- More than 82% of artisanal and small-scale miners keep up with their personal loan payments.
- The development of financial mechanisms for the ASGM sector can encourage their access to banking and financial services, as well as the formal market.
In Peru, around 300,000 people work in artisanal and small-scale gold mining (ASM). However, informality and bad perception of the sector are barriers to their financing access that allows them to invest in working capital and acquire more environmentally responsible technologies. The publication "Towards financial inclusion for ASM" addresses this issue and presents data of interest to the mining sector and financial entities.
Financial inclusion in Peru is defined as the access to and use of quality financial services by all segments of the population. According to data from the National Institute of Statistics and Informatics (INEI), 1 out of every 2 people is employed by a micro and small enterprise (MSE). Their inclusion in the financial system is crucial, since it contributes to the financing of ventures, formalization, and growth.
Although ASM is a small or micro-enterprise, the study reveals that currently there is no financial product or service designed for this mining sector. Only 1% of small mining companies are served by the bank as MSE or enterprise.
This is largely explained by barriers that come from both parties. On the one hand, the informality that a large part of artisanal and small-scale mining organizations tends to work, and on the other hand, the perception of risk and the internal policies of financial institutions.
In this regard, Vilma Morales, Director of Pollution Control and Chemical Substances of the Ministry of the Environment (MINAM) points out that “there is still a lot of mistrust in the ASM sector due to the image they project regarding informality, environment caring, or their payment capacity; therefore, the process of (financial) inclusion of the sector will demand time and commitment.”
The publication “Towards financial inclusion for ASM” highlights the “need to generate some clarity regarding concepts such as informal mining, illegal mining and formal mining, which differ greatly from each other,” comments Alberto Rojas, General Director of Mining Formalization of the Ministry of Energy and Mines (MINEM), when referring to a cause of trust generation between financial entities and ASM organizations.
The study indicates that ASM miners are predisposed to pay their debts to the financial system. A credit risk analysis center identified that more than 82% of the miners evaluated have a normal rating and are up to date with their payments.
In this sense, this sector represents an interesting market niche for financial institutions. The study indicates that more than 90% of the financial institutions interviewed express interest in serving ASM.
Ana Lucia Pinto, of the Peruvian Federation of Municipal Savings and Credit Banks (FEPCMAC), indicates that “municipal savings banks have had a green portfolio and a socio-environmental risk management system since 2017. This project (for ASM) is framed in a roadmap that was born together with a gender and non-discrimination policy.” Likewise, she emphasizes that this would be the third green product to be implemented from the municipal savings banks.
Artisanal and small-scale gold mining is the main source of mercury emission and release in the world, according to data from the United Nations Environment Program (UNEP). Currently, there are alternative mercury-free technologies for gold processing, which prevent environmental contamination and harm to people's health.
In this regard, the study indicates that only 1 in 10 miners in the surveyed regions knows about clean technologies. In the same proportion, 1 in 10 miners states that they are willing to invest in this type of technology.
Based on these figures, the need to educate and raise miners’ awareness is evident, both on environmental issues and financial education. For this, a joint effort is required between multiple actors from the government, the private sector, and international cooperation.
In this sense, James Leslie of United Nations Development Programme (UNDP) highlighted UNDP's commitment “to work together to promote responsible practices for the well-being and development of rural communities that subsist on artisanal mining, expanding the opportunities to achieve a Peru where truly no one is left behind.”
Meanwhile, Franco Arista, planetGOLD Peru National Coordinator, mentions that the initiative in conjunction with the FEPCMAC “will implement a financial access plan for ASM, which will start with a pilot and then scale with ad-hoc products to the sector.” This action will be accompanied by a financial education program.
About the publication
“Towards the financial inclusion for ASM” shows the results of a study on financial access in the artisanal and small-scale mining sector in Peru, carried out within the framework of the planetGOLD Peru initiative. The global initiative is supported by the Global Environment Facility (GEF) and led by UNEP. In Peru, it is executed by MINAM in partnership with MINEM, with technical assistance provided by UNDP.
The publication launch event was held virtually on Monday, July 19th, with the presence of representatives from UNDP, MINAM, MINEM, GĚRENS and FEPCMAC. As noted during the event by Armando Gallegos, rector of the GĚRENS Graduate School, the document shows "the value of knowledge to make decisions." It is a pioneering study that provides information to adopt important decisions for ASM, either within the framework of a policy or services that promote financial inclusion, formality, and more responsible practices in the sector.