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News tagged as "migrants"
July 19, 2013

Microfinance back and forth: development potential of migrants

Tags: microfinance, migrants, Spain | by Inma Martín Alegre, Servei Solidari

The economic crisis and the productive return

The organizations - as ours - that are dedicated to working with people of foreign origin living in Spain, have observed in the last two years a new situation concerning this collective. Migrants are now planning to return to their home countries to settle permanently.

The feasibility of a permanent return to the home country takes the lead in an environment of economic crisis in Spain, which has generated a dramatic loss of jobs in sectors where these people were hired mostly (such as construction).

Many of their countries of origin (in which migrants have decisively influenced the impact of remittances) are currently enjoying a phase of economic emergence. Adding personal constraints such as physical separation from family, the opportunity of a new (return) migratory process becomes more than reasonable for them.  

This process implies, indeed, a rearrangement of expectations and the design of a new life project. Many of these people are over 40 years old and present a low-employability profile in a new dynamic and demanding labor market. On the other hand, the same migration project in Spain has involved training and experience in new professional areas. The migrant then decides to create its own source of income:  the productive return is one of the most popular choices.

In these cases, although the person holds savings or some capital from the state program that enables the recovery of the capitalization of unemployment benefits in their country of origin, most of them need external financing.  Without it, the business project they have in mind will not be achievable.    

An opportunity to be grasped by MFIs

The financial systems of these countries conceive credit customers only those who can present a credit profile not only suitable but who can prove a minimum time of residence in the country. This policy also applies in the context of microfinance institutions, which would finance specially those projects which are not starts-up but have been operating at least for one year minimum.  


The migrant is left in a situation, therefore, obliged to necessarily devote the total amount saved to be invested in his/her business if s/he wants to start working immediately after returning home. Otherwise the business project results in a much smaller and precarious initiative than the initial project or the migrant will survive for a while with his savings, waiting to reach the required risk profile for accessing a loan.

The possibility of having this group as clients is an option that some MFIs have begun to value. From the commercial point of view is certainly a large market niche for several reasons. First, migrants can capitalize part of their remittances before returning through transfers to an account in their name. They are an important customer group that would generate revenue in the form of savings. Secondly migrants in Spain have savings to be transferred at the time they return to their home country.The beneficial impact for the migrants is evident as they can start planning their business ventures before returning and consequently organize their personal finances according to the future situation.

For this to happen, MFIs and lenders must be able to establish the necessary processes to disseminate information on the availability of these products and to facilitate and expedite the paperwork.

Migrant organizations in Spain are undoubtedly allied to achieving this ultimate goal as they guarantee capacity to disseminate information to potential recipients.

With the support of new technologies, by promoting the accessibility of management through the use of internet and smartphones such processes would be reasonably simple to implement and would respond finally to a clear need for this large group of people .

Initiative financed by: Initiative financed by AECID
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