Guide to microfinance in Latin America
There are some unique features of Latin America’s recent microfinance evolution, including innovations in regulations and technology, that may provide interesting lessons for other regions.
- specific policies and requirements vary from country to country, but a set of good regulatory practices in Latin America includes: minimum capital requirements; strict standards for related-party lending; increased access for MFIs to engage in more complex or risky operations subject to fulfilling more demanding requirements; ensuring adequate scale for efficiency; and promoting competition
- strategies implemented in Latin America show that capital investments in technology are essential in order to reduce risks, but they need to be matched with proper organisational innovations that involve personnel management. Technological devices reduce costs, but it is loan officers who need to be capable of managing issues related to microcredit with the clients. Communication skills and mutual trust are essential where no guarantees exist