Peru has a relatively well-developed microfinance sector, which is represented by diverse types of institutions ranging from larger banks to NGO credit cooperatives. Small- and medium-sized firms are very common in Peru, making up an estimated 42% of the GDP in 1998, but there is also a significantly high level of informal and self-employment in the country. These informal businesses tend to have lower productivity and lower wages due to less education and access to infrastructure.

Click here to view internship and volunteer opportunities in micro-enterprise/microfinance in Peru

Of those who work in the informal sector, it is estimated that 40% are poor, demonstrating the need for increased skill levels and infrastructure to support small business development. Business registration practices and tax filing can be complicated, but without these steps, informal businesses have limited access to benefits, credit, and government assistance. Meanwhile, small loans and savings cooperatives need to be strengthened in order to work around the difficulties that rural producers have in complying with the administrative and guarantee requirements of large financial institutions.

Puno is a center of commercial activity in the region, and recent years have witnessed the growth of small- and medium-sized business, as well as local fairs and markets in the city. There has also been an increase in migration to the city, especially among parents who leave behind their agricultural ties to rural areas in order to find better opportunities for their children. These are the individuals that often end up in the informal sector, in very small businesses or selling food or crafts on the street or in markets. There is very little opportunity for growth or advancement in this labor sector, and banks will not give loans to informal business owners.

The need created by this situation throughout the past decade prompted the creation of non-governmental organizations that offer small loans and business skills training to the low-income citizens of Puno, predominantly to women. FSD supports these types of projects that are essential to the economic development of Puno. Whether you are assisting the implementation of capacity-building workshops or supporting micro-lending programs, your work with FSD will directly result in the creation and development of micro-enterprises that allow families to climb out of poverty traps.

+ Click here to return to the Peru Development Overview Page.

+ To search through a directory of FSD's micro-enterprise/microfinance organizations, see the Organization Database.

+ To review recent projects implemented by volunteers and interns and funded by FSD, see
Recent Project Examples.