Overview of MSME Support Programs

This appendix provides an overview of programs to support the MSME sector in Latin America by type and institution. The high number of programs in the region makes it impossible to create an all-inclusive list. For example, SEBRAE of Brazil implemented nearly 1,500 MSME support programs in 2005 alone. In many cases, programs are summarized and/or only key programs are noted. For more information on programs, see website for each of the institutions listed in Table A4-1.

Table A4-1. MSME Support Institution Websites

Country Institution Web-site

Argentina SEPYME www.sepyme.gov.ar

Brazil SEBRAE www.sebrae.com.br

Chile SERCOTEC www.sercotec.cl

Colombia DIPYME www.mincomercio.gov.co/

Costa Rica DIGEPYME www.meic.go.cr,

www.meic.go.cr/esp2/pyme/index.html Dominican Repub-

lic

PROMIPYME www.promipyme.gov.do

Ecuador MICIP www.micip.gov.ec/

El Salvador CONAMYPE www.conamype.gob.sv

Guatemala Vice Ministerio www.mineco.gob.gt/mineco/mipyme/mipyme.

php

Honduras CONAMIPYME www.sic.gob.hn/mipyme/index.htm

Mexico SPYME www.contactopyme.gob.mx

Nicaragua INPYME www.inpyme.gob.ni

Panama AMPYME www.ampyme.gob.pa/sitenew/

Paraguay MIC www.mic.gov.py,

http://www.programapymes.gov.py

Peru PROMPYME www.prompyme.gob.pe/

Uruguay DINAPYME www.dinapyme.gub.uy/

Venezuela INAPYMI www.inapymi.gov.ve/

Each category highlights innovative programs in the region that have produced successful results and had positive impacts (such as reaching a great number of firms), are established and generally well-regarded programs, or exhibit some other specific merits.

FINANCING

MSME support institutions in Latin America have a variety of programs to create opportunities for smaller businesses to access financing (Table A4-2). For example, SPYME in Mexico operates the Red Nacional de Extensionismo Financiero Pyme program, in which finance consultants from SPYME pro- vide assistance to SMEs in assessing if and what modality of credit is needed and most appropriate, as well as applying for and securing such credit. A small number of institutions actually lower financial costs involved in accessing credit. Such is the case of the ‘Regimen de Bonificación de Tasas’ program in

Argentina, which since 2000 allows MSMEs to access credit at an affordable cost and in favorable terms. It is becoming less common for MSME support institutions to provide direct credit to businesses, but more common among first-tier institutions. Institutions in the Dominican Republic, Guatemala, Nicara- gua, and Venezuela implement programs to provide direct credit to small businesses.

Table A4-2. Finance Programs

Country Institution Program

Argentina SSEPYMEyDR Régimen de Bonificación de Tasas

Bolivia Ministerio de Producción y _Microempresa Sistema Nacional de Financiamiento para el Desarrollo Brazil SEBRAE

• •

Programa Capital de Risco Fundo de Aval

• Sistemas de Garantías

Chile SERCOTEC Programa de Acceso al Crédito

Dominican

Republic PROMIPYME PROMIDIGNA

El Salva-

dor CONAMYPE, Ejecuta BMI

Programa de Ampliación de la Cobertura del Microcrédito PACM)

(

Guatemala Vice Ministerio de la MI-_PYME • _• Programa Nacional para el Desarrollo de MSME _{Programa Global de Créditos}

Honduras CONAMIPYME Sistema de Garantías Recíprocas

Mexico SPYME Red Nacional de Extensionismo Financiero Pyme

Nicaragua INPYME Fondo de Crédito para la Micro Empresa (FOMICRO)

Panama AMPYME Programa de Garantías para Financiamiento _(PROFIPYME)

Venezuela INAPYMI • • • • • •

Financiamiento de Capital de Trabajo Activos Fijos

Deuda por Inversión

Financiamiento de Activos Intangibles Cooperativas de Producción

Transporte Utilitario

Although many MSME support institutions in LAC offer some type of finance program, most countries included in the study have other financial institutions that specialize in this type of activities. Usually it is development banks that provide direct and/or indirect credit and financial services to MSMEs. They are the main source of funding for microcredit, and an important tool for new or small firms and entrepre- neurs. Micro and small credit offered by development banks in Latin America often entail more flexible rates and terms, and lower fees.

Many second and third-tier MSME support institutions included in this study work in collaboration with development banks to improve products and services offered to MSMEs and entrepreneurs. Usually, the role of MSME support institutions is to assist in the coordination of activities, as well as participating in programs and the development of specialized financial instruments, while banks implement finance pro- grams and tools and distribute funds.

It is typical for MSME support institutions not to be involved in angel investors and venture capital net- works or funds. In fact, although these financing schemes are a mainstay in the United States and its use is growing in other parts of the world, they are largely absent in LAC. These networks and financing pro- grams provide funds to start-up firms and small businesses with exceptional growth potential. Technical assistance and managerial expertise is often offered to recipients of funds to ensure that they realize their potential. Brazil’s SEBRAE is a leading institution in this area. Its Risk Capital program, discussed be- low, could serve as a model on how to bring together private lenders to nurture new firms.

Highlighted Programs

Through the ‘Regimen de Bonificación de Tasas’ program in Argentina, SEPYME helps reduce the fi- nancial costs of access to credit by MSMEs. The goal of the program is to facilitate such access under reasonable conditions and costs for MSMEs. The national government implemented this program as a way of absorbing part of the financial cost involved in lending to MSMEs, which constitutes a strong and active policy for truly meeting that objective. The program offers a “bonus” of up to 8 percentage points above the nominal annual interest rate offered by intermediary financial entities. SEPYME assigns credit quotas to intermediary institutions and established criteria to give priority to certain MSME sectors and regions. By March 31, 2006 more than 163,000 MSMEs had already benefited from the program through financing for working capital, purchase of goods, and investment projects totaling about US$66.5 million. In Mexico, SPYME manages the National SME Finance Extension Program. The objective of the pro- gram is to help SMEs access appropriate financing suited to their characteristics and needs. Under this program, consultants provide independent technical assistance to SMEs in matters related to credit op- tions, loan applications and use of funds, reporting results back to the SPYME. Funds for the program are provided by the Economic Affairs Secretariat, and contributions are made by state governments, business networks, and other institutions. In 2002 and 2003 the program assisted 1,260 businesses for a total of about US$45.5 million in loans.

In Brazil, SEBRAE is implementing a risk capital program, a relatively unique experience in the region. Risk capital is offered to innovative micro and small enterprises to assist emerging tech-enterprises and enterprises with export potential. SEBRAE works jointly with private domestic and international research institutes and mutual investment funds to supply capital to firms. Eight risk capital funds have been estab- lished to date, and SEBRAE plans to create another 22 in the near future.