targeted exclusively to low-income women in peri-urban areas of different cities of the country. PRO WOMEN introduced the concept of “community banks or associations” as a new methodology in order to reach the poorest segments of the population.
The growth of the microfinance market, both institutional, methodological and normative, has allowed Bolivia to become a model for other countries. In the “model Boliviano” highlights the transformation that has suffered some financial NGOs into regulated institutions and self-sustaining, incorporated in FFPs. With this institutional structure is intended to regulate financial intermediaries engaged in small and micro enterprises. Moreover, empowering these institutions to raise funds from public deposits, opening the possibility of providing savings services to microentrepreneurs.
However, not all institutions followed the pattern established by the above model. In 1996 national FA $ $ IL, institution that was born as FFP to offer their services to microentrepreneurs in the department of Santa Cruz.
On the other hand, also have developed methodologies “upstairs” in the case of the Foundation for Production (FUNDA-PRO) and Nacional Financiera Boliviana (NAFIBO SAM). The former has developed a program of institutional credit since 1993 with a variety of financial institutions, mainly non-banks, and the second has been created as a specialized financing entity in 1996 to meet credit requirements for regulated financial institutions. Both institutions have come to establish a methodology for an efficient channeling of resources to various industries of the economy through intermediary credit institutions. FUNDA-PRO, which is the oldest institution among them, has placed emphasis on providing financial services to entities engaged in microenterprise activities.
Beyond the creation of FFPs and institutions “upstairs”, institutional development has taken a variety of ways. In the private sector, two associations have been organized to provide support services to microfinance institutions: the Corporation of Private Institutions Microenterprise Support (CIPAME) for institutions serving the urban area and the Association of Financial Institutions for Rural Development (FINRURAL) for those in rural areas.
In terms of regulation, has found a way to regulate financial intermediation in the microcredit market by the Constitution of FFPs. Furthermore, it has created a Quartermaster nonbank financial institutions, part of the Superintendency of Banks and Financial Entities (SBEF), whose central function is to precisely regulate the activities of such institutions.
In published material, the government of Gonzalo Sanchez de Lozada created the Program to Support Microcredit and Rural Finance (PAM), which was meant to support, financially and institutionally microfinance NGOs.
With the new government installed in August 1997, has established that the new Vice-Ministry of Micro and FONDESIF coordinate their efforts to meet the needs of training, technical assistance and financing of microenterprise.
Specifically in regard to funding has designed a program called Microcredit Fund, which defines the strategy and policies to guide government efforts in this field.
International agencies, meanwhile, have played an important role in the development of microfinance activity, focusing primarily on strengthening support institutional development and strengthening of portfolio management, support that was given to most microfinance institutions.
Finally, the paper highlights some of the challenges facing the microfinance market, such as the provision of new financial services, institutional strengthening and balance-sheet financial intermediaries and the development of regulatory standards appropriate to their activities.
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