Since they were first created during the 1970s, microcredit institutions have shown themselves to be an efficient tool for combating social and economic exclusion. Nevertheless, as the World Bank has indicated, the current global financial crisis will create 53 million more poor people, which will put the microfinance sector to a test. Prospéritas, a microfinance institution whose goal is to offer small loans to the low-income population of Colombia, emerged in this context, and it won first prize in the IE Business School’s 2008 entrepreneurship competition.
At the moment, there are more than 5.3 million micro-enterprises in Colombia. The potential market for microfinance is served by only 16 institutions that address 17.9% of the total demand. Prospéritas estimates that the business opportunity is as much as US$5.4 billion. Universia-Knowledge@Wharton spoke with two members of the Prospéritas team -- Marcela Torres of Colombia and Tomás Baylac of Argentina -- about the birth of the company and how microfinance is faring in these difficult times.
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