Miguel Tzoy Pu owns a small farm in Totonicapán, Guatemala, where he grows tomatoes, chilis, potatoes, and corn. His wife and three children depend on the income from his harvest to pay for school, food, and other household necessities. Like many of the 5.7 million smallholder farmers in Guatemala, Miguel has struggled to manage the impacts of a changing climate, enduring periods of severe drought and destructive hurricanes that wreak havoc on his crop yields. With little financial experience, he has also had limited access to financial products that might help him to reduce farm losses, invest in new technologies, and protect his farm against agricultural shocks.
Across Guatemala, 7.5 million people do not have a basic bank account and just 12 percent of the population saved or borrowed from a financial institution as of 2017. Micro, small, and medium enterprises (MSMEs), which account for 85 percent of employment and contribute 40 percent of GDP, consistently face challenges in accessing the formal financial system dominated by large commercial banks, with an estimated $14.2 billion formal finance gap. With half the population living in poverty and 70 percent of workers employed in the informal sector, traditional financial institutions have shied away from serving low-income households and microentrepreneurs due to a lack of documented transactions and collateral which has fueled credit and risk aversion among banks. As the country continues to struggle during the COVID-19 pandemic and the risk of extreme weather events grows, inclusive financial services are more critical than ever.
Fundación Génesis Empresarial is Guatemala’s largest nonprofit microfinance institution, offering a comprehensive portfolio of products and services that includes working capital, housing, and education loan products, agricultural financing and advisory, insurance, and remittances to MSMEs and rural communities across the country. Founded in 1988, Génesis has provided financial and non-financial products and services, financial education and business management training, and advisory support to more than 720,000 clients, helping them grow their businesses, send children to school, and move out of poverty. Of their current 138,000 clients – many of whom are excluded from the traditional financial system – 42 percent live in poverty or extreme poverty, 85 percent live in rural areas, and 64 percent are women. Their national coverage extends across more than 100 branches, 3,000 agents, and 12,000 payment points, many in rural areas with limited access.
Fundación Génesis provided Miguel Tzoy Pu with a loan to expand his tomato and chili cultivation and support to help him better manage his credit. The loan has allowed Miguel to further expand his tomato plots, produce higher quality crops, and earn more every month.
Accion is excited to continue our 30-year relationship with Fundación Génesis Empresarial as part of the Mastercard and Accion partnership to help small businesses like Miguel Tzoy Pu’s operate in and benefit from the digital economy. A cornerstone of our commitment to support economic opportunity in the Northern Triangle, Accion will help Génesis strengthen and accelerate their digital transformation to spur continued innovation and drive scale.
In recent years, Génesis has invested heavily in digital transformation – of their own institution, and of their clients. They now offer a digital wallet, called akisí, an online banking application, and recently launched a digital revolving credit product called Génesis Efectivo. Through this partnership, Accion will help Génesis:
- Drive adoption and usage of the akisí wallet, particularly among women and rural users.
- Develop and launch a holistic product and go-to-market strategy to scale Génesis Efectivo, their revolving digital credit line.
- Expand and optimize Génesis’ agricultural products and program for smallholder farmers, including the integration of best practices to adapt to climate change.
- Reimagine a customer-centric digitized group lending methodology to better support clients at the base of the pyramid.
This work will ultimately help increase access to high-quality digital financial services, improve economic opportunity for MSMEs and smallholder farmers, and build all Guatemalans’ resilience to economic and environmental shocks. Génesis is uniquely positioned to address complex challenges to financial inclusion in Guatemala. With the support of the Mastercard Center for Inclusive Growth and Accion, Fundación Génesis Empresarial can continue to deliver on its mission to promote the social and economic development of its clients.
Malavika Krishnan contributed to this article.