A Development Bank's Success with Microfinance: Banco do Nordeste's CrediAmigo

This paper describes the success that the development bank, Banco do Nordeste, had with its microfinance program, CrediAmigo.

The paper makes the following initial points:

• After only three years of operation, the Credi Amigo Program has already become Latin America's second largest microcredit institution, both in terms of number of loans and the amounts invested;
• The program was a joint initiative of the World Bank and Banco do Nordeste, which realized that the bank was not serving informal, family owned businesses;
• Banco do Nordeste launched Credi Amigo in a pilot phase at five of its branch offices;
• The rapid expansion of this program led to its initial failure.

The paper then explores the revamped version of the Credi Amigo program, highlighting its focus on:

• Quality, careful management of expansion, increase in training efforts and realignment of its incentive structure;
• Flexibility, high quality and productivity of human resources;
• Three segments of the informal economy: commerce, trade and services.

The paper states that Credi Amigo reached full financial self-sufficiency in 2003. It lists the following factors that helped the success of the program:

• Management of growth with adequate controls;
• Proper planning and appropriate policies;
• Training and incentives;
• Support of the senior management.

The paper concludes by charting a growth path for Credi Amigo's future that includes offering savings accounts.