San Jose del Cabo, Mexico – Agrofinanzas, S.A. de C.V., SOFOL (Agrofinanzas) was recognized June 19 by the G20 as one of 15 leading companies in the world on inclusive business innovation (The G20 Challenge on Inclusive Business Innovation), during a ceremony headed by the Executive Secretary of the Mexican Agency for International Development Cooperation and Chair of the G20 Development Working Group, Amb. Rogelio Granguillhome Morfín.

The award was granted to Agrofinanzas because, since its inception in 2006, it has designed and successfully implemented a business model that provides loans for Mexican small farmers and rural producers, enabling them to access the formal credit market from which they were previously excluded. Loans from Agrofinanzas carry affordable interest rates substantially lower than consumer lending and microfinance alternatives.

Referring to this global award, Mr. Francisco Mere, Agrofinanzas’ CEO commented: “We are proud to receive this recognition, but are even more pleased that, thanks to our business model, since our inception we have granted more than 80,000 loans to small agricultural producers, 80% of whom had no prior access to the formal financial sector.” He added, “Today, these producers are able to establish a credit history that gives them the opportunity to obtain other financing products. This way, we provide the tools to empower them to take control of their financial future and thus improve their economic situation in a win-win relationship.”

On the results of Agrofinazas financing system he mentioned: “We are currently the leaders in supply chain financing in the agribusiness sector in Mexico. Our innovative business model, based on technology and strategic alliances, has allowed the company to offer an attractive return to its investors for the past three years, while, according to a study we commissioned in 2011, over 30% of our customers have improved their economic situation since they received a loan from Agrofinanzas.”

The G20 on Inclusive Business Innovation Challenge is a global initiative launched at the G20 Summit ofNovember 2011 in Cannes that recognizes companies that have succeeded in developing innovative, scalable, as well as commercially viable and replicable inclusive business models which work with low-income people living in developing countries as suppliers, distributors, retailers, or customers, becoming in what is known as “inclusive businesses.”

Agrofinanzas is a financial institution in Mexico, dedicated to providing financing to unbanked producers and businesses in the food and agricultural sector in rural and suburban areas, with special emphasis on supporting sustainability and financial inclusion in Mexico. It was established and authorized by the Mexican Ministry of Finance in 2006 and is supervised by the National Banking and Securities Commission. It has investment grade rating by Fitch Ratings Mexico and its debt securities are traded on the Mexican Stock Exchange.

As of April 2012, Agrofinanzas has MxP$1.742 billion in assets under management and a loan portfolio of nearly MxP$1.6 billion, distributed in 22 states of the country and more than 20 supply chains related to agribusiness, aquaculture, forestry and renewable energy. In the first four months of 2012, its loan portfolio grew by 27% when compared to December 2011, while at the end of April 2012 its non-performing loans were 3.1% of its loans’ portfolio.

Image Courtesy of  G20

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Washington, U.S.A. – The Group of 20, the powerful international organization whose heads of state will meet next week in Mexico to discuss the global economy, needs to change its membership criteria in order to establish a legitimacy that is fast depleting at a critical time. That is the conclusion of a new study published by the 362,000-member National Taxpayers Union (NTU). The study suggests replacing four current members of the G20 based on proposed membership criteria.

“With the anemic economic recovery weakening, global leaders should quickly consider how to fulfill the G20′s potential for building economic stability,” write the study’s authors, Alex M. Brill and James K. Glassman. “The place to start is by establishing criteria for membership and adjusting the group’s composition accordingly.”

The authors develop a system that uses key numerical indicators measuring nations’ size, governance, and financial interconnectedness to establish country-by-country rankings for current and potential G20 members. Their goal is to create a practical methodology for membership standards that would give the G20 the legitimacy and trust it needs to fulfill its stated objectives: restoring global growth, strengthening the international financial system, and reforming international financial institutions.

Findings of the study include results that show two current G20 countries—Argentina and Indonesia— are falling far short of the proposed membership criteria and should be removed from the body. Two other current G20 countries—Russia and Mexico—fail to qualify by a very small margin. Four current nonmembers—Malaysia, Norway, Singapore, and Switzerland—should replace these countries.

The study also found membership should be reevaluated periodically—a minimum of every five years and a maximum of every ten years. Such a system would lend further legitimacy to the G20 as well as provide “an incentive for countries on the cusp of gaining membership to implement reforms or strengthen their economies’ growth prospects.”

The authors stress that for the G20 to avoid the “political and operational baggage” of other organizations like the United Nations and the International Monetary Fund, solid membership criteria “can lend credibility to the G20 without affecting the manner in which it conducts its policymaking.”

NTU Executive Vice President Pete Sepp notes that by following Brill’s and Glassman’s recommendations, “[T]he G20 could take a first step to becoming a new model of economic policymaking that depends not on costly bailouts but more on proactive self-discipline in the common interest; such a model rewards free-market solutions from innovators instead of statist behavior from bad actors.”

Alex M. Brill is a research fellow at the American Enterprise Institute and former chief economist and policy director to the House Ways and Means Committee.

Ambassador James K. Glassman is the Executive Director of the George W. Bush Institute and a member of the newly established Investor Advisory Committee of the Securities and Exchange Commission. He is a former U.S. Under Secretary of State for Public Diplomacy and Public Affairs.

NTU is a nonprofit, nonpartisan organization founded in 1969 to work for limited government and economic prosperity in the U.S. and around the world. The group has long advocated for more accountable multilateral policymaking bodies that focus on practical, nimble responses to economic growth challenges instead of costly, bureaucratic interventions.

Image Courtesy of  G20

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