ECUADOR - Real Estate & Construction
CEO, PROINCO Inmobiliaria
Santiago Ribadeneira obtained a Master’s in Business Administration at INCAE in Costa Rica, before beginning a distinguished career in finance in Ecuador and Latin America. Prior to his current position, he was the founder and executive president of Banco Solidario, working there from 1995 to 2006. He had previously served as Vice-President at Produbanco, and oversaw the work of the “Su Cambio por el Cambio“ foundation, dedicated to helping children living on the streets. In addition, he held a prominent management position for Banco Popular in Quito until 1984, and has run a number of other companies in the capital city over the past two decades.
My father, Ernestro Ribadeneira, was the founder of the El Recreo neighborhood in Quito, which was purpose-built for the workers of the La Internacional textile factory located in what today is Centro Comercial El Recreo. His idealism and social conscience inspires me to this day, and was the reason that, 25 years ago when I was a Vice-President of a bank, we created Su Cambio por El Cambio (Your Change for Change). This scheme involved the collection of spare change at a network of supermarkets, which was then channeled to the construction of homes for street children. In just three years, 2,000 street children received housing, while we also spread the message of the need for a positive upbringing that would inspire children to grow up as responsible adults.
In 1995, pursuing a closely held ambition of mine, I created Banco Solidario, the first Ecuadorean bank with a social mission to provide access to credit for self-employed parents and small businesses excluded from the conventional banking system. I was motivated by helping people escape the trap of debt and fostering the growth of small businesses that wanted to succeed but were excluded from regular means of funding.
A credit line of $1,000 from the informal sector would accrue $1,500 of interest per year. By relying on us instead, the client would only have to pay $260 in interest. The balance of $1,240 remains in the hands of those who worked hard to generate it.
From 1995 to 2006, we issued microcredits worth over $1 billion to 350,000 families and delivered 5,000 social homes with Bono de la Vivienda (the housing bonds program). Furthermore, we paved the way for microfinance in Ecuador. After us came Credife, Procredit, Bancos del Barrio, and many other cooperative banks. Nevertheless, we came to realize that certain ingrained paradigms within the industry had become obsolete and needed to be rethought in the interest of the segment.
Anyone not enrolled in the Social Security System is excluded, as the Bank of the Ecuadorean Institute of Social Security (BIESS) does not serve these individuals. Additionally, the unbanked population, representing 60% of the economically active population (EAP), lack instrumental information regarding financial information on matters such as assets or guarantees. They are often self-employed or small business owners who, because they are unbanked, fall prey to unscrupulous lenders; eroding what little savings they may have during times of personal crisis.
This requires a systematic effort toward rejecting accepted systems of banking. The organizations that have, thus far, served this segment have become cumbersome, and by extension, obliged to meet higher operational costs prompting many of them to withdraw from this less profitable branch of banking. Many sound lessons can be drawn from experiences abroad. In Asia, microloans are extended by cell phone and e-money has become massive in Kenya, greatly extending financial inclusion. In Venezuela, with the arrival of Chávez, a specialist microfinance bank became the loan originator for banks lacking experience in the microcredit business. The Chávez administration required that 3.5% of their portfolio be reserved for micro-enterprises. The model for the future in terms of financial inclusion must amalgamate existing concepts for the sustainable performance of this financial service.
We looked for a small financial entity, so that through it we could integrate these concepts and follow our vision of going further than just microfinancing. This meant that small business owners and their families would find in one place everything they need to improve their quality of life: microcredit, emergency credit, supplies for work, supplies for home, health insurance, medical assistance, hospitalization, and even “homes with the own little houses.”
When you follow your dreams and learn to listen to the voice of your heart, your visions materialize. We found that with PROINCO, which was the most well-recognized real estate brand in the country. Hence, with PROINCO already operating, we decided to add YAPA, a word that inspired us because of its meaning “to give more,” and which helped us to renew our philosophy in our new financial inclusion project. For us, giving a little bit more makes us happy.
PROINCO is a financial entity specializing in financial inclusion. With just 27 staff, we disburse $12 million in microcredit per month, leveraging the YAPA’s existing commercial network nationwide, as well as in partner institutions and other non-bank outlets. The client portfolio generated is then sold on to financial entities that lack our know-how and experience. To access credit, our unbanked clients can conveniently utilize an existing banking network to pay their YAPA fees. And now that electronic money is gaining ground, we will be issuing credit and receiving payment via cell phones, eliminating the need to even have a bank account.
We will offer the world’s first example of a system that generates products that are an alternative to social security for those not covered. This is the culmination of many years of planning based on a vision of inclusion set out by my father. To achieve this, we have formed an alliance with a financial entity from the Popular and Solidarity Economy.
Clients who are not affiliates of the IESS will invest in a certificate of contribution, becoming a member of the financial entity of the Popular and Solidarity Economy. The profit from this certificate will create a reserve fund for the retirement of small business owners. Also, being a member of the entity will give rights to health insurance, medical assistance, and hospitalization with microcredit for their business, credit for home and business supplies, and mortgage credit so that they can build what my father used to refer to as a “home in their own little house.” In this manner, we continue his legacy.
PROINCO Inmobiliaria is continuing on the same path. He founded El Recreo, and we have founded Nuevo Sur, which will become the neighborhood boasting the best services and housing in the south of Quito. There is a commercial center planned, as well as a theater, schools, and even a dry port with storage for heavy trucks, sparing merchants the long journey to Quito. All this was designed by considering improvements to the overall quality of life of local families. Meanwhile, a separate project of this type in the parish of Cutuglahua, in Mejía Canton—the new development center of Quito—has received foreign investment.
Our sole mission is to improve the quality of life of the communities that receive our real estate investments. We are developing the best project on the Ecuadorean coast in Jama, Punta Ballena. By combining the efforts of the public and private sectors, we are improving social conditions in El Matal, in order to transform it into a prime tourist attraction, which is in line with the government’s goal of redeveloping our beaches and towns. It will be known as Mundo Jama, and will prove the point that merely planning a socially worthwhile scheme is the first bold step toward realizing it in reality.
Yes. This is our philosophy, and I hope God will give us the light and life to continue enjoying it, and that we can achieve all that we have proposed and that we can leave our children with a mission and a task to fulfill.
ECUADOR - Energy & Mining
General Manager, Electric Corporation of Ecuador (CELEC EP)