USAID assistance to the Government of Colombia (GOC)
USAID has provided technical assistance to the GOC through the Banca de Oportunidades program to expand financial services for under-served groups in isolated regions. USAID provided assistance to the GOC to strengthen financial policy reform and extends training to banks, credit unions and non-governmental institutions (NGOs) to establish and expand micro credit, savings, insurance, and other services through the formal financial system.
The program has made important adjustments to the regulatory framework to foster development of the microfinance sector. Successes include exempting low-balance accounts (under 7,800,000 COP, about $3,900) from the “4 by 1000” fee on all transactions, and allowing the Financial Superintendency to allow different interest rates so that financial institutions can broaden their products to reach new targeted populations. Other key reforms include authorizing and regulating non-banking correspondents.
The program, which started out with five pilots in early 2007, grew to incorporate 24 institutions by the end of the year, including the largest commercial banks, major credit unions and microfinance NGOs. The program works in 48 municipalities that previously had no access to financial services, nearly 100 municipalities with significant displaced populations (in Antioquia, Tolima, and Valle del Cauca), and 58 majority Afro-Colombian municipalities in areas such as Chocó and Bolivar.
In October 2009, when USAID assistance to the Banca de las Oportunidades ended, the program had reached 470,000 active clients, including 95,000 Afro-Colombians, 308,000 women, and 23,000 rural poor. 216,000 new credits were disbursed and 142,000 saving accounts were active. A total of 5,300 new non-banking correspondents were established in remote areas of the country.
Mobile Banking in Colombia
In 2007 the Colombian banking system started providing mobile banking services. About half of the 24 commercial banks in Colombia are utilizing mobile banking to expand access to financial services in urban areas, with more than 9 million transactions during the last three years. The three main cell phone companies in Colombia (Comcel, Movistar and Tigo) are currently providing these services to the banks.
A pilot program for rural mobile banking has been implemented by Banco de Bogota, the Coffee Growers Federation and Movistar in the departments of Santander, Caldas and Risaralda. It has reached more than 300,000 small rural producers.
Currently, Colombia faces one of the highest costs of mobilizing cash in the world, which increases the cost of servicing rural areas and the poor. This situation has limited the expansion of financial networks and made the cost of mobilizing savings and lending to the poor extremely high.
In order to address this problem, USAID led a visit of high-level Colombian government officials and private sector representatives to the Philippines in November 2008. There, they learned about the USAID supported G-Cash experience which has effectively combined microfinance and mobile banking. Lessons learned from this visit have already been used to adopt emergency decrees aimed at improving access to savings and electronic transactions for poor people affected by Ponzi schemes in the southern part of Colombia.
The Financial Superintendency has expressed interest in expanding mobile banking technologies to reach the rural poor, however no policy actions have been taken thus far.