1. BANKINGFORBANKINGFOR THEMAJORITIESTHEMAJORITIES

2. Financing and its impact on local/national business Eduardo Bazoberry Fondo Financiero Prodem Ottawa, April 2005

3. Bolivia  Land area: 1.1m km²  Population: 8.7 million (2002)  GDP: US $7.7billion (2002)  Per capita GDP: US $885 (2002)  Adult literacy rate(2001): Total 86%  Poverty (below national poverty line): 63%  Urban population: 63%  Official languages: Spanish, Quechua and Aymara * Source Worldbank www.worldbank.org, Countries at glancewww.worldbank.org

4. PRODEM FFP  Self-sustained regulated entity  76% of the money lent comes from clients with saving deposits  Accounts for 44% of the microfinance sector savings  Largest number of savings accounts (148,000)  Largest network with 79 full fledged branches and 30 service centers across Bolivia  52 smart ATMs throughout urban and rural areas, and 40 Autonomous Points of Sale (PAV´s)  ROE 2004: 18%  Equity: 8,8 Millions $us

5. WHERE MICRO ECONOMICS MAKES SENSE! PRODEM FFP NETWORK

6. DISBURSEMENTS Total disbursements: 233.307.346 OUR IMPACT

7. CLIENTS (By economic sector)

9. CLIENTS (By gender)

10. AVERAGE LOAN SIZE

11. FINANCIAL SERVICES AVAILABLE TO OUR CLIENTS MICRO LOANS: US$ 50 TO 7.000  Flash Loans US$ 50 to US$ 300  Micro Credit Line  Agricultural – Loans  Seasonal Loans Guarantee: Personal, quasi-mortgage, custody of documents, time deposits, savings accounts, solidarity group

12. FINANCIAL SERVICES AVAILABLE TO OUR CLIENTS SMALL SIZE LOANS: US$ 7.001 TO 40.000  Credit Line  Mid-term Loans Guarantee: Mortgage, time deposits, saving accounts

13. FINANCIAL SERVICES AVAILABLE TO OUR CLIENTS MEDIUM SIZE LOANS: US$ 41.000 TO 200.000  Credit Line  Mid-term Loans Guarantee: Mortgage LOAN PRODUCT PORTFOLIO WELL DIVERSIFIED IT SATISFIES OUR CLIENTS’ DIFFERENT NEEDS

14. FINANCIAL SERVICES AVAILABLE TO OUR CLIENTS SAVINGS PRODUCT PORTFOLIO  Savings account with smart card finger print recognition and with saving passports  Time deposits  Smart automatic teller machines (ATMs)  Autonomous points of sale (POS) INTRODUCING THE SMART CARD WITH FINGER RECOGNITION INTRODUCING THE SMART CARD WITH FINGER RECOGNITION ALLOWED PRODEM FFP TO REVOLUTIONIZE SAVINGS ALLOWED PRODEM FFP TO REVOLUTIONIZE SAVINGS IN RURAL AREAS. HIGH TECHNOLOGY THAT GIVES IN RURAL AREAS. HIGH TECHNOLOGY THAT GIVES SECURITY, VERSATILITY, AND USER FRIENDLY SECURITY, VERSATILITY, AND USER FRIENDLY

15. ATMs AND POS

16. FINANCIAL SERVICES AVAILABLE TO OUR CLIENTS ADDITIONAL PRODUCTS  National Transfers  International Transfers  Life Insurance  Money Exchange  Service Payments  Payroll Payment  Cash Advance  Tax, Police and other services collection

17.  Low income people are eager and able to progress on their own given proper opportunities  Understanding customers’ needs and financial possibilities are essential to create viable products and services  Low income people, both in rural and urban areas, must be key players in third world economies  Rural and low-income communities are willing and able to use technology  Mass coverage of financial services requires advanced technology CHARACTERISTICS OF OUR CLIENTS

18. CLIENTS

19. WHAT WORKED FOR US  Clear role of government  Laws and Regulations  Political independence of the Superintendence of Banks  Floating interest rates  Second-tier government Banks

20. WHAT WORKED FOR US DEVELOPMENT AID WELL DIRECTED (HELPED TO BUILD AN INDUSTRY)  From ngo’s to regulated microfinance entity  From credit oriented to full financial services: Saving, transfer remittances, lines of credit, insurance  From social investors to local entrepreneur investors:  Good Competition InnovationOutreachEfficiency

21. WHAT HAS WORK FOR US LOANS  According to their needs  Just-in-time  Working capital vs. investment capital  No red tape  Takes into account their track record SAVINGS OTHER FINANCIAL SERVICES

22. ADDITIONAL VALUE ADDED SERVICES BUT THEY ALSO DEMAND NON FINANCIAL SERVICES Technical Assistance:  How to improve their businesses?  How to sell more?  What to produce? (Change in markets)  Understand norms and regulations  Become an exporter “Instrument’s that are their for a globalize economy to work. Not taken into account the local entrepreneurs”

23. OUR ENVIRONMENT  We feel that the Microfinance industry in Bolivia has contributed to the impact of financial intermediation for micro, small and medium size businesses by increasing: Efficiency Stabilizing the system Institutional sustainability Outreach “Independent of how you measure the impact, Microfinance has contributed to the bottom line of our economy” “Independent of how you measure the impact, Microfinance has contributed to the bottom line of our economy”

24. OUR ENVIRONMENT “Microfinance is leading the way on how our financial system will work in the future”

25. WHAT CONCESSIONAL FINANCING NEEDS TO TAKE INTO ACCOUNT?  The level of development of the microfinance industry in the country In Bolivia the major regulated Microfinance entities don’t need just loans for portfolio growth, already have accesses to savings, time deposits and the stock market

26. WHAT CONCESSIONAL FINANCE NEEDS TO TAKE INTO ACCOUNT?  Support local entrepreneurs. I quote one of the key principles of microfinance that the CGAP and it’s 28 donors member developed and was further endorsed by the G8 leaders “The key bottleneck is the shortage of strong institutions and managers”. “Donors should focus their support on building capacity”

27.  Eradication of poverty through profits requires advanced technology  Private businesses are proving more effective in solving the needs of the majorities  Important investments are needed in MIS systems and connectivity  Provide financial support to local private investors willing to take risks in technology ventures or in the creation of regulated Microfinance Entities Conclusions

28.  Philanthropy and charity are not sustainable  Private investors’ foresight has driven the microfinance industry to unexpected levels  Long term loans for low income housing  Assume exchange risk  Donors should share the Institution’s vision  Donors rarely have the appropriate expertise to provide practical guidelines * * The CGAP Donor guidelines on good practice in microfinance Dic. 2004 Conclusions