How do you sustainably promote financial inclusion? Medellín may have the answer


13th December 2016

Empresas Públicas de Medellín (EPM) has created a social financing program that grants revolving credit to its customers by means of credit cards.
By Lucas Figal Garone and Liliana Olarte Rodríguez
Normally, in a development bank like the Inter-American Investment Corporation (IIC), the story of an innovative project starts with a question that unites businesses with economic development. For example: how can we sustainably promote financial inclusion among the poorest and most vulnerable groups in society?
Financial inclusion is a broad issue, although in recent decades attention has been focused mainly on micro-credit. More recently, global enthusiasm has been waning. Critics argue that microcredit increases the debt level, worsens well-being and fails to have the hoped-for positive effects in other socioeconomic areas.
Beyond micro-credits
There is no doubt that society’s most vulnerable people are the ones who most urgently need to create, manage and expand small businesses. For example: they need to ensure that there is food on the table every day, and they must buy basic products for the home. With no collateral, credit history or the possibility of showing steady revenues, many of them feel unprotected by the financial system and without means for meeting the most basic needs like buying a refrigerator.
In Colombia, for example, barely 28.9 percent of the adult population has a consumer credit account, 32.9 percent have a credit card and 12.4 percent have a …

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