Average value of Oriented Productive Microcredit rises 38% after pandemic

Existing since 2005 to encourage the creation of jobs by popular micro-entrepreneurs with low interest rates, Oriented Productive Microcredit (MPO) experienced a profile change after the covid-19 pandemic. According to a study by the Support Center for Small Enterprises (Ceape Brasil), an entity associated with the United Nations Children’s Fund (Unicef), the average loan amount rose 38.5% between the first half of 2019 and the same period this year, driven by the service sector and the young public.

The survey was applied to the base of 26,000 active Ceape Brasil customers in four states: Maranhão, Tocantins, Pará and São Paulo. In the year before the pandemic, the average ticket (average order amount) was BRL 4,811.97. In the first six months of 2023, the amount was BRL 6,667.79. Regarding financed segments, commerce continues to lead, but loses share.

In 2016, according to Ceape Brasil, 86% of loans subsidized trade-oriented projects. The share dropped to 84% in 2019 and to 82% in 2023. On the other hand, initiatives related to the provision of services, which totaled just 2% in 2016, rose to 6% in 2019 and to 8% this year.

According to Ceape Brasil, the data suggest that the public is becoming more mature about the possibilities offered by Oriented Productive Microcredit. Financing with reduced interest rates started to be used in long-term projects with perspectives of sustainable development, instead of just being used as support to sell something. In addition, in May 2020, at the beginning of the covid-19 pandemic, remote technical guidance was authorized for granting loans, which stimulated loan applications.

age group

The public that uses the MPO is increasingly younger. Contracts with microentrepreneurs aged 23 to 27, which accounted for just 1% of the total in 2016, jumped to 5% in 2019 and 6% in 2023. The 28 and 32 age group, which represented 5% of loans in 2016, rose to 8% in 2019 and ended the first half of this year at 9%.

In the same period, between 2016 and 2013, the share of customers aged 73 to 100 fell from 7% to 2%. The percentage of clients between 68 and 72 years old dropped from 6% to 3%.

According to Ceape, one hypothesis for increasing the participation of young people is the search for different options to generate jobs and income, with the MPO being used to get new venture ideas off the ground, instead of financing traditional businesses. With the success of the initiatives, evaluates the institution, this type of microcredit has been consolidated as an alternative.

Historic

Created in 1989 as an initiative of Unicef, the Ceape Brazil offers productive microcredit oriented as a strategy to combat poverty. With branches spread across Maranhão, Pará, Tocantins and the state of São Paulo, the institution has 26,000 active clients and has helped more than 1.6 million informal entrepreneurs.

Of the 290 Ceape Brasil employees, 60% are credit advisors, who visit borrowers to analyze loan conditions and assess business risks before defining the loan amount, based on payment capacity. According to the entity, 62% of the beneficiaries are women.

Coordinated by the Ministry of Labor and Employment, the MPO has interest limited to 4% per year. Aimed at expanding production capacity, this type of credit can finance improved cash flow (working capital). The MPO can also be used to purchase equipment, furniture, tools and other items necessary for the functioning of the economic activity. The entire loan contracting process takes place under technical supervision.

This modality can only be contracted by three types of entrepreneurs: informal with monthly income of up to R$ 30 thousand, individual microentrepreneur (MEI) with revenue of up to R$ 81 thousand per year or micro-enterprise with revenue of up to R$ 360 thousand per year. The contractor cannot have more than R$ 80,000 in debt with banks and other financial institutions, except in the case of housing credit operations.