Since the 1980s, Latin America has developed into one of the most sophisticated microfinance markets in the world. Countries such as Bolivia and Peru are home to some of the most recognized institutions that offer a wide array of financial products and services, including insurance, savings, and remittances. In addition, traditional banks are moving down market to reach people typically served by microfinance institutions (MFIs). However, amidst these dynamic developments, millions of the region’s poorest people, especially in remote rural areas, still have no access to vital financial services they need to move themselves out of poverty.
- More than 45 million people live under $1.25/day in Latin America
Grameen Foundation has been supporting microfinance activities in Latin America and the Caribbean since 1999, when we began working with Al Sol in Chiapas, Mexico. As of September 2011, we have made more than $3.75 million in direct investments in poverty-focused microfinance institutions to enable them to provide financial services to the poorest women, and have provided nearly $16 million in loan guarantees to facilitate $42.7 million in local currency financing from local banks.
Last Mile Initiative
In November 2011, we launched the Last Mile Initiative, a five-year campaign to help 1 million poor people living in rural Latin America improve their lives. Across the region, the poorest people are concentrated in the rural areas and depend on subsistence agriculture to make a living. The Last Mile Initiative will go beyond microfinance to give these largely underserved communities access to financial services, viable opportunities to build and expand businesses, and critical information to help them enhance their livelihoods.
Rural farmers in Latin America have largely been overlooked because the sector has been perceived as too risky. The farmers often live very far from urban centers and lack the necessary equipment to get their crops to market. In addition, even small farmer cooperatives, where they exist, face challenges either because they have little money or the ability to negotiate good prices for members’ crops. We are committed to reaching the poorest communities and believe that putting capital, technology and productive tools into farmers’ hands will demonstrate that this type of investment in agriculture can be a sustainable and beneficial intervention.
Through collaborations with farmer cooperatives, government, local private and nonprofit organizations, and other key stakeholders, the Last Mile Initiative will focus on encouraging favorable market practices that translate into inclusive opportunities for poor farmers by developing linkages to local and international markets, and promoting fair pricing schemes and social marketing tools that will benefit their well-being.
Grameen Foundation has a proven track record of successfully financing deals and building sustainable mobile agriculture solutions, and we are using that expertise to provide a more holistic solution to address those concerns, by:
- Creating a specialized agriculture fund that provides early and readily available capital to help farmers establish and renew plantations, adopt improved farming practices and invest in equipment that increases the quality of their produce, and, in turn, their income.
- Using loan guarantees to facilitate lines of credit from commercial banks and other entities, to poverty-focused microfinance institutions that require access to funding without exposing themselves to currency exchange risk.
- Using mobile phones, the most commonly available technology for the very poor, to give poor farmers complete access to vital agricultural, weather and pricing information, and support them with technical assistance, as well as accelerate the impact of organizations working with the poor.
We strongly advocate the need for all organizations to measure how well their programs and services are helping their clients escape poverty. In the Last Mile Initiative, the cooperatives will use the Progress out of Poverty Index® (PPI®) to measure their social performance. This will enable them to better tailor products and services for their customers and will also enable investors to monitor the social and financial impact of their funding.
Chiapas International, a generous, long-time supporter of Grameen Foundation, has committed $2 million dollars to support the Last Mile Initiative. This will provide base support for our activities to extend financial services to the very poor.