Microfinance in Peru: Key Findings and Perspectivesmddb.apec.org/documents/2011/GFPN/WKSP1/11_gfpn... · Microfinance Companies no Banks 36 6.2 Municipal Institutions 13 4.5 Rural

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2011/GFPN/WKSP/010 Session 3

Microfinance in Peru: Key Findings and Perspectives

Submitted by: Profinanzas

Workshop on Microfinance Best Practices Ha Noi, Viet Nam

7-8 April 2011

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Maria Rosa MoránMaria Rosa Morán

Member of the Board of Directors ofMember of the Board of Directors ofMember of the Board of Directors of Member of the Board of Directors of

PROFINANZASPROFINANZAS

www.asomifperu.com14

Asomif PerúAsomif PerúMicrofinance Leaders AssociationMicrofinance Leaders Association

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ABOUT US…ABOUT US…

www.asomifperu.com2

""MICROFINANCE IN MICROFINANCE IN PERÚ: PERÚ: Key Findings And Key Findings And y gy g

Perspectives“Perspectives“

Presented by:


y

Maria Rosa Morán

APEC Summit, April 2011, Vietnam

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AGENDA

1. The Peruvian Socioeconomic Context1 The Peruvian Socioeconomic Context

2. The Microfinance Demand

3. The Peru Case Study

1. The Peruvian Socioeconomic Context

2. The Microfinance Demand

3. The Peru Case Study


4. Conclusions and Perspectives4. Conclusions and Perspectives

Peru has been a top performer in LA since 2002.

MACROECONOMIC CONTEXT

In 2008, the Peruvian GDP grew by 9.8%, one of the highest growth rates in the world.

P ’ t t di i di t d lid fi l iti


Peru’s outstanding indicators and solid fiscal position have prompted several international risk classifiers to grant the country an investment grade.

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GDP Growth


0 00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%


0.00%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

%

Nevertheless:

36.2% of Peru’s population lives in poverty, 12.6% in


extreme poverty.

The country is currently working towards a reduction to

11.5 % by 2015; unfortunately, inequalities between urban

and rural areas have increased.


The highland and jungle areas register the highest

percentages of the population in extreme poverty: 37.4%

and 20.7% respectively.

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POVERTY LEVELS ARE DECREASING BUT STILL HIGH


PERU: POVERTY INCIDENCE 2004 -2008 (%)


Micro or Small Company (SME´s)

By the number of workers employs to 10 or 100 workers

MICROFINANCE DEMAND

By the number of workers, employs to 10 or 100 workers.

By annual sales, sells 15000 or 170,000 Euros approx.

Currently the 98.6% of the total number of business are

SME´s, approx. 3.217 million; they generate 77% of

employment and explain the 42 1% of the Peruvian GDP


employment and explain the 42.1% of the Peruvian GDP.

However, most of the SMEs (72.6%) are in the informal

sector, in particular the micro.

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MICROFINANCE DEMAND

Micro or Small Company (SME´s)

Only 18% have Tax Registration Number and 75% has no Only 18% have Tax Registration Number and 75% has no operating license. They have low productivity.

On annual average, a worker in a micro and small business generates 3,870 Euros and 15,390 Euros, respectively, while the average of the medium and large


company is around 27,700 Euros.

World Bank: 60% of the Peruvian economy is informal.

MICROFINANCE DEMAND

TWO DIFFERENT WORLDS


MICROENTREPRENEURSTRADITIONAL BANKERS

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PERUVIAN MODEL

Is there a Peruvian Microfinance Model?


PERUVIAN MODEL

OVERALL MICROFINANCE BUSINESS

ENVIRONMENT RANKINGS

Rank Country Score Score change

2009

1 Perú 74.3 0.52 Philippines 71.8 3.33 Bolivia 69 6 -2 3

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3 Bolivia 69.6 2.34 Ghana 64.9 45 Pakistan 64.8 8.36 Ecuador 61.3 1.77 El Salvado 61.3 3.88 India 59.1 -310 Kenya 55 -0.8

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19,258147%147%Growth

IMF´s CREDIT PORTFOLIO EVOLUTIONDecember 2010

(millions of nuevos soles)

20107,796

11,121

15,345

,147%147%

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Fuente: S.B.S.Elaboración: Área de Estadística – Asomif Perú

2007

2008

2009

14,868182%182%Growth

IMF´s SAVINGS EVOLUTIONDecember 2010

(millions of nuevos soles)

20105,273

7,413

10,907

,182%182%

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2007

2008

2009

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IMF´s OFFICES GROWTDecember 2010

(percentage)



27,122

IMF´S JOBS GROWTHDecember 2010

(Percentage)

33%8,435

19%

10,089

24%

12,542

16,674

35%

22,423

18%Crec.

,


2008

39%

2005

19%

2006 2007 2009 2010


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PERUVIAN MODEL

PERUVIAN FINANCIAL SYSTEM

Number of Companies

Assets %

Traditional Banks 15 78.3Financial Companies 4 1.7Microfinance Companies no Banks 36 6.2Municipal Institutions 13 4.5

Rural Institutions 13 0.9

Edpymes 10 0.8


py

State Banking 2 13.4Banco de la Nacion 1 10.5

Agrobanco 1 0.2

Leasing Companies 5 0.4

62 100

PERU: MICROFINANCE MARKET

PERUVIAN MODEL

Traditional Banking System: 88.6% of savings and 84.3% of loans.

Microfinance System: 11.4% of savings and 15.6% of loans.

Number of borrowers in the financial system:


y6, 910.047….. microfinance system serves 42.2% of them!!!

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WOMEN'S ACCESS TO CREDIT (Dec. 2009)

PERUVIAN MODEL

Tradicional Banks: 26%

Rural & Municipal Institutions: 38%


Edpymes: 58%

Fuente: SBS

75% OF THE MICROENTREPRENEURS ARE IMFs CLIENTS´

PERUVIAN MODEL

Deudores por Microcréditos del Sistema Financiero Peruano (%)

J i 2009Microcredit clients in the Peruvian Finance System

Bancos y

financieras no

especializadas

11 % Bancos y

financieras

especializados

24 %

Microfinancieras

no bancarias

Deudores

Compartidos

15 %

Junio 2009Microcredit clients in the Peruvian Finance System


Fuente: SBS

no bancarias

50 %

>>Total de deudores por microcréditos del Sistema Financiero Peruano: 1,257 ,162

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Main Features:

Commercial approach (self-Sustaining),

PERUVIAN MODEL

Market Driven Model

Individual Credit = Credit Group

Urban portfolio (more lucrative)

Political Independent


No subsides

Size of MFIs

Products Diversification

Main Features:

Funding Sources

PERUVIAN MODEL

Credit culture

Enabling regulatory and institutional

environment

Upgrading & Downscaling


Still a unmet demand

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Credit Methodology:

Analyst Omnipresent

PERUVIAN MODEL

Analysis In Situ

No collaterals

Cash Flow


Speed and customer proximity

Simple and Friendly Procedures

Long Term Relationship


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MAIN THREATS Higher incidence of Administrative costs …scale!!.

CONCLUSIONS & PERSPECTIVES

Population Geographically dispersed.

Costs in time and resources due to complexity of legal and regulatory framework.

Taxes to credit lines (30% + 19% (Income and Sales Tax))


Taxes to credit lines (30% + 19% (Income and Sales Tax)).

Collateral reduce risk but increase credit cost.

High costs in resolving conflicts due to Peruvian judicial system inefficiencies.

MAIN THREATS Traditional banks Downscaling


Entry of participants without expertise in the

sector…..Increased competition can lead to over-

indebtedness of clients

Decreased of low-cost funding


Excessive regulation can harm smaller entities

Increasing government intervention may affect the

sector

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MAIN SUCCESS FACTORS

"Double Profit“: Profits and social responsibility are compatible!!!


Credit portfolio management

• Products Tailored

• Decentralized business model

• Informal sector, tailored to economic swings, flexibility, etc.

• Atomized portfolio business model people-intensive mixed


• Atomized portfolio, business model people-intensive, mixed public-private funding

SUCCESS FACTORS " Conservative provisions and uncollectible of

default loans


Microcredit = MicrofinanceOne stop shop for all finance needs:

Microcredit, Savings, Remittances, microinsures Mortgage, vehicles, microleasing, machinery, among others Debit cards, ATM Machines,


Debit cards, ATM Machines, Micro rural loans Rural structured loans (advised and supervised) Among, others…

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P i Mi fi C St d h


Pervian Microfinance Case Study has shown that supporting Micro and Small enterprises and ensuring broad acces to financial services, is not only a tool to the succes of democratization of credit but also an effective instrument to fight

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but also …an effective instrument to fight poverty!!!


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www.asomifperu.comwww.asomifperu.com

María Rosa Morá[email protected]

Documents

Microfinance in Peru: Key Findings and Perspectivesmddb.apec.org/documents/2011/GFPN/WKSP1/11_gfpn... · Microfinance Companies no Banks 36 6.2 Municipal Institutions 13 4.5 Rural