Microfinance Bolivia

Abstract:

Bolivia is the poorest country in South America, but the country possesses a microfinance sector, which is the most advanced one in Latin America. Major Microfinance Activities of the country are carried out by the cooperatives and financial NGOs. Recently, the commercial banks and private financial funds have also started to open microfinance segment in order to enter the microfinance market of Bolivia.

Microfinance Bolivia is a good topic to discuss as Bolivia is the poorest country in South America and the role of Microfinance in such a country can open new horizons for several other poor countries of the world. It has been widely accepted that Bolivia possesses a microfinance sector which is counted as one of the most advanced microfinance sectors among the Latin American Countries.

History of Microfinance in Bolivia

In the middle of 1980s, government of Bolivia realized that in order to improve the efficiency of the microfinance programs, government interventions are necessary. But, the attempts of Bolivian govt. to intervene in the microfinance sector of the country proved to be unsuccessful. This failure of govt. intervention generated distrust among the people of Bolivia. In this situation, Non Government Organizations or NGOs started entering the microfinance sector of the country. These NGOs carried out financing activities and helped the poor people by providing credit and other financial services.

At present, Bolivia possesses a very strong supply base of microfinance. Compared to the demand size, supply is really huge in the country and this fact hints to the excessive growth rate of microfinance programs in the country. This growth came through the NGOs, which received significant levels of external development assistance in planning microfinance programs.

Microfinance Institutions in Bolivia

Micro credit is available in Bolivia both through the Supervised Financial Organizations like Credit Unions and loan associations and through the Unsupervised Financial Organizations like Cooperatives and financial NGOs. But, the market is dominated by the Unsupervised Financial Organizations. In Bolivia, small loans are available from almost 200 cooperatives and near about 33 financial NGOs.

Recently, some commercial banks of Bolivia have revealed their desire for downscaling. In fact a commercial bank named Banco Economico has already opened a segment for carrying out microfinance operations. Two Private Financial Funds have also started competing in the microfinance market of Bolivia. These downscaling efforts may result in a situation where the larger share of the Bolivian Microfinance Market would be captured by the Supervised Financial Organizations rather than Unsupervised Financial Organizations.