IFC Promotes Microfinance for Brazil's Favelas
IFC gathered key players from the private and public sectors in Rio de Janeiro to discuss expanding access to finance in Brazil's poorest neighborhoods, known as favelas, and other low-income areas. The event was a joint initiative by IFC Investment and Advisory. H.R.H. Princess Maxima of the Netherlands, the U.N. Secretary-General's Special Advocate for Inclusive Finance, was a key speaker.
IFC invests in Brazilian microfinance to scale up access to a range of high-quality financial services for underserved populations, maximize development impact, and ensure institutional sustainability.
“The event was an excellent opportunity for IFC to promote a dynamic environment for the exchange of experiences amongst the institutions involved in microfinance, and examine the successes and lessons learned," said Loy Pires, IFC Senior Manager.
Attendees determined that:
1. Traditional financial services are not easily accessed by favela residents, making microfinance a strategic tool to help these communities and promote opportunity and investment.
2. There have been major steps forward in the expansion of access to finance, particularly in areas where security has improved. Banks have opened branches,and local people serve as bank and loan officers and promote microcredit. The country's insurance federation has launched an
innovative program in financial awareness to help favela residents successfully utilize credit to start or improve businesses.
3. While young people in Rio's favelas have taken initiatives to start their own innovative businesses, such as motorcycle taxis and internet cafes, there is still more to be learned on how to better service this urban population.
In her speech, Princess Maxima stated that about 400 million enterprises and 2.7 billion people around the world today do not have access to financial services. She noted Brazil has provided access to formal bank accounts to 56 percent of adults, which has contributed to economic growth and helped millions of Brazilians out of poverty. The Princess added that the challenge now is to determine how to extend the same success to the remaining 40 percent of the population and to the 12 million informal SMEs that do not have access to financial services.
IFC has invested $121 million in four Brazilian institutions offering microfinance and offered advisory services to six microfinance enterprises. IFC has also organized events to discuss the regulatory framework together with the Brazilian Central Bank. Globally IFC has worked with 150 microcredit institutions in more than 60 countries, providing investment and advisory services.
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