Fighting Inequality Through Finance
Por B the Change Media, 15 de marzo de 2017.
In spite of now being classified as a “high-income country” by the World Bank, Chile actually has a lot of poverty within its borders. The country’s GINI index, above 50, is one of the highest in the world, which translates into the lowest 20 percent of the population living with 5 percent of the country’s income, whereas the highest 20 percent owns 57 percent of it (data from 2013). Given that those same data points were of 3 percent and 61 percent 26 years ago, one can easily see there has been little evolution in that situation despite the economic growth of the country.
Yet, the lasting aspect of the situation did not discourage María José Montero from hoping for more. With the support of Ameris Capital, she decided to try out using private-market solutions to solve social problems from the Chilean bottom-of-the-pyramid. Having heard of impact investment and seen it function in other countries like the United Kingdom, it seemed logical to put to good use the experience of Ameris Capital in administrating private funds and create in impact investment fund.
Although the firm as a whole was fully supportive, it soon turned out a major issue remained: convincing investors. By 2010, the “Fondo de Inversión Social” (FIS), i.e. Social Investment Fund, was formally created, and María José Montero, designated fund
manager, was highly motivated to concretize the idea, but it seemed like no amount of dedication could compensate for the investors’ reluctance.
There was an underlying perception that each investor should have two wallets: one for making profits and one for doing good, and that those two didn’t normally mix. Shifting that perception toward the possibility of creating a bridge between the two wallets was tremendously difficult, but eventually Montero found enough investors open to this novel idea and got the fund going.
Now, seven years later, seven impact investments have been made. Organizations specialized in education, recycling, social housing or even retail have been able to grow and thereby increase their social impact. More than 9,300 individuals from the Chilean bottom-of-the-pyramid have seen their lives improved, either by access to a social house, to employment or to education (which includes education at primary school level, university level and adult-oriented primary education).
With this successful background in mind, Montero and Ameris Capital are working toward opening a second fund to continue to develop this industry in Chile.