Small-to-midsize businesses in Latin America and the Caribbean are flourishing. SMBs account for about one third of the region's GDP, employ roughly 70% of the official labor force and represent one of the fastest-growing segments of the economy. Collectively, LatAm SMBs have grown to $2-$3 trillion in value– a figure that only promises to grow on the back of an increasingly diverse pool of human capital, robust access to financial capital, and an ever-expanding array of technological adoptions.

For over six years, I've been working with Latin American SMBs on creating channels these businesses can leverage to access credit. The market for SMB credit in LatAm is vast; its characteristics vary on a country-to-country basis, but from my perspective the immensity of economic opportunities is clear. 

Given their potential, how come LatAm SMBs still struggle to access credit from capital providers?

The $3 trillion opportunity

First, let us dive into the drivers behind this opportunity and the current tech landscape. 

Human capital

The availability of human capital, financial capital and technology-enabled productivity are the driving forces of the region. Human capital is projected to grow further: According to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), interactive demographic indicators show us that Latin America has a few decades of population growth ahead, which means more younger people, more growth, more consumer demand:

Source: Economic Commission for Latin America and the Caribbean 

Women’s labor force participation, another factor crucially correlated with economic growth, is also trending in the right direction. This is not unique to Latin America, but recent positive trends are extremely important given the lack of high-level executive positions held by women in the region. According to a shocking survey published by Statista, the percentage of female CEOs was commonly perceived to be nearly 27% across 27 countries in the region, while the actual number sits at about 3% (numbers don’t need commentary sometimes, do they?). Women’s participation in the labor force tends to be influenced by economic cycles as well as black swan events like the Covid-19 pandemic, but still proves resilient, as seen in the graph below.