China: Latin America Share Experience in Funding for the Poor

Aug 2016
China, August, 26 2016 - Finance for equality. A Chinese and Latin American micro-finance summit has started in Beijing. Here, delegates aim to find ways to use credit to improve lives.

The meeting of officials, experts, and business people revolves around making financial services more accessible.

In particular, the summit's main concern is how to push banks to lend more to the poor.

Chinese officials said their country's central bank plans to put financial inclusion as one of its priorities.

"In the future, the central bank will make micro-finance and inclusive finance part of reform measures for the financial sector. We will guide more businesses into these efforts, and let more people feel the benefits of financial services," said Chen Yulu, Deputy Governor, The People's Bank of China.

Latin American experts echoed the trend to put clients' interests before financial agencies' profits.

"In the last years, we are observing another trend, which is financial inclusion, with the focus not the institution in the profitability and sustainability, but the focus in the interest is the welfare of the client. Their life are better off by having access to finance," said Thomas Miller, Chief of Resource Management, Inter-American Development Bank.

The three-day meeting is sponsored by banking regulators and anti-poverty agencies from China and Latin America.

Policymakers agreed that lending to low-income earners was not charity, but a sustainable business.

One Chinese executive shared his experience in this area.

"You could look for real businesses for farmers, lend money to them, and link their businesses with large manufacturers. For instance, farmers can raise chickens, or plant trees, and pay off the loans by selling their produce," said Wu Weixiong, Chair, Hainan Rural Credit Union.

Offering financial services to the poor is not only viable business, but, as one Chinese expert said, is key to closing the gap between the haves and the have-nots.

"These people do not need a lot of money, but their population is huge," said Liu Dongwen, General Manager, CFPA Microfinance MGM'T.

"If financial agencies only serve rich people and shut out the poor, then the gap between the rich and poor will increase. This will threaten social stability and long-term development."

Liu said the major challenge is designing financial services for poorer people, who are usually locked out of the conventional banking system.

And it takes all-around reforms by the government and the lenders to finish the job. Every country aims to share prosperity equally, and leaders at the G20 summit early next month are also expected to keep inclusive finance on the agenda.


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