March 29, 2021
Women business owners in the poorest states
On March 24, the Japan International Cooperation Agency (JICA) signed a loan agreement with Banco Compartamos S.A., Institución de Banca Múltiple (Compartamos), Mexico’s largest microfinance institution, to provide $50 million in loans to women-owned businesses with an emphasis on businesses located in the Mexican states of Chiapas, Oaxaca, Guerrero, and Puebla, which are among the poor regions of Mexico and are known as “the poorest states.” This is the first microfinance support project in Latin America for JICA's Private Sector Investment Finance, and is supported in coordination with the U.S. International Development Finance Corporation (DFC) and Citi.
Mexico has a large disparity between the rich and the poor, and with approximately 2.2 million people living in extreme poverty, the problem of poverty is serious. The Human Development Index (*1) in the poorest states is lower than that of the country as a whole. It is estimated that about 30% of adults do not have access to financial services in Mexico. In the southern region where the most impoverished states are located and where financial institutions (including microfinance institutions) have so far been unable to make inroads, this ratio is as high as 40%. Consequently, poverty reduction through correction of regional disparities and improvement of financial access is an issue that needs to be addressed.
Compartamos was established in 1990 as an NGO to provide microfinance to small businesses in the states of Chiapas and Oaxaca, which are among the poorest states in the country. Its main clients are those with monthly incomes below the national average, and about 90% of its existing clients are women. It was awarded the Smart Campaign Certification in 2014, which certifies the implementation of client protection standards in microfinance.
The JICA loan will support the expansion of lending by Compartamos to women-owned businesses in Mexico, mainly in the poorest states, and contribute to improving access to financing for women-owned businesses.
The project will contribute to the “G7 2X Challenge: Financing for Women” initiative announced at the G7 Charlevoix Summit (Canada) in June 2018 (* 2) and aligns with the Sustainable Development Goals (SDGs) 1, 5, and 8.
(*1) The Human Development Index (HDI) is a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and have a decent standard of living.
(*2) The “G7 2X Challenge: Financing for Women” aims to mobilize $3 billion by 2020, by calling on DFIs in each of the G7 countries to provide their own funding and encourage private sector investment. It promotes women's economic empowerment, including the advancement of women entrepreneurs and business leaders and facilitating their entry into the labor market. The G7 2X Challenge aims to double the amount and effectiveness of investment in women.