Finance: micro is big
Friday, May 23, 2014
Central America is becoming an attractive market for microfinance and microinsurance.
In the fourth quarter last year, microfinance companies reported a 7.4 percent growth in assets compared to the previous quarter, according to Redcamif.
Honduras and Nicaragua led with a 7.7 and 7.2 percent growth rate in the period, respectively, while Costa Rica and Panama reported the lowest figures, between 1 and 2 percent.
In the case of Panama, the main challenges for the sector are a lack of distribution channels and long authorization processes.
The microinsurance sector is attracting customers in the region, due to its low costs.
Companies offer customers a range of policies including life, accident, hospitalization, education and even food.
Traditional insurance policies are expensive and complicated, said Fernando Guzmán, president of the Nicaraguan association for micfofinance companies, Asomif.
Microinsurance policies cost as little as $5 a month.
This year, seven microinsurance companies will enter the Nicaraguan market, authorities said.
The Central American Bank for Economic Integration, along with the Central American Katalysis network, last November agreed to provide free technical support to companies in the sector.
The microfinance companies could lend to energy-efficiency programs for small and medium enterprises, bank president Nick Rischbieth said.