Sociedade de Credito Do Microemreendedor

completed

Established in 1998 as a joint venture between Fininvest and the municipality of Rio de Janeiro, today RioCred operates as an NGO. As of December 2000, it had approximately 1,400 active clients and an outstanding portfolio of US$770,000. The project consists of converting RioCred into an SCM (the Portuguese acronym for "Credit Corporation for Microentrepreneurs"), a financial institution regulated by the Brazilian Central Bank. Thereafter it will be called MicroInvest. In the process of incorporating RioCred into an SCM, Fininvest will acquire the participation of the municipality. Fininvest plans to revamp RioCred’s operations by drawing on its considerable experience in low income consumer lending. Fininvest sees IFC as a strategic partner which, more than providing financial resources, will help the company develop its business, by bringing to bear its worldwide exposure and network of contacts in the microfinance industry. More importantly, IFC will be supporting a microfinance institution whose main sponsor, Fininvest, is willing to approach microfinance as a sustainable business. Should this approach succeed in Brazil, others will certainly replicate it. Sustainable microfinance institutions, in turn, would bring to a different plateau the access to credit for a large number of microenterprises, which are an important engine of economic growth and social development in most emerging markets including Brazil. This project fits well with the World Bank country assistance strategy for Brazil (CAS, March 2000), as it represents an important step towards improving financial intermediation, providing sustainable financing mechanisms for small and medium sized enterprises (SMEs) and increasing income earning opportunities for the urban poor. It is also in line with the World Bank Group strategy for SMEs, which is underpinned on: expanding access to capital for SMEs; building capacity in the locally-based institutions that support SMEs; and improving the business enabling environment.