Financial services aren’t just for the wealthy. The micro-financing industry was born 20-30 years ago, providing access to services we take for granted to lower-income clients; and during the recent downturn, when income streams are lower and less predictable, these services have been vital in Latin America.

The New Economy: What is the roles of the micro-financing industry in the economic landscape that we have now, post down turn?

Carlos Danel: Post the down turn the role of the micro-finance industry is actually more important than ever. I think in the core what the micro-finance industry is doing is financial inclusion. In the developing world what you see is a financial sector that is in a way incomplete. We seem to think that financial services are only for the top segment of the socio-economic pyramid, where in fact the products and services that a lot of us take for granted are also products and services that the lower ends of the pyramid can actually benefit from. What the actual micro-finance industry is doing is financial inclusion. So providing financial services for low income clients and in that way bringing them into the financial sector with products that enable them to save, or to have credit when they need it for different purposes, or to cover some risks like insurance or so on. In a down turn where people not only go through a period where their income streams are probably lower, but also more infrequent or less predictable, I think access for financial serves and financial inclusion play a bigger role than ever. I think it is an industry that was born some 20/30 years ago but now as we come into this down turn I think the role of it, being it now not a mature industry but an up and coming industry, is bigger than ever.

The New Economy: You are Co-founder of Banco Compartamos, one of the largest micro-finance institutions in Latin America. What would you say is your organisations mission?

Carlos Danel: I would say our mission in Compartamos is actually to provide opportunities of development for low income house-holds in Mexico through innovative large scale models that enhance peoples lives. Back in the early 1990s when we were founding Compartamos we thought that our intervention by providing financial services to our clients would in fact drastically and absolutely change peoples lives. We still believe that access to financial services is something that provides great wealth and great value to the clients lives but slowly what we have come to realise is that what we are bringing to the table is no more than a tool. It is a tool that enables them to manage better there cash flow or cover the risks. It is the clients that actually do the work, it is the clients that take that tool and take it to a different level. The results of the micro-finance, or the impact that the micro-finace industries having on clients lives sometimes varies. On average I think they bring a lot of value to providing these tools to these clients. Some people will do better and some people will do not as well, but having access to financial services is an opportunity for them to take on their own lives and to add value to them. We started out talking a lot about a solution to poverty or poverty alleviation in the communities that we work at. I think today most people in the industry realise that yes micro-finance does important things and provides important tools for those house-holds, but there are a lot of other things that need to come into play to really have an impact on poverty. Access to good quality health services, infrastructure, housing, education, all of that is part of all the tools that are needed in the developing world for the low incomes communities and these low income families to improve their livelihoods. So financial services is just a part of it and as an industry we need to make sure that we know exactly what it is that we do for the clients and what kind of impact we have on them but clearly the promise of the silver bullet, if you will, to end poverty is not what micro-finance is about. Micro-finance is really about financial inclusion and giving the tools to those clients for them to change their own lives.

The New Economy: The IPO was a major land mark for Compartamos, what makes it a sustainable institution though long term?

Carlos Danel: Long term when Compartamos thinks about sustainability we think about continually adding value to all of our stakeholders. So first and foremost the clients, the house-holds that we serve and the communities where we serve them. We need to make sure that to be sustainable through time our products are products that they can benefit from. One of the things that is clearly a condition in any up and coming industry is that at first we are very concerned about how we can provide these products and services to the people that we serve. It is a supply driven industry. We are now into a period in which we are trying to look more in details exactly what it is about our products that works best with these families. Then we can provide them with good tools, good products, good quality low price, good access. In that sense just keep giving them options and tools of products and services that can help them manage their cash flows and their risk. First and foremost is adding value to those clients and also to the communities that we work with. When a bank like Compartamos or any other micro-finance institution comes into a low income community, we want to make sure that the whole community and not just the clients that we are tending to benefit from that. Access to financial services should then have an impact in the whole community. Second of all, also adding value to the staff. Compartamos as of today has almost 10,000 people working full time and these are people that are walking the streets, in the house-holds and in the market places where we do our business and with the people that we serve. We also want to provide an opportunity for those people working within the bank to become better people, to become better individuals and better professionals. For many years we have been named one of the top companies to work for, last year we were voted the best company to work for in Mexico. So thirdly, value to also the stakeholders of investors. We want to provide investors an opportunity to invest in a profitable, sound, growing micro-finance institution and industry in a way that they themselves can also explicitly target not only financial goals but also social goals in what they are doing. Long term sustainability for us is really providing long term value for our stakeholders within our community and within our company.