Through an innovative collaboration our Peruvian business Backus has brought micro-banking to rural areas, with huge benefits to Backus customers and local communities
As of 2012 just six million of the 11 million working Peruvians were said to have access to financial services, according to research by Banco de Credito del Peru. This represents one of the lowest levels in Latin America and is a key challenge for Peru.
The absence of banking services – which is particularly acute in rural areas – has long caused major headaches for many of Backus’ retail customers. These small, community shops run on a cash only basis, which leaves them vulnerable to robbery and makes obtaining credit impossible. Often shopkeepers lacked the funds to buy-in enough beer to meet demand, losing revenue for themselves and Backus, while sales reps were spending more time counting cash than actually making sales.
As one of Peru’s largest and best-regarded companies, Backus realised it had an opportunity to tackle this issue. The team joined forces with financial institutions to bring micro-banking to rural communities, a move that has freed its retail customers from their financial shackles and in turn boosted Backus’ own business.
For local retailers this initiative has brought much-needed access to credit. They have been able to take out small loans on preferential terms, using the money for infrastructure development as well as to increase beer sales.
In addition to providing banking services to retailers, some have themselves become mini-banks, bringing basic banking services to previously unreached areas and reducing the reliance on cash transactions. A simple mobile banking service has also been established, which works via text messaging and can be accessed on the most basic phone handsets.
The impact of all this has been dramatic. In pure financial terms, more than 5,000 small retailers have received a total of US$38 million in loans, helping to increase their revenues by 16%. To help them make the most of this new source of capital, Backus has worked with more than 2,300 small retailers through its ‘Advancing Together’ programme to provide finance and business skills training.
Peru’s rural population has also felt the benefits of improved access to banking, thanks to the increased numbers of banking points and the new mobile service.
The project has the full support of government and regulators, and has already garnered five national and international awards. Backus plans to continue expanding the programme, both at home and through sharing learning among other Latin American countries with similar market conditions.