80% of mypes go to usurers to finance themselves

by time news

Most people loan $1,000 to loan sharks, even up to 48 times a year. / DEM

80.9% of micro and small businesses are financed through loans from usurers, according to a study by the Salvadoran Public Opinion Research Center (CIOPS), of the Technological University of El Salvador (UTEC).

The document is part of a survey applied to a sample of 1,100 businessmen. The results indicate that in 2019, 99.3% of merchants opted for usury as financial support, a figure that decreased almost three years later.

However, the director of CIOPS, Francisco Armando Zepeda, explained that this did not mean something encouraging, since the numbers are still worrying.

“There are some inferences that we can make, in order to justify this drop, the main cause of that difference, we believe, was due to the covid-19 pandemic,” he pointed out.

The report points out that in order to make formal credit banking more attractive, regulation is necessary to reduce the requirements of informal merchants to “finance their operations.”

The CIOPS director explained that the range of loans was reduced, as it went from $750 million in 2019 to $650 million in 2022.

While interest rates went from 2,626.1% in 2019 to 1,869.4% for 2022.

TO THE

TO THE

Zepeda stated that current interest rates are 22 times higher than the rate approved by the Central Reserve Bank (BCR) for this year, which is around 82.8%.

“Then it is a serious problem, it is a very serious problem, because this limits the growth of our entrepreneurs,” the director stressed.

The research also indicates that the pandemic generated a change in the search for informal credit, in 2019, 82% of those surveyed were visited at their jobs or businesses to offer them a loan; however, by 2022, 62% of the sample recognized that they themselves sought financing with the usurer.

However, at the time of collection, it is still carried out mostly on a daily basis, and it is the usurer who visits the merchant’s workplace or “cash pickup” is made (an option that was not mentioned in 2019) .

Formal sector gains ground.

Despite everything, the formal sector such as banks, cooperatives, savings and credit associations, among others, increased their demand by 5.9% in 2022, when compared to data from 2019.

“They are going in greater numbers to the formal banking system, cooperatives, workers’ banks, so that is a small improvement, all this has been affected by covid,” said the president of the Salvadoran Banking Association (Abansa), Raúl Cardenal .

You may also like

Leave a Comment