What is Colombia doing to counteract the 'drop by drop'

What is Colombia doing to counteract the ‘drop by drop’

One of the serious problems faced by small businesses and productive units in Colombia is access to credit or means of financing. Hence, one of the great challenges facing the Government, private companies and banking entities is to promote financial inclusion in order to curb illegal and informal phenomena such as ‘drop by drop’ or ‘pay daily’, that in addition to having high interest rates, has become a social problem.

(Abc of the project that seeks to end the so-called ‘drop by drop’ credit).

That is why different sectors are advancing strategies to counteract these situations, and incidentally formalize and democratize credit.

In fact, in the last few hours, the National Government, through the Ministry of Finance, filed a bill “by which norms related to access and financing for the construction of equity are dictated”, and that modernizes payment systems and updates the capital market.

“This is a project that will not only allow us to increase social welfare and equity in the country, but will also be key in the fight against informal and highly expensive schemes, such as ‘drop by drop’ or ‘paid daily’ . This initiative will contribute to this end of universalizing access to legal, safe and low-cost financing schemes”explained the Minister of Finance, José Manuel Restrepo.

(In 2021, loans in the country increased 42%).

However, Colombia is advancing on other fronts to confront this phenomenon.
One of them is fintech, which uses technology to improve or automate financial services and processes, which have put a variety of options on the market so that those who do not have a credit life or access to credit can do so through these Models.

“The drop by drop” ´must be treated for what it is: an illegal model whose money sometimes comes from illegal activities, and therefore generates a very big social problem. In addition to that, it takes away resources from the State because they do not pay taxes and instead charge high interest rates without any return for their users”, commented Daniel Materón, CEO of RapiCredit.

According to him, fintechs are a model that has accelerated financial inclusion in the country in a short time and with a high volume of growth, which has had a positive impact on Colombians.

(This is how the ‘drop by drop’ came to a large part of Latin America).

Likewise, financial and banking entities have also been working on more ambitious plans for low-amount loans and with affordable interest rates for all Colombians, in order to advance in the inclusion of more people in formality and eradicate once for all and forever ‘drop by drop’.


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