Despite what is said about Venezuela due to the exorbitant income from oil exports that it receives, the country shows a low performance index in microfinance matters.
To begin, let's develop the term, Microfinance. It refers to those financial operations offered to micro-entrepreneurs (owners of a micro-business). When we speak of microfinance, we understand then, that they are the financial services granted to urban or rural micro-companies or micro-producers or micro-economic activities of various kinds, in any of the sectors, be it transformation, service provision or commercial. Therefore, the source of working capital of all credit obligations is in the sales or income generated by the activity.
According to sources from the Inter-American Development Bank (IDB) and the Andean Development Corporation, in the last quarter of 2008, Venezuela was in the last place with Argentina in terms of micro-finance, with 27.4%. In the investment climate, according to this report, Venezuela is ranked number 10 along with Ecuador with 41.3% and in the framework of regulations it has a poor evaluation (it is in position 14 with 31.3%). Regarding institutional development, Venezuela is in 15th place with 16.7%. All these percentages in reference to 15 countries in the region.
In this same vein, it is important to recognize that in recent years the current government has made credits aimed at microfinance compulsory, operating under the profile of community figures to approach the low-income population (80% of Venezuelans).
But the IDB report affirms that excess regulations have not managed to increase this financing system, except for a minority of banks that have increased their loans to this sector of entrepreneurs.
Financial market regulations in the area of microfinance have made the development of banks towards this sector less, and only some institutions have a higher percentage of microcredit operations in Venezuela. Everything indicates that it needs more instances to promote this type of microcredits to the business sector.
I believe that legal security should be improved in one way or another and the level of governance significantly increased, in order to strengthen microfinance, since there is a history of nations with much smaller and poorer economies than ours and clearly outperform for the largest and richest, the observations are clear and differ from those usually considered for traditional investments.
It is not enough to have stable macroeconomic and political conditions, if there are not other key and more specific conditions for the regulation and operations of microfinance.
If this is taken into account, it would be calculated that in the next five years, microfinance could serve an approximate 20 million people in the country, with the exception of improving the conditions mentioned above. The more favorable the business environment in our country, the higher the population's utilization of microfinance services tends to be.
It is important to note that by referring to these terms, it implicitly has an important component as a strategy and opportunity for the development of the productive economic micro-unit, which will undoubtedly benefit the families that comprise it, through higher levels of nutrition, education, and health., among others, with the prospect of a gradual increase in their own capital stock or wealth.
I want to finish this article on Microfinance: a strategy for the economic development of Venezuela with a few words from the philosopher, Latin writer, scientist and naturalist Plinio that very well call us to reflection: «Many things are deemed impossible to do, before they are done ».
