Productive financing, or financial products and services granted for the development of entrepreneurs who have no access to the conventional financial system, is the most effective way to fight poverty and inequality, said Manuel Méndez del Río, president of the BBVA Microfinance Foundation, during a conference this week.
During the conference, hosted and co-sponsored by the Universidad del Este, the executive noted that the tools offered to that segment of the population are an “effective, sustainable and ethical development engine for the most disadvantaged people in society.”
In his presentation, Méndez del Río said “although these last 200 years have been the period of greatest development of humanity, we now live in a world with a high level of poverty and inequality, where 3.9 billion people are poor. Nearly two in three people in the world are poor, according to the standards of the developed world.”
Since 2011, the poverty rate in Latin America has remained stagnant at around 28 percent, with 167 million people living in those conditions. Of those, 43 percent are in extreme poverty, he said.
“In the case of Puerto Rico, its poverty rate almost doubles that of Latin America and Mississippi, the poorest state in the United States. As for the levels of inequality, Latin America remains the most unequal region, and only Guatemala and Honduras are more unequal than Puerto Rico in the region,” Méndez del Río said.
Part of creating better opportunities for the disadvantaged segment of the population requires fueling the birth of businesses that in turn spur jobs, Méndez del Río said.
“The engine for development of countries is the creation of companies that, in turn, create jobs. Since poverty and inequality are at the base of the pyramid, we must create businesses and jobs at the base, where it is concentrated and the situation is perpetuated,” he said.
At the local level, Microfinanzas de Puerto Rico — a nonprofit dedicated to supporting entrepreneurs — has teamed up with the Universidad del Este and its parent, the Ana G. Méndez University System, to strengthen the development of the micro-entrepreneur ecosystem at the college level. The agreement was signed last year and consists of educational workshops throughout the university system.
“Entrepreneurship in Puerto Rico increasingly takes more force in light of the challenges of the local economy,” said Annette Montoto, president of Microfinanzas Puerto Rico. “Our mission is to provide advice and financial solutions so that people can grow and strengthen their business in a sustainable manner and achieve better quality of life.”