Initiative promotes entrepreneurship through the offer of solidary microcredit and Social Currency
The Renova Foundation started the implementation of community banks in five locations in the Doce River Basin. The first to be opened was Lagoa Verde Bank, in Dionísio, Minas Gerais, to benefit families in the Baixa Verde district and strengthen the local economy. The objective is to promote consumption within the community itself, encouraged through the offer of solidary microcredit and Social Currency, contributing to the strengthening of the local economy.
In Minas Gerais, the district of Cachoeira Escura, in Belo Oriente; and the municipality of Itueta will also receive the investments. In Espírito Santo, the communities of Regência and Povoação, in Linhares, participate in the project.
The residents themselves manage the bank, defining the types of credit lines to be granted, interest rates, payment terms and even the name of the institution. The Lagoa Verde bank, for example, was named in honor of the lagoon that is a tourist spot in the Baixa Verde district, in Dionísio.
Strategies include valuing existing enterprises and encouraging the creation of new businesses, according to talent, skills and local needs. With an expected duration of 33 months, a total of R$3 million will be invested. R$900,000 will be made available for credit funds, of which R$180,000 per community. The rest of the budget will be allocated to infrastructure and human resources.
The project provides for the hiring of two Local Development Agents, who must be residents of the communities, and are responsible for serving the population and for operating the granting of credit. The forecast is that the banks will be inaugurated during the second half of this year. Each bank will receive direct assistance for its constitution and operation for 24 months, in addition to being linked to the Brazilian Network of Community Banks.
According to André Mapa, Analyst of the Renova Foundation’s Economic Development and Diversification Program, “the project encourages other economic activities by creating better conditions for the population to be able to undertake and generate income, both through easier access to credit, with lower interest rates than in traditional banks, as well as by stimulating consumption at the local level through the use of Social Currency”.
How does the community bank work?
Exclusive Social Currencies will be created for each location with the proposal of retaining the resource in the community itself, so that it becomes more competitive and stimulates an entrepreneurial culture among the population. The banks will be managed by properly trained residents, and the credit policy will be defined by the community itself. The project works based on the principle of trust: those who participate in the management are the beneficiaries themselves.
The community will monitor the execution of the resources destined to the initiative and will initially be able to benefit from three lines of credit. The Bank will offer Productive Credit to support entrepreneurs and encourage the creation of new businesses; Housing Credit, intended for small works; and Consumer Credit, aimed at the low-income population and intended to meet people’s emergency needs, such as purchases of medicine and food.