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Technical Note
Supply-Side
Assessment of
Financial Inclusion
in Paraguay
October 2014
DRAFT
2014 International Bank for Reconstruction and Development / The World Bank
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Acronyms
ADEFI: Asociacin de Financieras (Association of finance companies)
AFD: Agencia Financiera de Desarrollo
AML: Anti-Money Laundering
ANDE: Administracin Nacional de Electricidad (National Administration of Electricity)
ASOBAN: Asociacin de Bancos (Association of banks)
ATM: Automatic Teller Machine
BCP: Banco Central de Paraguay
BNF: Banco Nacional de Fomento
CAH: Crdito Agrcola de Habilitacin
CCT: Conditional Cash Transfer
CDA: Certificado de depsito de ahorro (Certificate of Deposit)
CENCOPAN: Central de Cooperativas del rea Nacional Ltda.
CNV: Comisin Nacional de Valores (Securities Commission)
CONATEL: Comisin Nacional de Telecomunicaciones (National Telecomunication Commission)
CONPACOOP: Confederacin Paraguaya de Cooperativas (Paraguayan Confederation of Cooperatives)
Co-op: Cooperative
DGEEC: Direccin General de Estadstica, Encuestas y Censos (National Statistic, Surveys, and Census Office)
DNCP: Direccin Nacional de Contrataciones Pblicas (National Procurement Office)
EIF: Encuesta sobre Inclusin Financiera (Survey on Financial Inclusion)
E-money: Electronic money
EMPES: Entidades de medio de pago electrnico (Companies that provide electronic payments)
EPH: Encuesta Permanente de Hogares (National Household Survey)
FAS: Financial Access Survey
FSAP: Financial Sector Assessment Program
G2P: Government to Person
IFC: International Finance Company
IMF: International Monetary Fund
INCOOP: Instituto Nacional de Cooperativismo (National Institute of Cooperativism)
INMU: Instituto Nacional de Mutuales (National Institute of Mutuals)
IPS: Instituto de Previsin Social (Paraguayan Social Security Institute)
KYC: Know Your Client
LAC: Latin America and the Caribbean
MFI: Microfinance Institution
MNO: Mobile Network Operator
MSMEs: Micro, Small and Medium Enterprises
NGO: Non-Governmental Organization
NPL: Non-performing loans
NSA: Nuestra Seora de la Asuncin
OTC: Over-the-counter
ROSCA: Rotating Savings and Credit Association
RUC: Registro nico del Contribuyente (Business registration)
SEPRELAD: Secretara de Prevencin de Lavado de Dinero o Bienes (Secretary for the Prevention of Money Laundering)
SME: Small and medium enterprises
Exchange rate: 1 USD=4,280 Gs.(September 2014)
Acknowledgements
This technical note was prepared by Celina Lee under the supervision of Jane Hwang. Overall guidance was provided by
Alfonso Garcia Mora (Sector Manager, Finance & Markets Group, Latin America and the Caribbean).
The team thanks Yoko Doi, David Grace, Maria Cristina Heisecke Paredes, Mariana Paredes, Doug Randall, Dante Mossi
and Javier Suarez for their substantive comments during various stages of this project. Korotoumou Ouattara, Gunhild Berg
and Leyla Castillo also provided invaluable insights to this technical note.
The team gratefully acknowledges the Paraguayan authorities, including the Banco Central, Ministerio de Hacienda, Instituto
Nacional de Cooperativismo and Secretara Tcnica de Planificacin, for their cooperation and collaboration throughout the
project.
Finally, the team is particularly appreciative of the financial sector community in Paraguay who generously gave their time
and views through extensive meetings and discussions to provide their information and perspective of the financial sector in
Paraguay.
Paraguay Supply Side Technical Note 2014
Table of Contents
Executive Summary ............................................................................................... 1
Introduction ......................................................................................................... 5
Landscape ........................................................................................................ 7
Savings ............................................................................................................. 33
Credit ............................................................................................................... 33
Payments and Transfers .................................................................................. 33
Insurance ......................................................................................................... 33
Summary of Recommendations ..................................................................... 33
References ........................................................................................................... 72
Annex A ................................................................................................................ 73
Annex B ............................................................................................................... 82
Annex C ............................................................................................................... 82
Paraguay Supply Side Technical Note 2014 | 1
Executive Summary
Note: Number of formal accounts held by cooperatives is the number of cooperative members. Not all members necessarily have accounts.
This technical note presents the findings of a supply-
side study of financial services in Paraguay. This note,
together with two other technical notes (on the demand-
side and on the legal-side), will help inform the
Paraguayan national financial inclusion strategy. This
study covers the current status of financial sector overall,
products and services (savings, credit, payments, and
1 Throughout this note, unless otherwise noted, banks or the banking sector refers to both banks and finance companies as a general category.
insurance), and service providers, focusing mostly on
formal providers, and to a lesser extent, semi-formal and
informal service providers.
The Paraguayan financial sector has experienced
continued growth in recent years. Outstanding bank
(and finance company1) loans represent 39% of GDP in
2014, up from 12% in 20042. Bank deposits represent
2 Source: Current data from BCP, based on current performing loans as of April 2014 and 2013 GDP. 2004 data from International Monetary Fund
Paraguay Supply Side Technical Note 2014
| 2
42.6% of GDP in 2014, up from 24% in 2004.3 There are
208 bank deposit accounts and 202 bank borrowers per
1,000 adults4. There are 10.25 bank branches and 23.31
bank ATMs per 100,000 adults.5 Outstanding cooperative
loans represent 8% of GDP6. Cooperative deposits
represent 6% of GDP7. There are 291 members of savings
and credit cooperatives per 1,000 adults8.
There is a diverse set of entities providing financial
services in Paraguay. The formal financial institutions
are banks, finance companies and cooperatives with
savings and credit as their main activity. Semi-formal is
defined as companies that are properly authorized to
conduct business, but are not actively supervised from a
financial perspective. Semi-formal players include casas
de credito, prepaid medicine, etc. Informal players are
those that are not legally recognized as any type of
business or organization. While anecdotal evidence
suggests that the semi-formal and informal sectors are in
fact playing a consequential role in Paraguay, this
technical note does not concentrate much on them mainly
because data on the size and impact of this sector is still
limited. More in-depth research in this area would be
valuable.
There are 16 banks, 12 finance companies, and 330
cooperatives whose primary business is saving and
credit, and an additional 120 other cooperatives that
provides financial services as a secondary activity
operating in the country. Cooperatives hold
approx