Empowering Entrepreneurs: A New Approach to Financial Inclusion in Santa Marta

In a bold move to foster local entrepreneurship and combat predatory lending practices, Santa Marta’s Mayor’s Office, under the leadership of Mayor Carlos Pinedo Cuello, has forged a strategic alliance with the Fundación Tras la Perla (carlos Vives Foundation) and Monet, a digital microcredit platform. This collaboration aims to provide accessible, secure, and rapid credit solutions to micro-businesses throughout the city, directly challenging the pervasive and harmful “daily pay” (gota a gota) system.

“That Your Daily Earnings Aren’t Drained Away”: The Strategy Behind the Initiative

Spearheaded by the Ministry of Economic Development and Competitiveness, the initiative, aptly named “Que tu diario no sea el pagaré” (That your daily earnings aren’t drained away), focuses on extending formal credit access to entrepreneurs and informal sector workers who have historically been excluded from customary financial systems. The program offers microloans ranging from $50,000 to $500,000 Colombian pesos, completely interest-free, with near-instant disbursement, 30-day repayment terms, and no credit score restrictions.

From the district management we are committed to eradicating practices such as ‘drop by drop’, which directly hit the economy of Samaria families. This alliance with Monet is an possibility for our entrepreneurs to access working capital quickly, safely and without abusive conditions.
Carlos Jaramillo Ríos, Secretary of Economic Development and Competitiveness

Eligibility and Intended Use of Funds

The microloans are available to adults with a minimum monthly income of $1,000,000 Colombian pesos who possess a bank account or digital payment options like Nequi or Daviplata. These funds can be used for essential business expenses such as utilities, transportation, food, and the procurement of business supplies.

The Stark Reality of Microcredit Access in Santa Marta

Recent data from the Secretariat’s financial inclusion report paints a concerning picture: 42% of Santa Marta’s micro-businesses avoid seeking credit due to fear of debt, while 33% report failing to meet the stringent requirements of traditional financial institutions. Consequently, only 8,241 micro-businesses in the city have successfully accessed formal credit, a substantially lower number compared to cities like Cartagena, which boasts over 11,600.

Monet’s Viewpoint: Unlocking Entrepreneurial Potential

Juan Pablo Salazar, Growth Manager at Monet, emphasizes the untapped potential within Santa Marta’s entrepreneurial community. He states that the partnership with the Ministry of Economic Development, the Mayor’s Office, and the Fundación Tras la Perla is forging a genuine alternative to predatory lending, characterized by inclusion, speed, and fair terms.

In Santa Marta there is enormous potential for entrepreneurs to free from ‘drop by drop’. Together with the Ministry of Economic Development, the Mayor’s Office of Santa Marta and after the pearl we are generating a real alternative, with inclusion, speed and without abusive interests.
Juan Pablo Salazar, Growth Manager at Monet

The National Crisis of “Gota a Gota” Lending

Nationwide, the “gota a gota” system is estimated to move between 2.5 and 3 billion Colombian pesos daily, translating to approximately 1.1 trillion pesos annually, according to figures from entities like Connecta. This predatory lending practice disproportionately affects vulnerable populations, posing not only financial risks but also jeopardizing the safety and well-being of communities. These informal lenders frequently enough charge exorbitant interest rates and resort to violence to collect debts.

Such as, a small business owner might borrow $100,000 pesos and be forced to repay $110,000 pesos the very next day, effectively paying a 10% interest rate daily. This cycle of debt can quickly spiral out of control, trapping individuals and families in poverty.

building on Success: Lessons from Bogotá

This initiative draws inspiration from prosperous implementations in cities like Bogotá, where similar alliances have enabled over 23,800 entrepreneurs to access credit. mayor Pinedo’s commitment to inclusive economic development and the formalization of independent work underscores the importance of this program for Santa Marta.

A Commitment to a Fairer Economy

With this initiative, the Mayor’s Office of Santa Marta reaffirms its dedication to creating a more just, equitable, and secure economy for all its citizens, providing tangible tools that empower entrepreneurship and reduce reliance on exploitative informal financing schemes. The program represents a notable step towards financial inclusion and economic empowerment for the people of Santa Marta.