Q&A: Juan Eduardo Errazuriz, Caja de Compensacion chairman

Wednesday, October 23, 2002

Micro-lending is gaining support around the globe as a way to help people out of poverty. BNamericas spoke recently with the chairman of Chilean lending and social security institution Caja de Compensacion de Los Andes, Juan Eduardo Errazuriz, about micro lending in Chile.

BNamericas: How much has Los Andes destined to micro lending to date, in terms of total funds?

Errazuriz: During the last 28 years we have granted micro loans worth a total of US$2.5bn.

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BNamericas: And you only lend to your affiliates?

Errazuriz: Yes, we grant micro loans to our affiliates and today we have some 40,000 micro loan clients.

BNamericas: Is your objective to increase your client base and lending volume in the future or are you content with current levels?

Errazuriz: We want to boost both volume and clients, but to do so we want a change in the legal framework. Today, only people that are employed by a private company or state-run corporations can become an affiliate through his or her employer, but there are millions of independent and public sector workers that would be potential affiliates or micro loan clients, if only the law permitted their incorporation.

BNamericas: What about your interest rates, are they below those of the traditional private banks?

Errazuriz: I would say that our interest rates are between 10% and 20% below that of the banks in Chile.

BNamericas: How do you see the micro loan culture that exists today in Chile, is there widespread agreement on the need for more micro lending?

Errazuriz: We still have a long way to go, but the visit last year by Mohammad Yunus, the founder of the Bangladesh-based Grameen Bank, was very important for micro lending in Chile because he is a great source of inspiration and he has shown that his way to reduce poverty really works.

BNamericas: Is there maybe a cultural problem in Chile with respect to micro lending?

Errazuriz: Unfortunately, our fathers and grandfathers always told us that one should help the poor by giving them handouts, and that's obviously not the way to do it because the poor stay poor .The philosophy of Yanus to empower the poor is a way of providing concrete results and helping to eliminate our Spanish-Christian mentality of helping the poor by charity instead of providing them with opportunities to help themselves.

BNamericas: Can you give me any examples of some concrete results that came out of Yunus's visit in terms of micro lending?

Errazuriz: We made very important progress in terms of coordination in the micro loan sector. Together with Yunus we discovered there were a great number of institutions working towards the same objectives, but with very little or no coordination, and now we have an established network to better coordinate our micro loan efforts.

BNamericas: Will there be another visit from Mr. Yunus in the near future?

Errazuriz: The interest in Chile for Yunus and his philosophy was impressive and he really became fond of Chile and we're in regular contact with him. He plans a visit to Chile next year again to take stock of what has been done since his last first visit.


La Caja de Compensacion de Los Andes is an employee-funded institution that provides its affiliates with micro loans and a wide range of social security-related benefits. The Grameen Bank is the world's most famous "poor man's bank" and its founder Mohammad Yunus is today a world authority on micro lending and poverty reduction.