HomeNewsBrief'Colombian' Loan Sharks Fill Void in Honduras Informal Economy: Report
BRIEF

'Colombian' Loan Sharks Fill Void in Honduras Informal Economy: Report

HONDURAS / 15 MAY 2015 BY DAVID GAGNE EN

Money lenders, identified as "Colombian," are reportedly providing high-interest loans to everyone from butchers to tortilla vendors in Honduras, a practice that provides workers in the informal sector with much-needed access to credit but can nonetheless have significant drawbacks.

An investigation by the Honduran newspaper La Tribuna found that in the country's capital city, Tegucigalpa, what locals identified as "Colombians" regularly make micro-loans to workers in the city's informal economy.

"The Colombians help us because nobody lends us money here," one street merchant told the newspaper.

These loans enable many who work in Tegucigalpa's street markets to pay for basic necessities and invest in their businesses, the report said.

"Generally, you take out a loan to cover domestic expenses, because I do it when I don't have enough money to pay for electricity or to buy corn flour," a tortilla vendor told La Tribuna. 

However, a high interest rate  -- roughly 20 percent per month -- can make it difficult for some borrowers to pay back the Colombians on time, a period the article said was 23 days. This can lead to threats and even killings of those who are tardy in making their loan payments, according to street vendors. 

However, low-income workers may soon be able to free themselves of exorbitant interest rates and the threat of retribution. The tortilla vendor said within the last few weeks the government had offered her a loan with a one percent interest rate.  

In addition to Tegucigalpa, "Colombian" money lenders are also providing financial services in the provinces of Cortes and Olancho, reported La Tribuna.

InSight Crime Analysis 

Loan sharking is one of the oldest organized crime activities in the world. And the investigation highlights why people do it: these micro-loans fulfill a need for a large percentage of Hondurans that would otherwise have no credit on which to buy staple goods or invest in their small businesses.

Information on the size of informal economies is scarce, but the the International Monetary Fund (IMF) has estimated (pdf) that Honduras' unofficial sector represented 54 percent of the country's total Gross Domestic Product (GDP) during the early 2000s.

SEE ALSO: Honduras News and Profiles

However, loan sharks can also be involved in other criminal activities such as hired assassination. If borrowers fall behind on their loan payments, they can become vulnerable to extrajudicial punishments, such as beatings or even death. Excessive interest rates can also put low-income workers into significant debt, pushing some victims into forced labor

share icon icon icon

Was this content helpful?

We want to sustain Latin America’s largest organized crime database, but in order to do so, we need resources.

DONATE

What are your thoughts? Click here to send InSight Crime your comments.

We encourage readers to copy and distribute our work for non-commercial purposes, with attribution to InSight Crime in the byline and links to the original at both the top and bottom of the article. Check the Creative Commons website for more details of how to share our work, and please send us an email if you use an article.

Tags

Was this content helpful?

We want to sustain Latin America’s largest organized crime database, but in order to do so, we need resources.

DONATE

Related Content

HONDURAS / 31 AUG 2012

A group of suspected cash smugglers posing as journalists who were arrested last week reportedly traveled from Honduras to Nicaragua…

ARMS TRAFFICKING / 21 MAY 2013

According to a Congressional committee that handles public security issues, some 80.5 percent of all crimes in Honduras are committed…

ELITES AND CRIME / 27 JUN 2018

The announcement of a graft investigation against almost 800 legislators in Honduras raises further questions about the legitimacy of the…

About InSight Crime

THE ORGANIZATION

Apure Investigation Makes Headlines

22 OCT 2021

InSight Crime’s investigation into the battle for the Venezuelan border state of Apure resonated in both Colombian and Venezuelan media. A dozen outlets picked up the report, including Venezuela’s…

THE ORGANIZATION

InSight Crime Tackles Illegal Fishing

15 OCT 2021

In October, InSight Crime and American University’s Center for Latin American and Latino Studies (CLALS) began a year-long project on illegal, unreported, unregulated (IUU) fishing in…

THE ORGANIZATION

InSight Crime Featured in Handbook for Reporting on Organized Crime

8 OCT 2021

In late September, the Global Investigative Journalism Network (GIJN) published an excerpt of its forthcoming guide on reporting organized crime in Indonesia.

THE ORGANIZATION

Probing Organized Crime in Haiti

1 OCT 2021

InSight Crime has made it a priority to investigate organized crime in Haiti, where an impotent state is reeling after the July assassination of President Jovenel Moïse, coupled with an…

THE ORGANIZATION

Emergency First Aid in Hostile Environments

24 SEP 2021

At InSight Crime's annual treat, we ramped up hostile environment and emergency first aid training for our 40-member staff, many of whom conduct on-the-ground investigations in dangerous corners of the region.