An estimated 15.7 million people in Brazil work in the informal economy as microentrepreneurs, outnumbering formal sector entrepreneurs by more than three to one. Of these informal microentrepreneurs 93% run profitable businesses. However, 84% of these microentrepreneurs did not have access to credit.

In November 1996 at a meeting in Fortaleza, the World Bank and Banco do Nordeste, a development bank formed to support growth in northeastern Brazil, decided to initiate a collaborative process to jointly implement a local development program based on the idea of micro-credit. Motivated by the fact that small informal companies – family owned and small properties - were not being served by the Bank's financing activities due to the restrictive regulation of Brazil's Banking Systems, Banco do Nordeste and the World Bank decided to develop and launch a pilot low-income bank, targeting micro-entrepreneurs from informal sectors.

When asked why Banco do Nordeste decided to launch a microcredit institution, executive director, Stelio Gama Lyra Junior responds simply “we are a development bank; it was a logical step”.3 The fast growth and success of the CrediAmigo program suggest that he might
be right. After only three years in operation, CrediAmigo had already become Latin America’s second largest microcredit institution both in terms of number of loans and the amounts invested.

With the experience gained trough its pilot program, CrediAmigo officially launched its microcredit program and has continued to grow steadily. In fact, it has achieved 40% growth each year since 1998. As of May 2003, CrediAmigo has 123,203 active clients with an active portfolio of R$72 (US$ 24.69) 9 million and an average loan size of R$ 581.35 (US$ 199.33). CrediAmigo offers loans at 3.5% monthly rate (approximately 51% per year). As an incentive for customers to pay on time, CrediAmigo reimburses its customers 15% of their interest payment when their loan is paid in-full and on-time.10 The maximum loan size allowed is R$4,000 (US$ 1,371.51). In the future, CrediAmigo plans to continue to expand its services throughout the northeast of Brazil, as well as offer greater product/service selection such as savings accounts and insurance products.

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