Background on the 88th Banking Convention
The Mexican government and the Association of Banks of Mexico (ABM) are set to sign an agreement during the 88th Banking Convention, aiming to enhance financing for micro, small, and medium-sized enterprises (SMEs) in the country. This collaboration is part of the Plan México and will focus on two key areas: regulatory changes to simplify credit application requirements and reducing informality.
Who is Julio Carranza?
Julio Carranza, the president of ABM, emphasized the banking sector’s understanding of the need to support SMEs with financing. His role as ABM president highlights his influence in shaping the agreement, which will foster a stronger relationship between the government and the banking industry.
Current Barriers Faced by SMEs
SMEs are the driving force behind Mexico’s economy, accounting for 99% of all businesses and generating 8 out of every 10 jobs. However, several structural barriers hinder their growth through credit access.
- Informality: 63% of Mexican businesses are informal, making it challenging for them to access formal credit.
- Lack of financial education: Misconceptions about bank credit exist within the SME sector.
- Self-exclusion: 66% of SMEs do not have a business account, believing they don’t need one.
Improved Conditions for SMEs
Despite these challenges, commercial banks provide financing to SMEs under better conditions than other intermediaries. The average interest rate offered by banks is, on average, 29 percentage points lower than other lenders.
Upcoming Agreement Details
On the afternoon of this Thursday, during the 88th Banking Convention, the federal government and commercial and development banks will sign an agreement in favor of Mexican SMEs. The event will feature President Claudia Sheinbaum.
One of the objectives is to ensure that, by 2030, 30% of Mexican SMEs have access to credit. Currently, the proportion stands at 24%, according to ABM.
Key Questions and Answers
- What is the main goal of the agreement? The primary objective is to improve access to credit for Mexican SMEs, aiming for 30% of them to have access by 2030.
- What are the two main areas of focus in the agreement? The agreement focuses on regulatory changes to simplify credit application requirements and reducing informality among SMEs.
- Why is this agreement important for Mexico’s economy? SMEs are crucial to Mexico’s economy, generating 8 out of every 10 jobs. Enhancing their access to credit will foster growth and job creation.
- What challenges do SMEs currently face in accessing credit? Informality, lack of financial education, and self-exclusion are significant barriers for SMEs seeking credit.
