Almost three years after its approval, the Microfinance Law in Guatemala still does not have a regulation defining the way in which institutions dedicated to this activity should operate.
The Microfinance Law approved in May 2016, is still waiting for the regulations that will allow its full application. This situation prevents entities seeking to operate in this activity from registering with the Ministry of Economy, since there is no regulation determining how to do so.
A warning has been given that 44% of microfinance clients are overindebted and that a change is required in the regulation in order to reverse the situation.
A study prepared by Grupo Analítica, SA for the Network of Microfinance Institutions of Guatemala (Redimif) said that the main problem behind the high level of indebtedness is the poverty that affects most of the debtors, many of whom live in the poorest departments, such as Totonicapan, Suchitepequez, Quetzaltenango, Zacapa and Sacatepéquez.
The catagories that will be awarded prizes are agriculture, the service industry, handicrafts, trade and production.
The Citi Foundation and the Network of Microfinance Institutions will award the " Premio Citi a la Microempresa Guatemala 2011", which aims to encourage the growth of microenterprises in the country.
An article in Elperiodico.com.gt states: "the evaluation will take into account all micro businesses whose sales do not exceed $32 thousand per year and do not have credit with more than 2 microfinance institutions. The date for submission of proposals begins on 11 August and closes the 16th of August, the awards will be held on October 27."
A law regulating the microfinance market would open the opportunity to capture savings that currently can only be done through cooperatives and banks.
The article by Byron Dardón in Capital.com.pa, reports that the bill on microfinance is expected this year and has the support of the Financial Inclusion Program of the Treasury of the United States, which promotes the adoption in Latin American countries of market governing rules.
One of the main obstacles to the development of microcredit institutions in the region is the lack of a legal framework to integrate them in to the formal financial system.
Reynold Walter, president of the Microfinance Network of Central America (Redimif) and who inaugurated the sixth edition of the Central American Microfinance Conference yesterday, commented that, except for Honduras, no other country has a legal framework for that sector.
Despite a less favorable macro-economic environment, the credit portfolio of the micro-finance sector in Central America grew 28% in 2007 in comparison to the previous year.
Reynold Walter, president of the Central American Network of Micro-Finance Institutions (Redcamif), reported that in 2007 some 99 micro-finance institutions from Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica and Panama granted loans worth US$676.6 million to 814,344 micro-businesses.
Starting next Wednesday, August 27, the IV Conference of Central American Microfinance Institutions will be held in Guatemala City.
The event will be held under the theme "Competitive Microfinance with Social Impact" and will finish on Friday, August 29. It is being organized by the Central American Network of Microfinance Institutions (Redcamif) and the Microfinance Institution Network of Guatemala (Redimif).