Access to credit is tricky in the Dominican Republic, and the World Bank has identified the issues as one of the most problematic factors in doing business in the country. This year, Atlas Network partner Instituto OMG (IOMG) has changed the landscape of bank loans in the country through the “Law of Movable Guarantees,” a new law that will help expand entrepreneurship and innovation in the island nation.
The proposal, which was recommended by IOMG and was developed with some of the organization’s research, was signed into law on February 18, 2020 and creates clear rules so that people and companies can obtain financing by putting their personal property as collateral. “Most bank loans required or preferred there to be a guarantee, but not all people own real estate,” explained Monika Melo, vice-rector at Instituto OMG. “So a mechanism to facilitate access to credit for a greater number of Dominicans was needed.”
IOMG has been working on their Diminishing Barriers for Entrepreneurship and Free Enterprises in the Dominican Republic project for almost three years. The project was a multifaceted approach to identify the roadblocks that hinder entrepreneurship, and to propose some of the necessary reforms to improve the regulatory environment for entrepreneurs in Dominican Republic.
Before the law was implemented, about 77 percent of bank loans were guaranteed by real estate, which made it difficult to access formal credit for those who lacked such goods. Under this law, access to credit will be accessible to thousands of more Dominicans, empowering them to start or grow their businesses.
Instituto OMG received a grant in 2017 from Atlas Network to support their Diminishing Barriers for Entrepreneurship and Free Enterprises in the Dominican Republic Project.