In Brazil microcredit loans for women improve financial inclusion and reduce poverty, often through innovative lending to teams of female entrepreneurs

Angelúcia Moura’s business on Brazil’s northeast coast started out small, mainly selling clothing and perfumes. She opened the shop to support her family and complement her husband’s income. But that changed in 2010, when she took a loan from Crediamigo, a microcredit service offered by the Banco do Nordeste. The credit allowed her to develop her activity.  Today, her shop in Aquiraz, in the state of Ceará, offers a larger variety of products, and it’s the main source of income for the family.

“I was hesitant at first,” says Moura. “But I’m now better able to support my family.”

Banco do Nordeste, based in Fortaleza, is the largest Brazilian regional development bank. Its Crediamigo programme of subsidised microcredit is the biggest in Latin America, having disbursed over €1.97 billion in 2021 to micro entrepreneurs in urban areas.

To better serve female entrepreneurs, Banco do Nordeste created Cedriamigo Delas, a microcredit line specifically for women. “In Brazil, 34.4 million women are financially responsible for their families. In Crediamigo, around 67% of our clients are women,” says Fabrizzio Leite Feitosa, director of urban microfinance and micro companies at Banco do Nordeste. “That led us to develop and implement a new credit line exclusively for women, with the support of the European Investment Bank.”

The European Investment Bank signed a €200 million loan with Banco do Nordeste in March 2022. This financing targets micro-businesses led by women and improves their quality of life and financial inclusion. Ultimately, the loans help reduce poverty in the northeast region of Brazil, which includes the most economically challenged towns of the country.

The EU bank’s loan qualifies for the 2X Challenge, an initiative lead by G7 development institutions, which deploys and mobilises capital to empower women and enhance their economic participation. In 2021, the Bank has financed intermediated investments (compliant with the 2X Challenge) totalling €357.2 million across geographies, out of which €179.95 million directly contributes to women’s economic empowerment.

Brazil microcredit loans for women overcome financial limitations

Gender inequality is still a problem in Brazil. Despite having a similar educational level, Brazilian women generally don’t have access to the same opportunities as men. Women earn 25% less than men in Brazil. To compensate, women are forced to take on multiple jobs. 

Through Crediamigo Delas over 300 000 women received over 500 000 loans between 2021 and July 2022.

 “When women come to us to apply for Crediamigo Delas, they want to ensure the survival of their families,” Feitosa says. “With the support of our microcredits, they ultimately develop and grow their businesses. They also have a positive impact in their communities and neighbourhoods, by generating income for their families and new jobs.”

Brazil microcredit loans for groups of women

Crediamigo Delas finances investment and working capital, with a term of four to 24 months. Loans are limited to around €2 350 per client.  For credit approval, the client’s payment capacity and the characteristics of the business are analysed. Apart from the credit, Banco do Nordeste proves advisory services for the clients of Crediamigo, and keeps several partnerships with other institutions to help women entrepreneurs.

Crediamigo Delas also can be issued as a “solidary loan.” “The solidary loan means small groups borrow together and encourage their members to repay in a timely manner,” says Joana Sarmento, a loan officer at the European Investment Bank who works on the project. “This works very well with female clients, who tend to re-invest their income in the health and education of their families.”

The bank’s experience suggests women are more likely to start businesses in solidarity groups. They are more cooperative and willing to share the lessons learnt. “It’s very common for a woman to encourage friends to get into entrepreneurship or to encourage them to take that first loan,” says Feitosa. “An entrepreneur teaches and stimulates another."

Moura is a good example.

“I got involved with Crediamigo through a solidary credit,” she says. “It helped me overcome my hesitation and inspired me to develop my business further.”