"50% of our microcredit portfolio is affected by extortion."

The president of Caja Arequipa, María Pía Palacios, has highlighted the growing concern over the impact of insecurity on the microfinance sector in Peru. In a recent interview, Palacios revealed that approximately 50% of the institution's microcredit portfolio is affected by cases of extortion, leading to an alarming crisis in the income flow of micro-entrepreneurs. This situation has caused risk assessments to increasingly focus on this factor, complicating the repayment capacity of entrepreneurs.

Insecurity is not an isolated problem; it has become a pervasive reality that affects everyone, particularly micro-entrepreneurs, who are mostly the driving force of the national economy. Sectors such as transportation, construction, and commerce are the hardest hit, and Palacios emphasized that the government's response has been insufficient. "We see it every day, day in and day out, but nothing is done from the State," she lamented, reflecting the frustration of those trying to support entrepreneurs in an adverse environment.

Despite the challenges, the president of Caja Arequipa offered a note of optimism when discussing the recent holiday campaign. Although last year was disastrous, since October of this year, there has been a significant increase in the disbursement of microcredits, reaching approximately S/ 830 million, which represents a 15% increase compared to the previous quarter. Palacios estimates that the holiday campaign could close with 20% more success than last year, suggesting a gradual recovery within the sector.

However, despite this improvement, it is important to note that delinquency in payments has been a complicated issue. Palacios indicated that financial institutions have been committed to cleaning up their portfolios and stated that the worst of the year has already passed. "We are going through a year of constant challenges, and each year presents a different challenge," she commented, anticipating a hopeful first half of 2025, although she is cautious about what might happen in the second half due to the political climate.

In this context, innovation becomes a key element for maintaining competitiveness. The president emphasized the need to identify the needs of micro-entrepreneurs and develop specific products for them. A crucial point is the competition with "gota a gota," an informal credit system that, despite its high costs, is attractive due to its accessibility. Palacios highlighted that financial institutions must simplify their credit access processes to compete effectively.

Financial education was also an important topic in the conversation, with Palacios emphasizing that it is essential for clients to understand that "cheap can be expensive." The growing popularity of applications linked to "gota a gota" has raised concerns; the Superintendence of Banking and Insurance (SBS) identified 70 applications with 3.7 million downloads, indicating a potential increase in the use of informal loans. The intentions of some legislators to repeal the law that limits interest rates have also raised concerns in the sector.

The future of microcredit in Peru is not just an economic issue but also a political one. Palacios indicated that political uncertainty can have a significant impact on how financial institutions operate and can support micro-entrepreneurs. The lack of concrete action from the government, coupled with the pressure of insecurity, creates an environment where innovation and financial education must be priorities to help entrepreneurs navigate these turbulent waters.

As the economic landscape develops, institutions like Caja Arequipa have the task of adapting, innovating, and educating. The resilience of Peruvian micro-entrepreneurs, along with the right support and a safer environment, could be the key to recovery and growth in the coming years. However, for this to happen, it is essential that both the financial sector and the government work together to address the issues affecting the foundations of the Peruvian economy.