Background – Inequality and poverty are widespread in Ecuador. The problem reaches extremes in rural areas: the poverty rate is over 40 percent in the coastal region, and almost 60 percent in the Amazon region. In the cities, three out of 10 people earn barely enough to cover their basic needs. Beyond a simple lack of assets, poverty also means that people’s opportunities to improve their own lives are limited. Small businesses are a possible way out of poverty, but for these enterprises to grow and thrive entrepreneurs must have access to adequate financial services. Among financial service models, communal microcredit, in which a small group of borrowers is liable for credits extended to its individual members, has been remarkably effective at reducing poverty. Unfortunately, banks in Ecuador’s coastal and Amazon regions struggle to meet the demand of local people and small businesses for communal microcredit.

Project – Swisscontact’s financial services project in Ecuador contributes to expanding communal microcredit, with an emphasis on the coastal and Amazon regions. Local experts advise 12 credit and savings cooperatives in strategies to introduce and reinforce communal microcredit facilities that ultimately reach at least 50 small villages. To enhance sustainability in the microfinance sector as a whole, the project works with local, regional, and national partners, both private and public. These range from individual consultants to universities to microfinance associations and government bodies.

One of the project’s main activities is developing training programs and short courses for staff at credit and savings cooperatives and offering support to remittance services in order to reduce transaction costs. Swisscontact accomplishes the latter in two ways: on the one hand, by supporting the strategic use of technologies such as mobile phones, points of sale, and ATMs; and on the other hand by increasing access to these facilities for the poor inhabitants of the coastal and Amazon regions. By 2012, the project aims to reach at least 15,000 low-income residents and their families who currently lack access to formal financial institutions. With access to financial services, residents will gain new opportunities to improve their earnings through their own efforts. This process will help stimulate the local economy, allowing even more people to escape poverty.