The World Bank approved a $64.6 million loan to strengthen Mexico’s non-bank financial intermediaries, including credit unions and cooperatives, and to expand financial services to the poor, especially in rural areas, including their access to deposit services and to remittances coming from abroad.
"Access to financial services is critical to achieve the integration of low-income people into the national economy," said Olivier Lafourcade, World Bank Director for Mexico, Colombia and Venezuela. "In traditionally under-served rural areas, the healthy development of savings and other microfinance activities requires reliable financial intermediaries."
The $64.6 million technical assistance loan will support the Savings and Credit Sector Strengthening and Rural Microfinance Capacity Building Project, which seeks to improve the quality and coverage of non-bank financial services by focusing on institutional capacity and sustainability, as well as overall sector supervision.
Technical assistance will include institutional strengthening of savings and credit institutions (SCIs), modernization of their information systems, and training for their management and staff in the areas of finance, accounting, risk management, credit analysis and governance. Some 380 SCIs are expected to participate in the program and about 800 SCI staff members are expected to benefit from the training.
In addition, the project will provide assistance at the community level by training the poorer segments of the population on basic principles of household finance and financial transactions, in order to improve participation in formal financing.
The technical assistance programs will be implemented through the Banco Nacional del Ahorro y Servicios Financieros and the SecretarÃÂa de Agricultura, GanaderÃÂa, Pesca y Alimentación. A single oversight body, the Comisión Nacional Bancaria y de Valores, will be in charge of eligibility certification and supervision of the SCI sector.
"An improved participation in formal financial transactions and stronger institutions will benefit the rural poor enormously," said Carlos Cuevas, World Bank Task Manager of the project. "Many more Mexican families, for instance, will improve their access to the money their relatives send them from abroad through non-bank intermediaries also known as banca popular."
It is expected that in five years the project will help SCIs double the current number of clients nationwide (from 2 to 4 million), and will directly benefit some 60,000 rural families in six of the following eight regions: Chiapas, Huasteca, Oaxaca, Veracruz, Guerrero, Michoacan, Puebla, and Sierra Gorda.
For further information on the World Bank’s work in Mexico, please click here.
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