In an effort to broaden access to microfinance and encourage lending by private banks, the Brazilian government is expanding its National Program of Oriented Productive Microcredit (PNMPO in Portuguese), an initiative through which the government provides funding to microfinance institutions (MFIs) and other financial service providers for on-lending to small businesses and microentrepreneurs. The key changes will be a reduction in annualized interest rates paid by clients, from approximately 60 percent to 8 percent per year, and the cost of opening a line of microcredit will fall from 3 percent to 1 percent of the borrowed value.
The Brazilian government reportedly plans to spend up to BRL 483 million (USD 300 million) over the next two years to support the reduction in interest rates. As of March 31, 2011, PNMPO reported a loan portfolio of BRL 977 million (USD 600 million) with an approximate outreach of 908,000 active borrowers.
By Rohan Trivedi, Research Associate
Sources and Additional Resources:
[1] Invest in Brazil: “Brazil expands Federal Microcredit Program”, http://investinbrazil.biz/news/brazil-expands-federal-microcredit-program-78k9
MicroCapital.org story, August 25, 2011: “MICROCAPITAL BRIEF: Central Bank of Brazil Publishes ‘Inclusao Financeira’ Calling for Increased Financial Inclusion, Urging Microfinance Institutions (MFIs) to Boost Transparency, Product Innovation, Financial Education”, https://www.microcapital.org/microcapital-brief-central-bank-of-brazil-publishes-“inclusao-financeira”-calling-for-increased-financial-inclusion-urging-microfinance-institutions-mfis-to-boost-transparency-pro/
MicroCapital.org story, June 21, 2011: “MICROCAPITAL BRIEF: Laura González of Getulio Vargas Foundation’s Microfinance Studies Centre, Marcelo Azevedo Teixera of Banco do Nordeste do Brasil (BNB) Praise Brazil’s National Productive Microcredit Programme, Argue More is Needed”, https://www.microcapital.org/microcapital-brief-lauro-gonzalez-of-getulio-vargas-foundations-microfinance-studies-centre-marcelo-azevedo-teixeira-of-banco-do-nordeste-do-brasil-bnb-praise-brazil’s-national-productiv/
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