Colombia - Rural Finance : Access Issues, Challenges and Opportunities
The history of rural - mostly agricultural - finance in Colombia, is characterized by a system which channels benefits to limited numbers of beneficiaries, at the expense of the public sector, and the economy as a whole. A legacy of powerful agricu...
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| Format: | Other Rural Study |
| Language: | English en_US |
| Published: |
Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2003/11/3044045/colombia-rural-finance-access-issues-challenges-opportunities http://hdl.handle.net/10986/14712 |
| Summary: | The history of rural - mostly
agricultural - finance in Colombia, is characterized by a
system which channels benefits to limited numbers of
beneficiaries, at the expense of the public sector, and the
economy as a whole. A legacy of powerful agricultural
lobbies (coffee, livestock) has translated into
sector-biased legislation, that established the
"Sistema Nacional de Credito Agropecuario"
(National Agricultural Credit System), and related
institutions. Nonetheless, current agricultural policies
send mixed signals in terms of the degree of protection vs.
subjection to market forces producers can expect, thus
preventing the development of a profitable, and competitive
agriculture. Against this background, the advent of a new
administration faced a rather dangerous policy juncture, as
the pressure to tackle poverty in rural areas, coincides
with severe fiscal, and public debt constraints. The
Government however, has now the opportunity to build
substantive reforms in the financial sector, enacted under
previous regimes. The study found that access to financial
services in rural Colombia is limited and segmented, whose
causes are traced to inadequate services, lack of innovation
in financial intermediation in rural areas, and, to an
outdated model of public intervention in agricultural
credit. Recommendations center on a re-direction of public
interventions, aimed at substantially expanding
institutional outreach, and financial services and quality
in rural areas. Recommended reforms would exploit the
existing private (including cooperative) and public retail
institutional base, and, the skills and capabilities in the
two main institutions, one playing as second-tier
institution a strong development agency role, and the other
as a lead innovator in rural microfinance. Also suggested is
a substantial revision of the usury law, and reforms of the
legal and judicial framework, for the use of moveable
property as collateral. |
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