The VMC visits Panama and Microserfin

In the early weeks of March, nine members of the Vanderbilt Microfinance Club had the opportunity to spend a little over a week in Panama. While a large sum of the trip focused on cultural exploration and a hiatus from academia, we also dedicated several days to visit and learn about Panamanian microfinance organizations.

One such organization that we visited was called Microserfin. Microserfin is a for-profit microfinance solutions enterprise that is supervised by the Panamanian Department of Finance, Ministry of Commerce and Industry. Since 1997, Microserfin has lent over $52 million in more than 31,000 microloans nationwide targeting ambitious entrepreneurs who have difficulty accessing necessary capital for their business ventures. The initial loans range from $100 to $3000 and the amount can then gradually increase depending on the debtors credit history and business needs.

When we were first arrived at one of the Panama City branches, the office’s Business Development Manager, Ricardo Rodriguez, began to explain the general business practices and organizational structure of Microserfin. Instead of explaining the practices of Microserfin in a general sense, he was kind enough to lead us to one of their other office branches in the outskirts of Panama City to show us how the credit approval process functioned.

After arriving at the other branch, Ricardo and one his associates grabbed several files of current and potential borrowers, and went page by page with us to discuss the discrepancies. Ricardo explained that each application must be submitted with proper identification, a drawn out business plan, and pictures of tangible assets worthy of collateral. Even though some of the assets were seemingly worthless in resale value, Ricardo emphasized that this was simply a display of contractual commitment and was nothing more than an empty threat to keep the borrower on a steady business track. Additionally, he discussed how Microserfin creates their system of credit scoring to determine feasible interest rates based on the content and history of the potential borrower.  After properly assessing each application, branch managers and associates meet in a committee to approve or deny each request. According to Ricardo, about 90% of borrower’s requests are approved.

Immediately after going through the logistics, Ricardo and one of the branch’s credit officers drove us to three successful entrepreneurs that have maintained steady relationships with Microserfin. All three entrepreneurs were on their third or fourth loan with Microserfin, and were satisfied with the organization’s benevolence in assisting them with their startup and growth.

 

 

 

 

 

 

 

 

 

The first entrepreneur was a mechanic who rented out part of his lot to another colleague who specialized in fixing and reselling cars. He utilized loans from Microserfin to finance tools and parts necessary for his practice.

The second entrepreneur was a hair stylist who owned a salon. She utilized loans from Microserfin to finance her stock of new and appealing hair products.

The third entrepreneur was a landlord with a deep-seated passion for cockfighting and raising roosters. He utilized loans from Microserfin to maintain upkeep for his tenants.

The next day, Ricardo invited us to another office branch in Panama City to discuss the potential opportunities and future relationship between the Vanderbilt Microfinance Club and Microserfin. We agreed that it would be possible for the VMC to invest in several entrepreneurs seeking credit through Microserfin. While the specifics have not been formally laid out, we have been able to maintain contact with Ricardo and over the next couples weeks, hope to have a concrete plan in which the VMC will be able to assist several entrepreneurs seeking assistance and access capital.

Check back with the website in the next couple of weeks to see what type of progress we have made!

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