In the last eight years, poverty in Bolivia has decreased significantly; however, the current recession threatens to reverse all the progress if the support structures for the vulnerable populations are not there. A period of stable economic growth linked to high oil and gas prices was first interrupted by commodities depreciation and then by the Covid-19 crisis. As a result, the country’s economy is facing recession and over a million people risk going into poverty.
The aftereffects of the global pandemic threaten to bring back the high economic and social inequality Bolivia struggled with for decades. Historically, the poorest and most excluded throughout Latin America, indigenous peoples, are the ones who suffer disproportionally from economic decline. Native Bolivians mostly live in sparsely populated rural areas with few job opportunities and often lack access to basic economic services. They are usually the first to lose their sources of income in times of crisis and rely on affordable credit to cope with financial shocks. As bank loans are mostly inaccessible for marginalized communities, they rely on microfinance institutions (MFIs) for support. Providing finance for those institutions is crucial for a country’s inclusive development. That’s why Cordaid Investment Management is reconnecting with long-term partner Idepro, an MFI with a strong social mission.
The $1.5M investment came at the right time: “Cordaid Investment Management provided Idepro with important post-pandemic financing. With CIM’s help, we can improve Bolivian microentrepreneurs’ quality of life and help them reactivate their enterprises. On a bigger scale, together, we contribute to financial inclusion, a fundamental pillar for developing our country’s economy,” says Idepro’s ESG / Communications Officer Mariela Zaida Aramayo Cortez.
The MFI caters to an unattended market niche at the bottom of the pyramid, focusing especially on women and youth in rural and peri-urban areas. Idepro serves 11,334 clients, mainly small producers and microentrepreneurs, through individual loans and intends to create village banking products to facilitate access for the poorest communities. The MFI services benefit rural and urban areas all around this sparsely populated country through a network of 7 branches and various service spots.
“Idepro has been an investee of CIM for many years and with a good track record. As CIM strives to invest in MFIs with a strong social focus, we couldn’t overlook this opportunity. Idepro shows a high commitment to its social mission for financial inclusion, development of microentrepreneurs, digital transformation by granting innovative financial solutions and financial education,” says Priscilla Smit, Senior Investment Manager at Cordaid Investment Management.
Moreover, Idepro is constantly evolving its business practices. In recent years, they have implemented robust impact evaluation systems, developed customized credit products, and digitalized their services. For example, through the new digital tool, credits are approved within 24 hours. This innovation was introduced in response to the travelling restrictions caused by the pandemic, but it also increases the MFI efficiency and makes the application process easier for the borrowers. Besides, the MFI broadened its offering from single standardized microcredit to a value-chain-oriented product and designed a loan for women – “Oportuno mujer”. The MFI’s strategy aimed at female entrepreneurs aligns with CIM’s commitment to creating equal economic opportunities for women.
“The Covid-19 crisis made us rethink our strategy, adapting our products and services to the new needs of customers. Likewise, we have ventured into new segments such as women, who, as a result of the pandemic, have decided to become entrepreneurs and build a better future for their children. Besides applying the gender lens, our new strategy prioritizes the implementation of client protection standards, monitoring, and evaluation of social, economic, and environmental impact”, concludes Mariela.