[Economics] Who benefits from credits to boost the po[CENSORED]r economy?

[#Wittels-]

The initiative will promote the placement of one million credit operations for po[CENSORED]r productive sectors.

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The Ministry of Finance today launched the "CREO, a credit to get to know each other" strategy, which seeks to promote the access of the po[CENSORED]r economy to formal financing, promoting this sector and replacing the 'drop by drop'.

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The initiative, designed with the support of the Inter-American Development Bank (IDB), was presented at the Po[CENSORED]r Economy Credit Innovation and Inclusion Forum.

The Minister of Finance and Public Credit, José Antonio Ocampo, described the strategy as inclusive, aiming to "close historical inequalities and generate accessible and flexible financing."

"As a key lever to promote the generation of capacities, financial well-being and the transformation of the living conditions of the po[CENSORED]r economy," said Minister Ocampo.

What does the strategy consist of?
"It aims to meet the financing needs of small-scale productive units, traditionally neglected, throughout the country and in all sectors of the economy, and to replace the onerous informal sources that prevail," said a statement from the Ministry of Finance.

The credit inclusion strategy of the po[CENSORED]r economy (EP) "CREO, a credit to get to know each other", has the objective of offering a solution to the financing needs of micro-businesses, which use informal sources to request money loans.

According to the DANE Microbusiness Survey (EMICRON), presented by the Ministry of Finance, at the end of 2022, of the 5.3 million microbusinesses in the country, only 30% have formal financing.

According to the data presented, one in four micro-businesses that applied for a loan did so through the 'drop by drop', this number has been growing since the pandemic.

“Itinerant businesses, shopkeepers, recyclers and low-income agricultural producers need access to financing and develop financial capacities to grow their businesses or productive projects. Many of them are at the mercy of the 'drop by drop'. For this reason, we seek to offer different alternatives that become the gateway to the financial system,” said Paola Arias, director of Banca de las Oportunidades.

 

What is a microbusiness?
According to DANE, they are an "economic unit with a maximum of 9 employed persons who carry out a productive activity of goods or services, in order to obtain an income, acting as owner or lessee of the means of production."

Some of its characteristics are that they are owners or holders of the raw materials, tools, equipment, machinery, vehicles, manufactured products, and facilities, with which they carry out their business.

In addition to being responsible for getting their customers, they can be operators by a single person and are responsible for the debt or obligation contracted in the process of production, sale or provision of the service that generates income.

"The economic activities carried out by micro-businesses range from small neighborhood shops to specialized consulting services, including the liberal professions, street vendors, and clothing inside the home," details DANE.

Therefore, your economic activity can be carried out from any place, home, premises, door-to-door, etc.

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Pillars of the initiative "CREO, a credit to know each other"
The initiative is headed by the Ministry of Finance and Public Credit; the Ministry of Agriculture and Rural Development; the Ministry of Commerce, Industry and Tourism; the Bicentennial Group; and the Bank of Opportunities.

"I BELIEVE, a credit to know each other" is consolidated by means of four columns or central axes:

Opportunities to access credit for those who have traditionally been underserved.
Provide access to credit to those who have not participated in the financial system, promoting their inclusion and giving them visibility.

For this, the entities of the Bicentennial Group will offer:

Silent guarantees aimed at improving risk management.
Concessional financing, whose purpose is to promote operational innovations that promote access to resources under favorable conditions.
An incentive for good payment, which promotes healthy and responsible financial habits among the beneficiaries.
"Throughout this first year, the progressive implementation of incentives will be carried out in 100,000 credit operations," explains the Ministry of Finance in a statement.

Promotion of group and associative financing methodologies.
Promotes the financing of po[CENSORED]r groups as a key element to access resources that enhance the productive activities of the po[CENSORED]r economy, fostering relations between communities or groups that share common interests and objectives.

Management and accompaniment in the territory of the po[CENSORED]tion:
Links the po[CENSORED]tion with the supply of financial service providers.

"To this end, the Government hopes to launch the po[CENSORED]r economy fairs in April, which bring together the supply of products and services and provide advice and economic support to Colombians who live in the most remote areas of the country," the statement said.

Generation of financial capacities of the po[CENSORED]r economy:

"The Bicentennial Group will launch an awareness program to promote formal credit and publicize the disadvantages of informal financing mechanisms," he describes.

As well as the benefits of having credits from the formal financial system, and the new products or services that will serve to promote the inclusion of the po[CENSORED]r economy.

financing models
“The cornerstone of the strategy is public banking, which is part of the Bicentennial Group. Bancóldex, Finagro-FAG and FNG, in an articulated and coordinated manner, will activate a package of financial and non-financial services to leverage po[CENSORED]r productive credits”, he points out.

According to Minister Ocampo's presentation at the Forum, the aim is to promote three financing models:

Individual: facilitates the entry into the financial system for the first time of microentrepreneurs who have not had access to formal credit.
Associative: granted by a cooperative or other association of merchants or producers, which encourages the cooperativeness of small entrepreneurs, promoting their development.
Group credit: small producers that create associations for credit fines, despite not having a formal association as a cooperative.

 

Link: https://www.canalinstitucional.tv/te-interesa/gobierno-lanza-estrategia-creditos-economia-po[CENSORED]r