Microcredit as a way out of the labor crisis

For

Raphael Valera

Director of Wenance

As in other times of crisis, the use of developmental individual finances can contribute to the reactivation of the economy. In the pandemic, fintech covered the needs of sectors most in need and showed their full potential.

How can personal credit help in the transition towards the development of your own business or formal employment?

No doubt, Increasing labor formality is the best tool to break down barriers that slow growth both personally and economically in general. However, improving structural conditions takes decades and strategic plans are aligned with a macro policy.

Concepts like microcredit, microfinance become more relevant when evaluated financial integration that coincides with the formality of labor. In this sense, part of the solution is real job creation or change assistance designed for extreme paid work situations and access to credit is an important tool.

Private credit has proven to be an ally to reactivate domestic consumption in the most critical situations such as 2001/2002. Thousands of ventures that are now companies, industrial or service SMEs, were born in the worst economic and financial debacle the country has ever gone through.

The volatility that the economy has shown, has a direct impact on access to the traditional banking system which, by reason of its own rigidity, leaves an important part of the pyramid; a sector that produces, consumes and has the capacity to build its own businesses, but there is no stability required by the “bank portfolio”.

The pandemic accelerated a growing trend in the financial business from the integration of technology. Ang triple the number of companiesnow there are more than 300, providing payment, collection and credit services, according to data from the Argentine Chamber of Fintech.

Unlike in 2001, when the crisis gradually erupted, in 2020, many businesses, industries and various service providers will have to lower their blinds from one day to the next. In that context, the dizzying response of the digital credit systemrepresents an unmistakable release.

From facilitating access to a personal mobility vehicle, a work tool, an appliance or a PC, the services ofbecause fintech has proven to be a great ally to sustain consumption. The trend has grown progressively and will continue because there is no need to access a physical branch; show documentation and financial guarantees to get money. Algorithms do their job at the speed of light, they allow a short -term business to be executed immediately.

Today, digital microcredit has gained great importance in Argentina as a mechanism to generate economic opportunities for a family, generating self-employment, which translates into greater predictability and better quality of life.

The development of microfinance, along with the evolution of the fintech ecosystem, is striving positive impact on economic growth. In a framework of adequate regulation and economic strengthening, this will contribute to an important aspect, the culture of repayment which at the same time is attractive to feed reinvestment and even attract new funds.