For more than two years, an ambitious proposal has been announced to the capital community through which microcredit resources would be offered to the most vulnerable populations, in accordance with the "Positive Bogota" Development Plan.
Since the end of 2007, the Capital District, DANSOCIAL and the Second Degree Cooperative Body, decided to join forces within the framework of an inter-administrative cooperation agreement in which they contributed 225 billion pesos for a program to strengthen solidarity organizations oriented to credit, microcredit and savings.
The first phase of the agreement contemplated a transfer process in which the cooperative body would deliver the individual microcredit methodology to 12 unconsolidated Microfinance Institutions (MFIs) located in Bogotá with which a District Microfinance Network would have to be formed .
The then Secretary of Economic Development of Bogotá, told the media (in early 2008) that the city required a strong Microfinance institution that will apply microcredit methodologies and that there be a greater offer of financial products and services for micro and small companies, committing to form a District Microfinance Network, led by Capital Banking, within six (6) months with the 12 MFIs that were to receive the transfer of microcredit methodologies.
For his part, DANSOCIAL stated that one of the products of the agreement would be to have a model and manual for strengthening and methodological transfer for solidarity organizations with Microfinance activities, DANSOCIAL would replicate in the other cities of Colombia, but unfortunately and with what has been seen until now it is a proposal that is far from the social purpose that supposedly justified it; It would basically be the replica of a business that has little or nothing of intention in creating social fabric with the most vulnerable communities because even the model excludes them from the start.
What is capital banking?
Capital Banking is an investment project of the District, administered by the District Secretary for Economic Development and which currently has a budget of more than 260 billion pesos, which in the previous government's Development Plan " Bogotá without Indifference " was called Bogotá Entrepreneur and its investment project Lines of Credit, then administered by the District Treasury of the Bogota Ministry of Finance. At the time, the proposal did not have the expected success nor did it meet expectations, considering precisely that in its application, it moved away from the social purpose that it should pursue in accordance with the Development Plan.
With the Lines of Credit, it was demonstrated that the District Administration intends to develop the business theme by allocating millionaire budgets for this purpose, but it is not enough if the social horizon is not clear and the inappropriate medium is chosen, for example, the operation of Public resources, which have to fulfill a social purpose, on the part of the financial sector whose Basel policies are totally opposed to the criteria of social inclusion proposed by the District Development Plan, focusing attention on the top of the pyramid, leaving the base completely unattended, forgetting that microenterprise represents more than 90% of the district economy.
In this sense, all kinds of alliances have been seen, from the agreements with garage organizations to large contracts that in their execution leave much to think about due to the lack of suitability and specific experience in matters related to microfinance such as training, counseling, the accompaniment and the most conjunctural as is microcredit through its different modalities for the management of money in cash.
When reviewing these contracts with a magnifying glass, irregularities are found not only in terms of contractual requirements but also in what has to do with the results; reduced credit operations, limited access to certain sectors of the population, high operating costs, low level of quality of service to vulnerable populations and other aspects.
Given this, it can be seen that the conditions are not equitable compared to the situation of the MFIs that, having received the methodological transfer and that are waiting for the opportunity to celebrate some inter-institutional cooperation agreement, and more in the conditions that favor only one actor than for yes it is already strong. For any MFI of the beneficiaries of the agreement, it is practically impossible to compete against an NGO that, despite being consolidated, the District favors it with the subsidy of its fixed costs and with the capital required for the placement of solidarity microcredits; Although the MFIs have a clear philosophy of a social nature and have the experience of working for the communities, they will not be able to lower interest rates beyond the tolerable limit, and even less stop charging the commission of the Mipyme Law.
The irony is that the justification for the methodological transfer to the MFIs as part of their institutional strengthening to form the District Microfinance Network with them, is precisely the high cost that microcredit operations represent for clients.and that the already consolidated entities were not willing to lower their costs because they were simply focused on the business, leaving aside the social factor; The businessman José Morera proposes that within the institutional strengthening strategy for the institutions that are to make up the Microfinance Network, there be an opportunity to sign this type of agreement with the MFIs not yet consolidated and that they be the recipients of subsidies and subsidies since if they have the vocation of customer service with social responsibility and especially with those non-financial services that facilitate the entrepreneurial strengthening of entrepreneurs and owners of Micro-enterprises, the crux of the matter is that the beneficiary can be given credit products at a low cost, with a purely social criteria,and that the costs required for the sustainability of the microcredit business and the charges that regulate the laws and regulations be jointly and severally borne by the District Administration through conditional subsidies.
What was the expectation that you had with Banca Capital?
JM What Bogotá expected from its Capital Bank was more than a project with beautiful intentions and little practical application in reality; The goals are ambitious, but I think it is failing more than anything else in the way in which such ambitious results are to be achieved.
Regarding the expansion of the products implemented so far, the increase in the beneficiaries who make use of them, improvements in the lines of credit and capital for entrepreneurs, micro-enterprises and microfinance institutions that make up the Capital Microfinance Network. It was also expected that within the microfinance services an emphasis would be made on the non-financial aspect such as business accompaniment and, of course, that Capital Banking meets its budget of being a second-degree bank for MFIs that, integrated in the Capital Microfinance Network, can access the funding of resources for the placement of microcredits and not that millionaire agreements have to be made with third parties.
Do you consider that the Microcredit Methodology is exclusive?
JM The perse microcredit methodology is not exclusive, the point is that in the absence of an inclusive public microfinance policy, the results will continue to be far from what is expected in terms of social indicators included in the District Development Plan, which refers to Capital Banking social and inclusive, with the willingness to deliver financial services to the most vulnerable populations, and even differs from internationally successful Microfinance models such as the case of the Gramen Bank in Bangladesh. Contrary to the social purpose, Microcredit technology presents a series of almost insurmountable filters that put the microfinance system on the same level as banks.
How should Capital Banking work?
JM First of all, Capital Banking in Bogotá has to be, in reality, a second-tier bank destined to finance the business plans of microenterprise entrepreneurs and entrepreneurs, with an emphasis on the most vulnerable communities, financial and non-financial services. The support of the District for this purpose is highly valuable for job creation and income generation, without saying that new programs or projects have to be created, but rather the budget is executed according to the mandate of the Development Plan, so that the resources produced by the income contributed by all citizens really fulfill the social purpose that inspires the needs of a people.
As for the operation of resources, it must be managed by microfinance institutions from the base with the accompaniment of entities that have the suitability and specific experience in transfer processes and microcredit methodologies, because you cannot definitely think of oligopolies in terms of to the management of public resources destined to the financing of the micro-enterprise when the effectiveness of this process lies precisely in the democratization of the resources and in the transparent operation of the same.
The idea is to link the beneficiary populations through some associative or solidarity process so that they jointly participate in the development of this type of project; a group of entrepreneurs or micro-businessmen with some productive affinity and closeness in terms of their location to whom the district administration must train and raise awareness in the solidarity economy, in terms of technical training for the job that the niche requires to get forward your productive productive activity, with regard to the life project and the attitude towards it and in what has to do with the transfer of microcredit methodologies so that once organized and formalized under some legal figure of the solidarity economy they can themselves operate the financial resources through microcredit or the different modalities of microcredit benefiting the members of these nascent organizations as long as certain requirements related to the sustainability of the business model are met and the risk can be controlled and manageable but without falling into the same exclusive game of the traditional financial sector, giving first of all priority in the care of young people, heads of families, ethnic minorities, among others in situations of vulnerability with a recognized degree of exclusion.
Among the various institutions that are created and consolidated during this process, the true District Microfinance Network must be formed, which must link the non-profit organizations that are dedicated not only to financing but also to training and accompaniment., and its missionary function must respond to that of a consultative and union body, which promotes the defense of the rights of entrepreneurs and micro-enterprise entrepreneurs and of the microfinance institutions they comprise, so that through this associative exercise they can have representation that allows them to infer in some way before the public corporations in charge of legislating or regulating about issues of social interest such as commissions, interest rates, reports to information centers and others regarding which until now they have not even had the opportunity to give your opinion and when regulating financial activity directed at this sector of the economypreference is given to attention, coverage and quality of service to the top of the pyramid, leaving the base where the majority of the capital's population is at a disadvantage.
