Brazilian Amazon Little Entrepreneurs Get Their Own Microloans

Brazilian Amazon familyBrazil is giving the green light to Accion International, a pioneer and leader in global microfinance to operate in the state of Amazonas, in Brazil’s remote northern region under the name Accion Microfinanças. It was in Recife, in the Brazilian Northeast that Accion first introduced the microlending concept, in 1973.

Joining Accion as an equity partner in the new venture is the Multilateral Investment Fund (MIF) of the Inter-American Development bank (IDB), which will assume an 18.1% stake.  Private investor Luiz Felipe D’Avila and other private investors will assume a total of 8.5%.  Accion will hold 73.4% of the organization.

Accion Microfinanças will begin operations in Manaus, the state capital and largest city in Amazonas, with plans to extend services to cities throughout Brazil’s northern region. 

The northern region, comprising seven states with a total population of about 14.7 million, is home to an estimated 1.9 million microentrepreneurs, only 8 to 10% of whom have received any kind of loan from a bank or microfinance organization.

“We are particularly excited by the prospect of extending financial access in Amazonas, one of the most underserved regions of a country where microfinance, overall, remains nascent,” said Michael Schlein, President and CEO of Accion. 

“This underscores our commitment to deliver such services to some of the developing world’s most needy regions, and follows closely on the announcement of our investment in Saija Finance, a microfinance startup in Bihar, India.”

Accion Microfinanças plans to apply new approaches and innovations in microfinance to best serve the needs of Amazonas microentrepreneurs.  These include employing a credit scoring and a cash flow-based credit assessment model; making use of Brazil’s innovative correspondent banking system to partner with banks and extend services through retail stores and other outlets; and deploying payment technologies such as PDAs, prepaid bank cards and cell phones.

In addition to conventional working capital loans, Accion Microfinanças envisions diversifying its product offering over several years to include products such as lines of credit, credit cards, longer-term fixed-asset loans, financial education and, eventually, microinsurance products through alliances with insurance companies.

“Accion’s new operations in Amazonas will be serve as an incubator for new approaches to credit underwriting, create new partnerships that extend access to services, develop innovative technologies, and diversify financial product offerings,” said Tomas Miller, senior investment officer at the IDB’s Multilateral Investment Fund.  “The MIF is proud to be a partner in this new venture.”

Private investor Luiz Felipe D’Avila added, “Stimulating entrepreneurship through microfinance is one of the most efficient ways to help people out of poverty.”

Accion will provide intensive management support in the initial years of Accion Microfinanças’s operation, deploying Accion staff in key management positions as part of a plan to develop local capacity for long-term management of the institution.

Accion International is a private, nonprofit organization with the mission of giving people the financial tools they need – microenterprise loans, business training and other financial services – to work their way out of poverty. 

A world pioneer in microfinance, Accion was founded in 1961 and issued its first microloan in 1973 in Brazil. Accion’s partner microfinance institutions today are providing loans as low as US$ 50 to poor men and women entrepreneurs in 23 countries in Latin America, Asia, Africa and the United States. 

In the last decade alone, Accion partners have disbursed more than 28.5 million loans totaling $23.4 billion; 97% of the loans have been repaid.

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