First Look: The Diverse Latin American Microfinance Market

The term “microcredit” is often associated with small working capital loans for microentrepreneurs. However, the reality of Latin American microcredit is far more diverse than meets the eye. Some microfinance institutions (MFIs) that traditionally provided loans to microentrepreneurs are now moving into the consumer, mortgage and low-end commercial loan segments. Meanwhile, some larger, consumer focused lenders are competing for microenterprise business. This article presents a first look at the Latin American microfinance market by four distinct types of credit: microenterprise, consumer, mortgage and commercial. It begins with a market overview analyzing the distribution of credit types regionally, by country and by institution scale and type. The article concludes with an in depth look at some of the trends and motivations behind product diversification in the microfinance industry.

At the end of 2006, the 231 Latin American MFIs reporting to MIX managed over US$ 11.1 billion in over 11 million outstanding loans. Microenterprise and consumer credit played the most significant roles in the composition of read more…