Microfinance and

International Migration

Strengthening Financial Inclusion in Zacatecas,

Mexico

Matt Rolland Fulbright-García Robles Scholar, 2010-2011

Project Overview

Objectives Evaluate the level of financial

inclusion in Zacatecas, focusing on access and use of financial services in marginalized areas;

Investigate adaptations of microfiannce institutions in high migration regions of Mexico;

Analyze existing government programs that provide financial and techinal assistance to migrant-owned businesses.

Activities

Interviews with microfinance institutions in four states: México state, Puebla, Guanajuato, Zacatecas;

Survey of migrant financial needs in migrant clubs in the United States;

Semi-structured interviews with the six government programs encouraging migrant entrepreunership

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Financial Inclusion and Development

“The access and use of a range of products and services by a

population, under an adequate regulatory framework that

protects the interests of consumers and develops their

financial opportunities.” -National Banking and Securities

Commisssion (CNBV)

Promote the well-being and economic development of a group of people through better financial services.

Become more productiveAccessible Credit

Financial EducationBusiness Assistance

Become less vulnerableSavings accounts

InsuranceUtilities payments

Composition of the Financial Sector in Zacatecas

Credit Unions (Cooperativas) nationwide: 8%Total Bank Branches: 136Important role of pawn shops: 30% all points of access to credit

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Geographic

Coverage

52% of all counties in Zacatecas do not have a bank branch

18% of the state population, compared to 10% nationwide, live in counties without bank branches

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Indicators of Access

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Nationally 2.87 bank

branches per 1,000 km2

1.77 bank branches per 10,000 adults

Indicators of Bank Use

Loans provided by Credit Unions

Checking accounts per every 1,000

adults

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Microfinance Institutions serving more to smooth

consumpion in Zacatecas than expand business

Very few checking and savings accounts

Business Use of Credit

Percentage of Businesses with Loans

Businesses in Zacatecas with loans, by number of

employees

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Only 27% of businesses in Zacatecas obtained a

loan

Low use of credit reflects barriers for small

businesses to access credit

Geographic Dispersion

34% of the state population lives in three counties: Fresnillo (14.3%), Guadalupe (10.7%) y Zacatecas (9.3%) 9

51 of every 100 Zacatecans live in towns with a population of 5000 or less

Marginalization and Finance

•Only one of the 9 counties with a ‘high’ grade of marginalization, Pinos, has a bank branch•One of every four Zacatecans lives in a county with high or medium grade of marginalization where there is only one bank branch per every 20,000 adults.

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Small Businesses and Finance

Extremely high dependence on small and micro businesses

Employ 70% of the economically active population

98% of all businesses are small or micro (up to 10 employees)

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Only 20% of micro-businesses sought funding to begin operating (ENAMIN survey)

Migration and Financial Inclusion

Table: Indicators of financial acces by migration region

 Total bank branches

Branches per every

10,000 adults

Percent of branches that are

commercial banks

Percent of counties without

bank branches

Traditional Región 33 1.75 79% 48%

Intermediate Región 13 0.76 54% 45%

EmergentRegión 22 1.51 68% 25%

State Total 136 1.41 74% 52%Fuente: Estimaciones del autor con base en CNBV 2010

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Towards a Transnational Microbank

Survey of Migrant Financial Needs

Interviews and Comparison of Microfinance Institutions

operating in high-migration areas

Analysis of government programs supporting migrant

entrepreneurship

Motivation: Of Mexican states, Zacatecas has the highest number of business funded by family members or friends living in a foreign country

Conclusions

High concentration of financial infrastructure in urban areas

Challenge: bring financial services to rural areas

Further, very low business use of credit, especially among micro-businesses

There is a large opportunity for microfinance institutions to meet these needs in rural areas

There exists a new space for collaboration between social development programs and microfinance institutions

New government program to promote financial inclusion

Open new channels of funding to support rural financing efforts (savings and credit services)

Explore new programs to equip microfinance institutions to bring remittance payment services to rural areas

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RecommendationsObservations

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Many Thanks• To COMEXUS and the Fulbright-

García Robles scholarship program

• Dr. García Zamora and the Development Studies

department, UAZ• FEDZAC and migrant leaders

• AMUCSS and the Microfinance institutions

• To the Government Directors and Delegates of Zacatecas

migrant programs

Matt RollandMatt.Rolland@fulbrightmail.org