Accelerating financial health for Latin American businesses
Moody’s has a strong and growing presence in Latin America. In 2019, we launched Moody’s Local, a domestic ratings platform focused on serving the needs of local capital markets in Latin America. That is why we have also expanded our CSR efforts there, as part of our commitment to supporting the social, environmental and financial health of Latin American communities.
In a strong example of our focus in the region, we collaborated with our Reshape Tomorrow™ partner Village Capital to host Finance Forward Latin America 2019.
Despite a recent increase in access to bank accounts, many Latin American small and medium-sized businesses continue to battle income instability. With the prevalence of a cash-based economy and insufficient financial education, it can be difficult for people to take the necessary steps to improve their financial health. Known for its unique peer-selected investment process, Village Capital finds, trains and invests in early-stage entrepreneurs solving major global problems. The organization also runs one of the most active financial health accelerators in the world, with more than 20 programs that have supported over 250 startups worldwide since 2014.
“We’ve seen real progress on financial inclusion in the past few years. But simply being included is only the start,” says Village Capital CEO Allie Burns. “Now that people are in the system, we need to make sure they can actually use the system to build their financial health.”
“We’ve seen real progress on financial inclusion in the past few years. But simply being included is only the start.”
CEO, VILLAGE CAPITAL
Regional startups, real solutions
Micro, small and medium-sized enterprises can play a significant role in generating economic activity and employment. Yet just 45% of those enterprises in Latin America survive longer than two years, compared with nearly 80% in Europe. Meanwhile, these small business owners grapple with the stressful financial situations that all business owners face, such as managing cash flow and liquidity and accessing capital.
With Finance Forward Latin America 2019, Moody’s and Village Capital aimed to empower entrepreneurs with the financial knowledge and resources they need to succeed and to create a positive impact in their communities. Developed as part of a multiyear global coalition created in partnership with MetLife Foundation, PayPal and other local partners, the program invited Latin American entrepreneurs to solve some of their region’s most pressing financial health challenges.
After reviewing 182 applications, Moody’s, Village Capital and the other major partners chose 12 startups from across Latin America to participate, including companies from Brazil, Chile, Colombia and Mexico. The initiative marked the first time that Village Capital’s accelerator held major events in four Latin American countries, making it the only one of its kind in the region.
A panel on peer-selected investments in Latin America during the 2019 South by Southwest Conference showcased the unique strength of Finance Forward Latin America 2019. The panel featured Alberto Jones Tamayo, representative director of Moody’s de Mexico.
A local ratings platform for local communities
In September 2019, we launched Moody’s Local, a domestic credit ratings platform focused on serving the needs of capital markets in Latin America. The platform uses unique methodologies to provide credit ratings and research for financial institutions, corporate entities, local governments and other sectors.
Moody’s Local tailors its research to the needs of these markets and provides research materials in the local language, allowing for greater efficiency and timeliness. In addition, Moody’s Local is developing non-rating products that are suitable for these markets, such as assessments for social performance and small and medium-sized enterprises.
The initial launch included a rebranding of Moody’s-owned affiliates in Bolivia, Panama and Peru. In the future, Moody’s Local will expand to other countries in the region.
“Moody’s Local will give us a stronger platform to address the needs of local markets in Latin America,” says Martín Fernández Romero, managing director and regional head of Latin America for Moody’s Investors Service. “This strategy allows us to grow our footprint while maintaining our core values: transparency, integrity and consistency in our rating process.”
Making a difference where we work
Moody’s is dedicated to the well-being of the communities where we do business. In 2019, our work with Village Capital and other local partners supported communities across Latin America.
Conciencia: Moody’s employees volunteered with Conciencia’s “Emprendiendo Tu Futuro” (“Building Your Future”) program to help entrepreneurs in Argentina train for jobs and develop professional skills. Moody’s employees engaged with the program as mentors and facilitators for a series of workshops covering budgets, income and expenses, and loans and interest rates.
Vocação: Our funding supported one of Vocação’s intensive job education and mentoring programs for students preparing to enter the formal labor market. In 2019, Moody’s employees volunteered with the program and provided mentorship to students interested in entering careers in the fields of finance, economics, technology and math.
Future Food Institute: In December, we added global nonprofit Future Food Institute to our partner portfolio. The institute’s Fazenda São Paulo Agroforestry Project will improve and enrich degraded land, develop a 478,000-plant eucalyptus forest, restore 287 hectares of native savannah, foster the area’s biodiversity and fauna, and create jobs for forest workers.
Instituto Perene: With a grant from the Moody’s Foundation, Instituto Perene — a nonprofit dedicated to promoting development while protecting natural resources in rural Brazil — installed 100 improved cookstove models in the state of Bahia. The new stoves were completed in July and are estimated to reduce carbon dioxide emissions by 1,700 metric tons over 10 years. In 2020, we will provide an additional 136 stoves through a renewed grant, expected to generate a total 2,217 metric tons of offset.
A powerful experience for entrepreneurs
Over three months, the entrepreneurs in Village Capital’s program attended a series of multiday workshops in Santiago, Chile; São Paulo; and Mexico City. Participants attended sessions with mentors from different organizations, including Moody’s employees, at the São Paulo and Mexico City workshops.
“As the regional partner for Finance Forward in Latin America, Moody’s brought such a unique and powerful perspective to the program,” says Dustin Shay, senior director of partnerships at Village Capital. “Their level of credibility within the financial services industry helped us to engage the startups at a deeper level and address some of the key challenges for small businesses across the region.”
At the end of the program, the entrepreneurs selected the participating startups they believed were “most investment ready.” The peer-selected startups received funding to help strengthen and scale their business operations. They also participated in a pitch workshop in Buenos Aires, Argentina, and met with local investors and venture capital funds.
Looking toward the future of Finance Forward Latin America, Shay is most excited about the opportunity to continue fostering these kinds of connections. “This program is a bridge to connect entrepreneurs with customers, investors and partners across Latin America, scaling contextualized solutions to systemic issues in financial health,” he says. “We’re excited to really build on that and continue to deepen those connections next year.”
“This program is a bridge to connect entrepreneurs with customers, investors and partners across Latin America, scaling contextualized solutions to systemic issues in financial health.”
Senior Director of Partnerships, Village Capital