Riesgos y Problemas que Condicionan el Exito de los Programas de Credito a Microempresas

This paper argues that although private development organizations (PDOs) present comparative advantages over government agencies to reach microenterprises, it is not clear that they will efficiently channel credit to microenterprises in developing countries. The success of PDOs as lending institutions will depend on the ability of these organizations to reduce loan default losses and high operational costs and to protect their loan portfolios from inflation. PDOs that behave as lending institutions and not as philanthropic agencies will have more chances to succeed. What is needed are PDOs using risk-reducing technologies, charging interest rates that allow them to cover their operational costs and losses from inflation, and capable of mobilizing most of their own funds. The paper argues that the success of microenterprise credit programs will also be limited by risks and problems created by institutional deficiencies, such as imperfections in land, insurance, and product markets, incomplete legal and informational systems, ill-defined property rights, financial regulations, and the like