MICROCAPITAL STORY: Bolivan Microbank Trade Association ASOFIN Projects Slowed But Positive Growth in 2009

In an interview with Business News Americas (BN Americas), the Association of Financial Entities Specialized in Microfinance (ASOFIN)‘s Executive Secretary, Fernando Prado Guachalla, remarks, “Fortunately, we haven’t felt the [financial] crisis in the microfinance sector in Bolivia.” ASOFIN, established in 1999, is an association of eight microfinance institutions (MFIs) regulated by the Superintendence of Banks and Financial Entities (SBEF) in Bolivia. BN Americas reports that members of ASOFIN expanded their loans 42 percent overall in 2008 while maintaining an average interest rate of 19.5 percent. However, Mr. Prado discloses that loan growth rates might slow to 20 to 30 percent because “It’s not adequate at this time to maintain annual growth rates of 40 percent.” Mr. Prado is ASOFIN’s highest ranking official and a Bolivian economist with 28 years of experience. He served as Chief of Party on USAID’s SEFIR project in Bolivia and was Director of the Microfinance Corporación Andina de Fomento (CAF), a Latin American bank.

ASOFIN is a vast microfinance association that moderates an overwhelming majority of the industry in Bolivia. ASOFIN’S loans account for 90 percent of total micro-loans in the country. BN Americas reports that at the end of February, ASOFIN members held USD 1.31 billion in gross loans and USD 1.17 billion in deposits, and that loan clients totaled 512,542 and deposit customers, 1.46 million. According to the MIX, the eight member institutions of ASOFIN cumulatively served 645,158 active borrowers and maintained a USD 1.27 billion gross loan portfolio by the end of 2008. Of all members, Banco Sol was the largest with a gross loan portfolio of USD 294.3 million and 161,626 active borrowers. Monthly balance sheets, available on ASOFIN’s website, illustrate the extensive activities and capacity in the midst of the financial crisis. At the end of February 2009, ASOFIN reported assets of USD 1.8 billion, liabilities of USD 1.62 billion, and USD 3 million as the net income of management. At the end of January 2009, ASOFIN reported assets of USD 1.77 billion, liabilities of USD 1.59 billion, and USD 1.89 million as the net income of management.

ASOFIN has reported increasing annual growth rates across its member institutions since 2000. As Mr. Prado states, the number of loans have indeed been growing, but deposits have also been growing resulting in greater percentages of loans being financed through deposits. Deposits (p8) were growing 26.78 percent in 2000, 27.34 percent by 2003, and 43.25 percent by 2007. Loans (p8) were growing 10.75 percent in 2000, 22.87, and 33.14 percent in 2007. The number of borrowers grew from 176,245 in 2000 to 376,851 in 2007 while the number of depositors grew from 91,450 in 2001 to 911,905 in 2007. In 1999, deposits constituted 51.04 percent of the loan portfolio (p7). This percentage grew to 79.84 percent in 2007. Mr. Prado remains confident of stability during the global economic crisis because, as he reports to BN Americas, 89 percent of loans are currently financed through deposits.

Only institutions licensed by the SBEF are invited to join ASOFIN. ASOFIN counts two banks, Banco Sol and ProCredit-BOL, amongst its members. Five members are Private Financial Funds (FFP) and one member is in the process of seeking its license from SBEF. Mr. Prado mentions to BN Americas that two of the FFPs, PRODEM and FIE, are expected to be granted banking licenses in 2009. The four remaining member FFPs are AgroCapital, Eco Futuro, FASSIL, and Fortaleza. SBEF sets strict eligibility and operational guidelines for FFPs. In order to be licensed, FFPs must have minimum capital of approximately USD 910,000 (p3). The total of non-guaranteed loans must be less than twice the equity of each FFP and FFPs cannot provide individual loans of more than 3 percent of their equity (p4). According to SBEF, such safeguards and the overall extent of regulation of MFIs in Bolivia are intended to minimize risk and ensure sustainability.

Additional Resources:

ASOFIN

SBEF Bolivia

“Association: Microfinance sector set for slower but solid growth in 2009”, by Maria Alejandra Moreno, Published by BN Americas, April 21, 2009

“Institutional Presentation”, Published by ASOFIN, October 2007

Monthly Balance Sheets, Published by ASOFIN (in Spanish)

“La Regulacion y Supervision de las Entidades Microfinancieras en Bolivia”, published by SBEF (in Spanish)

By Goda Thangada, Research Assistant