Top Bolivian Microbank Bought by Venezuelan Government?

Print
 
Dec 2006
Bolivia , December, 14 2006 - The Bolivian microfinance world is in turmoil because Prodem, #3 in the country’s microfinance market, has apparently been sold to the Venezuelan government. Prodem has not revealed who the buyer is, they have so far only confirmed that they will be acquired by a foreign investor. But the word is that this investor is an entity owned by the Venezuelan government.

It’s a smart move by Venezuelan President Hugo Chavez, at least in the short term. With Prodem he gains access to a far-flung branch network that covers even remote areas of Bolivia. Prodem is Bolivia’s 3rd largest MFI with a portfolio of $123 million equivalent at the end of September 2006 and 77,000 outstanding loans. Presumably this will give Venezuela an opportunity to demonstrate the blessings of the Bolivarian revolution to the Bolivian poor. A Venezuelan official has been quoted as saying that Prodem will make loans at “single digit interest rates”.

It is worth noting that the attempts of the Chavez government to make cheap microfinance available in Venezuela have not been a success. Banco del Pueblo and Banco de la Mujer have reportedly been spectacular failures. But these were attempts to build new institutions in Venezuela, where very little experience with microfinance exists. Prodem by contrast offers a large existing microfinance infrastructure, which should allow the new owner to reach large numbers of people with relative ease. Heavily subsidized loans distributed through Prodem could well be wildly popular for a while, ‘till borrowers decide – as they usually do when they smell politics – that it’s not worth their while to pay back these loans.

But all of this is speculation. All we know for certain (because Prodem has confirmed it) is that Prodem has agreed to sell itself to a foreign buyer. Everybody in Bolivia claims to “know” that that buyer is the Venezuelan government through one of the banks it owns. But there are different versions about who is the buyer. Both Banco Industrial de Venezuela and BANDES have been mentioned.



 

Research Analysis Tools

The fund indexes, institution benchmarks and other market information displayed here are all Symbiotics designed analysis tools, created in-house by our analysts and experts. Symbiotics has one of the oldest track records in microfinance investment analysis dating back to the late 1990s; its indexes and benchmarks have been regularly used as markers by investors, asset managers, financial institutions and practitioners. These, as well as several other research products, are available through the Research Account. Click on the link below to find out more.

Learn More