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Improving Financial Inequalities in Rural Colombia

The Rural Finance Initiative responds to decades of internal conflict and deep inequalities in Colombia by providing financial services to rural businesses, specifically targeting women and marginalized populations.

Colombia has a sophisticated financial system. However, obstacles such as information barriers, high costs, and risks have made it difficult for financial services to fully reach rural and agriculture sectors. Limited access to finance constrains rural families’ ability to improve their productivity, and as a consequence, inhibits sustained economic growth.

To improve inclusive financial intermediation in rural areas, the Rural Finance Initiative, in partnership with USAID, helps establish and strengthen market-based rural financial services for micro-, small, and medium-sized producers and businesses. By targeting these services, the program intends to increase access for previously vulnerable groups and improve conditions for economic growth, both of which are critical in reducing poverty and inequality that have been the root causes of Colombia’s internal conflict.

Specifically, the initiative seeks to link 200,000 marginalized clients to financial services by helping banks and other financial intermediaries (FIs) expand services in rural areas. Technical assistance and grants are helping these financial institutions target women, Afro-Colombians, indigenous peoples, and other vulnerable populations. For example, the project is helping a microfinance institution design seed funding mechanisms and financial education for women’s cooperatives. Likewise, the initiative is forming an alliance with an LGBTI umbrella organization to expand and protect equal access to finance, providing financial education for LGBTI persons and awareness training for bank officials.

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