The Challenge

Mexico has been at the epicenter of microfinance news since the initial public offering (IPO) of Mexican microfinance institution (MFI) Banco Compartamos in 2007. One of the first of its kind, Compartamos put Mexico’s microfinance industry on the map. However, while Compartamos has enjoyed positive notoriety and Mexico on a global platform is considered an “advanced middle-income country” (World Bank, 2007), more than 14 million Mexicans continue to live in conditions described as extreme poverty by Secretary of Social Development, Beatriz Zavala Peniche in the fall of 2007. Mexico maintains steady economic performance, but poverty rates remain high, as does income inequality. Even though its 2002 to 2005 poverty-reduction trends were encouraging—particularly rural poverty—Mexico is still focused on reducing urban poverty and improving its social programs to provide better coverage for the working poor.


The Entrepreneur and the Solution

The Finsol group is focused on just this: providing financial services to the working poor as a means of working out of poverty. A microfinance institute in Mexico, Finsol is unique in that they don’t just provide micro-credit, they intend to be a one-stop-shop for their clients. Innovating the way that financial products and services are marketed to the working poor, Finsol is committed to offering a broad range of loan products including life insurance and remittances, savings, housing improvement loans, and other financial products. The sky is the limit for Finsol. Through innovative technology, Finsol is introducing new products across geographies in more efficient ways than ever before. Already exporting products and technologies developed and tested in Mexico to other partners in key markets throughout Latin America, they see opportunities for remittances and micro-insurance abroad and plan to continue reaching hard-to-access regions through wireless technology.

Edgardo Salomón Barredo, Director General of Finsol has more than 30 years of experience in international banking and stands out as someone who brings a rare combination of commercial and development expertise to microfinance. Edgardo is passionate about microenterprise as a proven and effective means to promote economic and social development. Highly professional in his approach, he demonstrates a unique vision of the microfinance industry and its potential. His vision has attracted some of the industry’s top performers to Finsol. A growing organization, Finsol has aggressive plans for its business and for its clients for whose potential is limitless with its support.

 
The X-Interview

Edgardo Salomón shares with Global X his secret to success:

1. "Capital is always available for good projects. The main problem is talent."

2. "There is no success without scale, and that's why networking is so important and that's where Unitus can help us."

3.  Don't rely on consultants!

The Challenge

There are an estimated 3.5 million people living under the national poverty line in Buenos Aires.  Only two percent of them have access to financial services. The economic crisis of the late 90’s left Argentina suffering the world’s largest debt default in history and massive currency devaluation. What had been a snowball of poverty and unemployment turned into an avalanche as more than half of Argentines fell below the official poverty line. The hardest struck were the middle class and urban poor, previously classified as middle-income.


The Entrepreneur and the Solution

One of the first of its kind in Argentina, FIS was established in 1999 to provide financial services to the working middle class and urban poor. Founded and led by Julian Costabile, FIS’s mission is to bring urgently needed microfinance to millions of Argentines lacking access to financial services. In contrast to Asian and African microfinance markets, there is still a significant need to educate Argentineans about the benefits of microfinance. The lack of a micro-entrepreneurial tradition in Argentina and widespread distrust in the financial system has been a barrier to its growth. However, it is FIS’s belief that through microfinance, business and the pursuit of social benefit can be combined.

Their goal, to empower poor micro-entrepreneurs to improve their own lives, has begun to gain traction.  Today, FIS operates three branches throughout greater Buenos Aires, serving approximately 5,000 clients to date. It is currently the largest microfinance institution in Argentina, and has plans to expand its operations beyond Buenos Aires to the rest of the country.

Beyond traditional microfinance, FIS also offers untraditional loan products that provide other means for financial security. For example, to relieve families from the monthly costs of lighting and electricity (i.e. in the rural region of Boquerón, monthly expenditures for candles, kerosene or gas is estimated at $20 USD a month), FIS provides clients loans to purchase solar panels. Once the loan has been repaid, families can then reallocate monthly expenditures for education, health, or other important services.

FIS is also the administrator of a Social Investment Fund through which channels private and institutional investment funds to finance its loan portfolio. This was the first fund in Argentina to offers its investors both financial returns and social impact.

“Our team in Argentina is focused on empowering thousands of poor micro-entrepreneurs to improve their own lives," said FIS co-founder Julian Costabile. "We're excited about the impact microfinance will make in poor areas of Buenos Aires."

Julian Costabile is one of three senior leaders at FIS and combines a social vision with more than eight years of finance expertise at PriceWaterhouseCoopers. A founding member of the Argentine Network of Microfinance Institutions, Julian is a leading stakeholder and advocate for microfinance in Latin American, participating in numerous forums and seminars on microfinance throughout the region. 


The X-Interview

Watch Julian Costabile as he shares with Global X why Unitus is a crucial element to the success of his microfinance institution, and listen to his advice to fellow social entrepreneurs: "Find a couple of mentors or advisors compatible with your mission who have 20 or 30 years more of experience and who can help you go through the entrepreneurial phase in a better way."