Migrant-backed Loans: Mobilizing Remittances in Guatemala
After Hours Seminar #50 featured Khalid Al-Naif and Raul Reynoso from the William Davidson Institute (WDI) at the University of Michigan who discussed the impacts and challenges of their pilot activity, "Mobilizing Remittances for Enterprise Finance." Saul Wolf from of World Council of Credit Unions (WOCCU) followed with a presentation on "Guatemala Unbanked Remittances." He discussed current strategic alliances and ongoing challenges in creating increased opportunities for remittance recipients.
Mobilizing Remittances for Enterprise Finance
According to The Microcredit Summit, “more than 106 million of the world’s poorest families received a microloan in 2007.” This achievement illustrates the fruit borne by decades of commitment to revolutionizing access to credit among the world’s micro, small and medium enterprises (MSMEs). Despite this growth, access to capital remains one of the biggest constraints on the ability of MSMEs, as well as the lending institutions that serve them, to expand their businesses.
Through a public-private partnership, the "Migrant-Backed Loans: Mobilizing Remittances for Enterprise Finance Innovation" pilot aimed to provide migrants with a financial tool through which they could secure loans in their home country, as well as expand the overall outreach of lending institutions. Under the FIELD-Support LWA, the William Davidson Institute (WDI) at the University of Michigan partnered with the Microfinance International Corporation (MFIC) and ACREDICOM to design, test and market a migrant-backed loan product that targeted Guatemalan migrants residing in the United States. Through this project, migrants had a portion of their remittances deposited into a personal savings account, and they were able to use portions of the account as collateral, which MFIC and ACREDICOM then lent to borrowers as identified by the migrant and approved by the bank.
Guatemala Unbanked Remittances
The importance of remittances to the people, communities and economies of developing countries—a $400 billion industry—has long been recognized, fueling an intense interest in how to best harness these money transfers to promote local economic development and reduce poverty. In recent years, WOCCU's pilot activities in Guatemala, managed by the FIELD-Support LWA, have focused on exploring ways to integrate remittance recipients into the formal financial system and provide them with access to affordable financial products to manage and grow their money and increase overall economic security.
Saul Wolf, WOCCU's Remittances Manager, will take a look back at what was learned from the WOCCU “Integrating Remittance Recipients into the Financial Sector” pilot implemented in partnership with the Guatemalan National Credit Union Federation (FENACOAC, currently known as MICOOPE). Building on these lessons, Wolf will then discuss WOCCU's current strategic alliances and products, as well as ongoing challenges in creating increased opportunities for remittance recipients.
Greenroom Interviews: Key Takeaways
Khalid Al-Naif is the Director of Development Consulting Services at the William Davidson Institute at the University of Michigan. With over 27 years experience, Al-Naif is a business executive specializing in the design and implementation of international development projects, programs and initiatives, and has wide-ranging experience in foreign direct trade and investment promotion, macroeconomic policy reform, Public-Private Partnerships, and marketing. In banking, Al-Naif managed a business development portfolio that exceeded $4 billion in the United States, Europe, Middle East and Asia Pacific regions. He subsequently managed a diverse and cross-cutting USAID economic development portfolio that exceeded $1.5 billion over a period of 16 years.
Raul Reynoso is an experienced consulting professional with extensive experience implementing international development projects. Reynoso was the Project Manager for William Davidson Institute’s Guatemala Migrant Backed Loans Project. His Masters degree in Latin American Studies and grasp of the social and political dynamics of the region served him well in this role. Before joining WDI, Reynoso worked for the Julian Samora Research Institute focusing on remittance flows and transnational labor. Raul has also worked as a policy consultant, information technology consultant, and has studied the IT strategies employed by Latin American businesses. Raul received his B.A. from the University of California, Berkeley. He also holds a Masters in Public Policy from the University of California, Berkeley. His Masters in Latin American Studies was earned at the University of California, Santa Barbara.
Saul Wolf is Remittances Manager at the World Council of Credit Unions (WOCCU). WOCCU is the global trade association and development agency for credit unions worldwide and has offered remittance products since 2001. Currently, WOCCU’s remittance networks in nine countries (primarily in Latin America) collectively send and pay out just under $500 million in remittances annually. Wolf works to connect quality, low-cost money transfer firms to credit unions, financial cooperatives, and other microfinance entities by providing the technology, representation and knowledge necessary to develop sustainable business relationships. Wolf holds a Juris Doctorate and Master of Public Affairs from the University of Wisconsin-Madison, a B.A. in Spanish and Philosophy from Saint John's University, and is a member of the Wisconsin State Bar.