Microfinance Hailed As Top Initiative of 2005

Microfinance Hailed As Top Initiative of 2005

- Grupo Salinas Setting Global Standards in Microfinance with Innovative Programs -

MEXICO CITY, Dec. 19 /PRNewswire/ -- In a year of natural disasters and the continuing need for economic growth the world over, microfinancing is poised to address global social and financial concerns, according to Grupo Salinas, a Mexican leader in microfinance initiatives.

As evidenced by the growing number of politicians, economists and business leaders who have identified microfinance as an effective means to create opportunities for millions, the United Nations declared 2005 "The Year of Microcredit." Additionally, over the last 12 months a score of conferences around the world have focused on an array of microfinance topics. As 2005 comes to a close, the focus on microfinance shows no signs of slowing.

One of the most telling examples that illustrated the power of microfinance in 2005 was the creation of two major funds to support such economic initiatives around the world. In November, eBay founder Pierre Omidyar donated US$100 million to develop market-based solutions to global poverty. In addition, former U.S. President Bill Clinton launched a microfinance fund valued at US$75 million last month that draws on capital from several charities, government-sponsored development agencies, and multinational companies, including Deutsche Bank, Britain's Co-operative Bank, Hewlett-Packard, and Merrill Lynch.

In 2005, microfinancing also emerged as a viable solution to help rebuild communities that were destroyed by natural disasters. From the hurricane- ravaged areas of Mexico and the United States, to the towns and villages crippled by the tsunami in Asia, to the earthquake victims in Pakistan, microfinancing models have the ability to powerfully augment government assistance and other aid programs.

At its core, microfinancing is focused on the local level and creates entrepreneurs who, in turn, create jobs in their communities. This model allows for sustainable development in societies and countries -- and pays dividends at every step of the process.

In Mexico, Grupo Salinas has built "Azteca Entrepreneur," an active microfinancing program that offers loans through its financial arm, Banco Azteca, of up to US$3,000 each with terms that expand from 13 to 104 weeks. Loans do not require future entrepreneurs to present the same credit guarantees that commercial banks do, and, as a non-traditional commercial bank, Banco Azteca encourages the trust of the people who normally would not go to a bank at all.

Nevertheless, microfinance is not only about credit. Grupo Salinas, through Banco Azteca, also offers savings accounts that can be opened with only five dollars, basic insurance for the masses, and entrepreneurial support, ranging from medical coverage to free training on "How to Start Your Own Business."

Successful microcredit is about good credit quality, and Grupo Salinas has well established systems that allow it to effectively monitor and manage credit risk for small denomination loans on a weekly basis. Grupo Salinas is also a founding partner of Circulo de Credito, the only credit information bureau focused on the mass market, opening the door of this under-served segment of the population to other financial institutions.

"The private sector, including organizations like Grupo Salinas, needs to take the lead in microfinance initiatives and not let all of the burden fall on government and charitable organizations," Ricardo B. Salinas, Chairman and Founder of Grupo Salinas, said. "Through the combination of our Elektra stores and Banco Azteca, Grupo Salinas opens 50,000 new savings accounts every week and grants 80,000 new loans that average US$254 each to working-class individuals, a very important accomplishment considering that 70 percent of the population in Mexico is under-banked."

Through these and other efforts, microfinance initiatives in Mexico have grown substantially and continue to lift the barriers faced by small businesses, a key driver of the business sector. According to the Inter-American Development Bank (IADB), 40 percent of the Gross Domestic Product (GDP) in Latin American nations comes from microbusinesses, and the IADB expects this figure to rise in 2006. As Banco Azteca expands into Latin America, their microfinancing services will offer similar opportunities in a number of countries.

"Microloans enable the poor to lift themselves out of poverty through entrepreneurship," Mr. Omidyar said in a Financial Times story last month. "The microfinance industry has shown that enabling the poor to empower themselves economically can be a profitable business."

Beyond the aid governments can provide for small entrepreneurs, the private sector is emerging as a source of financial sustenance to developing areas of the world. The rising status of microfinance, along with its increasing popularity in the developing world, makes it an unstoppable global trend. 2006 will bring unpredictable and unforeseen natural, economic and political circumstances in which microfinance will undoubtedly play a role.

Grupo Salinas Profile

Grupo Salinas is a group of dynamic, fast-growing, and technologically advanced companies focused on creating shareholder value, building the Mexican middle class, and improving society through excellence. Created by Mexican entrepreneur Ricardo B. Salinas, Grupo Salinas operates as a management development and decision forum for the top leaders of member companies: TV Azteca, Azteca America, Grupo Elektra, Banco Azteca, Afore Azteca, Seguros Azteca, Circulo de Credito, Unefon, Iusacell, Movil@ccess, Todito.com and Telecosmo. Each of the Grupo Salinas companies operates independently, with its own management, board of directors and shareholders. Grupo Salinas has no equity holdings. However, member companies share a common vision, values and strategies for achieving rapid growth, superior results and world-class performance.

Source: Grupo Salinas

CONTACT: Media, Tristan Canales, Corporate Communications,
+011-5255-1720-1441, or tcanales@gruposalinas.com.mx, or Daniel McCosh,
International Communications, +011-5255-1720-0059, or
mccosh@gruposalinas.com.mx , both of Grupo Salinas; or Melissa Maslar, Levick
Strategic Communications, Press Liaison, +1-202-973-1336, or cell,
+1-202-276-0070, or mmaslar@levick.com

-------
Profile: intent