Colombia - Rural Finance - Access Issues, Challenges and Opportunities, Vol. 1

The history of rural finance in Colombia is characterized by a system which channels benefits to limited numbers of beneficiaries, at the expense of the economy as a whole. This paper finds that access to financial services in rural Colombia is limited and segmented, and traces this to:

• Inadequate services;
• Lack of innovation in financial intermediation in rural areas;
• Outdated model of public intervention in agricultural credit.

The paper recommends reforms to exploit the existing private (including cooperative) and public institutional base, and calls for:

• Re-directing public interventions;
• Substantially expanding institutional outreach;
• Facilitating high quality financial services in rural areas.

In the past powerful agricultural lobbies, such as coffee, livestock etc., have led to sector-biased legislation in Colombia. Hence the paper also calls for a review of the policy environment in the country:

• Substantially revising the usury law;
• Reforming the legal and judicial framework;
• Using moveable property as collateral.