The National Corporation for People’s and Solidarity Financing (CONAFIPS) becomes a guarantor for micro, small and medium-sized entrepreneurs through second-tier loans in alliance with savings and credit cooperatives and mutuals.

CONAFIPS is a public financial institution; a second-tier bank, i.e. it does not operate directly with loan beneficiaries, but places loans through other financial institutions.

“We provide loans to savings and credit cooperatives and mutual societies in order to turn these funds into productive microcredits to strengthen the popular and solidarity economy,” explained Roberto Romero, president of the CONAFIPS Board of Directors.

Within this sector, the institution has two main goals. The first is the strengthening of micro, small and medium enterprises in the country, from all economic sectors, both in production, trade and services. The second is to encourage financial inclusion. “That is why, from 2021 to date, we have managed more than 1,000 million dollars through cooperatives that have been converted into productive loans,” said the head of CONAFIPS.

Resources managed by CONAFIPS for cooperatives must be allocated exclusively to productive activities, trade, production and services, in an inclusive manner for men, women, young people and the elderly in the rural and urban sectors.

“In the rural sector, at the moment we note that 40% of our business is in this area, supporting agriculture, farming, fish farming, fishing and all these production sectors,” said the Chairman of the Board of Directors.

In addition, the entity has a product that helps financial inclusion called FOGEPS (Guarantee Fund for Popular and Solidarity Economy), which covers two important lines: one focused on investment guarantees between organizations in the popular financial sector and solidarity, and the other to support credit guarantees.

The first aims to mobilize resources between the organizations of the popular and solidarity financial system as a mechanism of economic integration, and the second is to support those who do not have guarantors or collateral to request a loan.

Romero emphasized that “FOGEPS allows us as a financial institution to become guarantors of solidarity so that the cooperative can grant productive loans to its members, who use these resources to develop their economic activities and create more jobs and more opportunities.”

As part of the topic of financial inclusion, the institution has the Violet Credit product, with which six of every ten loans approved with CONAFIPS funds are in the hands of female entrepreneurs.

Productive loans given to young entrepreneurs, with funds from CONAFIPS, consider financial inclusion and represent 30% of first-level credit operations.

“It is interesting that even young entrepreneurs, between the ages of 18 and 29, can get access to these loans through the guarantee fund, which allows us to be joint guarantors. When they don’t have their own collateral, CONAFIPS trusts them so that they can have access to production credits and that way the cooperative can deliver the credit,” Romero emphasized.

The first condition for members of the cooperative to access the guarantee fund is to belong to one of these institutions; By October of last year, there were 451 of them in Ecuador, because it is the cooperative that is looking for these resources to be able to put them in the hands of its members.

The corporation receives its funds through the funds of multilateral organizations, such as the Inter-American Development Bank (IDB), the Development Bank of Latin America (CAF), the French Development Agency (AFD), the European Investment Bank and several international institutions.

Romero pointed out: “Each institution that finances us has audit teams that confirm on the territory that these resources are really within the goal of developing productive activities of the popular and solidarity economy.”

According to the official, the popular and solidarity economy, despite the pandemic and multiple international situations affecting countries’ economies, “grew in an interesting way, for example, in the number of partners; “There are currently seven million Ecuadorians who are members of cooperatives.”

This represents 56% of the country’s adult population, and the assets of this sector represent 22% of the gross domestic product of all of Ecuador. In addition, 80% of work and employment in the country is created here.