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2. Access to Credit
2.1 Banks
2.2 Other Sources
2.3 Credit Bureau
In-Country Assessment Information

2. Access to Credit

 

Goal – An efficient, transparent financial sector that provides a broad range of citizens with access to multiple forms of competitive credit so that they can start businesses, build wealth, and purchase property

 

2.1 Banks

Core Question: Are traditional banking services robust and extensive enough to serve the needs of the population to help them build wealth and purchase property?  No, weak. Banks are available to the public, but once again the Venezuelan government has oversight to close banks and or reorder them for various reasons. Venezuela does have a requirement to “extend credit to small businesses and farmers at low interest rates,” (The Globe and Mail, 2009).

Source: Venezuela’s Bank Sector Key Facts 2009, The Globe and Mail
http://www.theglobeandmail.com/report-on-business/venezuelas-bank-sector—key-facts/article4215840/

Access

2.1.1   How easy is it to obtain a bank loan? Very Weak, Venezuela ranks 112 out of 148 and has a score of 2.34 out of 7. Trend is ↓. Access for bank loans is very limited in Venezuela.

Soundness

2.1.2   How sound are the country’s banks? Weak, ranking 87 out of 148 with a score of 4.71 out of 7. Trend is ↑.

Source: The Global Competitiveness Report 2013-2014, World Economic Forum
http://www.weforum.org/issues/global-competitiveness

2.1.3  Microlending

Very weak, there are only a handful of microlending institutions operating in Venezuela according to Mix Market Reports.

Source: Mix Market 2011-2014, Cross Market Analysis-Venezuela
http://reports.mixmarket.org/crossmarket

2.1.3.1  Microfinance allows citizens without traditional creditworthiness to build a credit history. How many microfinance institutions are operating in the country? The exact number is unknown. It is a very small market.

2.1.3.2  What is the number of active borrowers per institution?
BanGente                                      44,874
MiBanco Venezuela                  N/A

Source: Microfinance Information Exchange, Venezuela , http://www.mixmarket.org/mfi

Source: Client Protection in Venezuela, Center for Financial Inclusion
http://www.centerforfinancialinclusion.org/publications-a-resources/client-protection-library/114-summary-of-client-protection-in-venezuela

 

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2.2 Other Sources

Core Question: Are entrepreneurs free to raise capital outside the banking system including venture capital and/or by issuing stock in a well-regulated stock exchange? No. Very Weak. The Venezuelan Stock Exchange is extremely small, and less than 20 firms are listed. “‘The transactions in an average day are smaller than the value of a motorbike,’” (Al Jazeera, 2014).

Source: Socialist Venezuela: World’s Top Stock Market 2014, Al Jazeera
http://www.aljazeera.com/indepth/features/2014/02/socialist-venezuela-world-top-stock-market-20142278426379258.html

Financial Freedom

2.2.1   How much control does the government exert over financial services? Score 20 for financial freedom. Very weak, heavy government control.

Source: Index of Economic Freedom 2014, Heritage Foundation
http://www.heritage.org/index/country/venezuela

Venture Capital

2.2.2   How easy is it for entrepreneurs to find venture capital? Very Weak – Score of 2.12 and a ranking of 117 out of 148.

Equity Investors

2.2.3   How easy is it to raise money by issuing shares on the stock market? Very Weak –Score of 1.80 and a ranking of 145 out of 148.

Source: The Global Competitiveness Report 2012-2013, World Economic Forum
http://www.weforum.org/issues/global-competitiveness

 

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2.3 Credit Bureau/

Core Question: Is comprehensive credit information available through public and private credit bureaus? Not really, there is no public credit registry available. There is a private registry but it lacks information and does not distribute information to retailers, utility companies or financial institutions. So while information is available via private credit registries, only a small percentage of adults are in the system and it lacks the capability of a full force credit system.

Overall ranking is 130 (2014), trend ↑. Ranked 154 in 2013.

Coverage

2.3.1   What is the depth of information available in credit bureaus? Very strong with a score of 5 out of 6. 6 is the strongest and 1 is the weakest.

Public

2.3.2   What is the extent of public credit registry coverage? 0%, there is no public credit registry in Venezuela, only private registries.

Private

2.3.3   What is the extent of private credit registry coverage? Weak, Venezuela has 16.7% private bureau coverage among adults.

Source: Doing Business 2014 – Getting Credit, World Bank
http://doingbusiness.org/data/exploreeconomies/venezuela#getting-credit

 

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In-Country Assessment Information


FQ 8. How available are mortgage loans for purchasing commercial property (office, retail, industrial and logistics), who is the typical user and what are the prevailing trends?


FQ 9. What are the interest rates, term and loan-to-value ratios?


FQ 10. In addition to microloans, to what extent are microenterprises (5 or fewer employees) active in the country? Approximately what percentage are formally registered firms?


FQ 11. What services other than loans such as insurance, funds transfers, and business development training are available from microfinance organizations for formal businesses?


FQ 12. What professional financial services are available outside state owned banks including insurance, credit cards and investment management?


FQ 13. What has been the appreciation (or depreciation) rate for commercial property over the last several years?


FQ 14. How available is seed money or angel investors for the start up of small businesses?


FQ 15. Do small businesses have access to credit information about potential customers?


FQ 16. Can businesses gain access to information about them contained in credit bureaus and correct inaccuracies?