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65% of microentrepreneurs do not have a RUC or accounting record
Posted On 19 Feb 2018
Ecuadormews:
A research carried out by the Network of Development Financial Institutions reveals that 61% of entrepreneurs work in the urban area of the country.
There is still lack of access to banking. According to a study carried out by the Network of Financial Development Institutions (RFD) in 2017, there are 4.2 million microentrepreneurs in Ecuador, of which 39%, approximately 1.5 million, are in the rural sector.
The figures also reveal that 65% of microentrepreneurs nationwide do not have a single register of taxpayers (RUC) and at least 70% do not have any accounting records of their activity (see infographic). For access to loans, 29% of entrepreneurs mainly use banks, mutual funds or private financial entities.
Another 28% acquire commitments with savings and credit cooperatives. Family and friends are also a source for obtaining a loan, since 22% of microentrepreneurs use these sources. In smaller proportion, they go to public financial institutions (6%) such as the National Financial Corporation; to the Banco del Instituto Ecuatoriano de Seguridad Social (Biess) (7%), or to communal banks (3%).
Finally, there is a population segment of low-accumulation microentrepreneurs such as retirees or young people who remain excluded and it is necessary to provide them with adequate services.
According to Valeria Llerena, executive director of the RFD, the study concludes that the country still has a level of financial exclusion because 55% of the population lacks access to at least one formal banking product or another type of institution.
On the other hand, the analysis shows the use of means of payment. The most used channel is the ATM with 76.8% of the total transactions as of June 2017. It is followed by transactions made in windows or offices and by non-banking correspondents.
However, for the amount of cash withdrawals, offices and windows are still the most used means. In terms of savings, it is estimated that about half of Ecuadorian households have an account in a financial institution. The percentage of account tenure is lower in the rural sector and in the poorest strata.
“It is fundamental to strengthen the financial education programs so that potential users know the differences in the management of the various credit, savings and insurance products, so that they can make decisions that allow them to finance their homes, preferably via savings because the excessive credit leads to over-indebtedness, “said Llerena.
The research recognizes the importance of the electronic money project promoted in the first instance by the Central Bank of Ecuador (BCE) and currently in a transition to public and private banks and savings and credit cooperatives. The mobile wallet is considered one of the mechanisms with the greatest potential to increase financial inclusion in the country.
The study recommends a public policy that promotes the use of electronic means with tax incentives to cooperatives or NGOs that serve geographical areas to which large entities do not reach. The results of the study were based on the Employment, Unemployment and Unemployment Survey of June 2017; the Living Conditions Survey of 2014; data from the Development Bank of Latin America; of the BCE, among others.
Entrepreneurs
43 years is the average age
The age of the microentrepreneurs in the Sierra was 45 years; in the Coast of 42.7 years, and in the Amazon of 41, 9 years. The highest age entrepreneurs are in the rural sector, which reflects the migration from the countryside to the city.
73 percent of microentrepreneurs in Ecuador have their business as their main activity.
Low educational level
51% of microentrepreneurs have a primary education; 36.5% finished school and 12.5% finished college. (I)
