Written by Alejandro Caminos
A career in finance can be very rewarding, not just monetarily but also emotionally and intellectually. This is especially true for Latinos interested in a career in finance where our language and cultural sensitivities can be leveraged to make inroads and changes where others can’t. We can use our finance, language and cultural skills to bridge gaps and help integrate individuals and companies into in addressing their financing/financial goals.
As Latinos we have the power to make meaningful changes, regardless of the career we choose within the broad industry of finance. This was my experience when, after the US financial crisis, I took the opportunity to leverage my skills towards working with governments and help further their economies. So, in 2008 I started IPFC Group a consulting firm that allowed me to work with governments, and NGOs throughout Latina America, Africa and Asia.
One problem that I found immediately evident and present, was how farmers throughout developing countries have struggled to secure adequate access to capital for both capital and operational needs from financial institutions. Therefore they found themselves dependant largely on the buyers of their products, the distributors and sellers for credit. However such loans are often at unfavorable terms and rates, leaving the farmer with a profit margin too small to sustain their business or live decently. This lack of access to capital is becoming a bigger problem for many countries where farming plays a significant role in their GDP. Consequently this leaves the government’s farm bank overwhelmed and as the only sustainable source of lending.
In 2010, I worked in the Dominican Republic where my assignment was to help increase the flow of capital towards the farm sector. What was revealing was the gap that existed between the financial and farming sectors. Specifically as it pertained towards micro, small, medium sized enterprises (MSMEs), who represent a major source of employment to the country’s formal and informal economies, these were largely ignored. The challenges required bridging the gap between these two sectors which led me to develop a farm credit risk model for banks to use in addition to their commercial credit risk model they used for non-farm clients. These commercial credit risk models inadequately quantified farm risk deeming MSME farmers unfit for credit and causing financial institutions to pass on lending opportunities that otherwise provided a profitable margin for financial institutions.
Although success was achieved in some levels, much remains to be done in this and in many other areas. There is plenty of room for innovation and bridging gaps both here in the U.S. and abroad. For this reason I appeal to you as a Latino in Finance to never forget how your skills in finance and as a Latino can become a tool to help make meaningful change.