In Colombia, the term “Drop-by-Drop” (Gota-a-Gota) is omnipresent and carries a dark connotation. This illegal industry of informal credits, often resorted to by the poorest, is regulated through violence and has become one of the business axes of mafias in all regions of the country. In contrast, the Grameen Bank, known as the bank for the poor in Bangladesh, represents a model of microfinance that has empowered millions, especially women, through small loans. Inspired by this model, Colombia launches the CREO microcredit line, aiming to combat the illegal economies sustained by the Drop-by-Drop and promote broader and fairer financial inclusion.

According to the Minister of Economy Ricardo Bonilla, “CREO is intended to promote access to formal financing for the popular economy, that is, the trades and commercial occupations (production, distribution, and commercialization of goods and services) and non-commercial (domestic or community) activities developed by small-scale economic units (personal, family, micro-businesses, or small enterprises) in any economic sector.”

Expectations for CREO:

1. Financial Inclusion and Empowerment: CREO seeks to replicate the success of the Grameen Bank in terms of financial inclusion. By offering accessible microcredits, CREO is expected to reach those sectors that have not yet accessed the traditional banking system, which accounts for 40% of the population, offering a viable and safe alternative to the exploitative Drop-by-Drop loans.
2. Stimulus to the Local Economy: Like the Grameen Bank, CREO is expected to boost the local economy. By providing capital to small entrepreneurs, farmers, and artisans, CREO could be a catalyst for the growth of local businesses and the development of entire communities.
3. Reduction of Exploitative and Usurious Practices by Mafias: One of the most significant goals of CREO is to offer an alternative to the exploitative and usurious Drop-by-Drop loans. With fairer interest rates and transparent loan conditions, CREO could significantly improve the financial conditions of borrowers and reduce the violence associated with informal loans.
4. Development and Formalization of Businesses: CREO has the potential to facilitate the formalization and growth of small and medium-sized businesses. This would not only contribute to economic development but also improve financial security and access to other services for entrepreneurs.
5. Long-Term Impact: In the long term, CREO could have a significant impact on reducing poverty and improving the quality of life in Colombia. By fostering job creation and sustainable development, CREO can help build a more inclusive and equitable economy.

The Two Sides of the Coin:

Unlike the Grameen Bank, CREO is not a private initiative; it is a program backed and actively participated in by the Colombian government. This state participation can be seen as a commitment to financial inclusion and economic development. By acting as a guarantor and subsidizing interests, the government seeks to reach sectors traditionally excluded from the formal banking system.

However, this dependence on government financing and guarantees also poses certain challenges. There is a risk of politicization of funds and bureaucratic inefficiencies. In addition, changes in government administration could affect the continuity and effectiveness of the program. The long-term sustainability of CREO is a crucial issue, subject to the vicissitudes of Colombian politics and economy.

In summary, the CREO line represents a significant effort by the Colombian government to combat exploitative lending practices and promote broader financial inclusion. Inspired by successful models like the Grameen Bank, CREO has the potential to transform lives and communities, offering a fair and safe alternative to Drop-by-Drop loans. Its success will depend on how it handles the challenges inherent in any microfinance program, especially those linked to government participation.