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

ELITES AND CRIME / 16 FEB 2021

The department of La Paz does not house any major transnational criminal economies or established criminal actors.

COCA / 22 DEC 2020

President-elect Joe Biden wants to reset US-Latin American relations, but the Trump administration’s approach may leave scars.

COCAINE / 6 MAY 2022

The US has offered a $5 million reward for information leading to the arrest of leaders of the Montes Bobadilla…

About InSight Crime

LA ORGANIZACIÓN

Extensive Coverage of our Chronicles of a Cartel Bodyguard

23 SEP 2022

Our recent investigation, A Cartel Bodyguard in Mexico’s 'Hot Land', has received extensive media coverage.

THE ORGANIZATION

InSight Crime, American University Host Illegal Fishing Panel

19 SEP 2022

InSight Crime and the Center for Latin American & Latino Studies (CLALS) at American University discussed the findings of a joint investigation on IUU fishing at a September 9 conference.

THE ORGANIZATION

Impact on the Media Landscape

9 SEP 2022

InSight Crime’s first investigation on the Dominican Republic made an immediate impact on the Dominican media landscape, with major news outlets republishing and reprinting our findings, including in …

THE ORGANIZATION

InSight Crime Sharpens Its Skills

2 SEP 2022

Last week, the InSight Crime team gathered for our annual retreat in Colombia, where we discussed our vision and strategy for the next 12 months.  During the week, we also learned how to…

THE ORGANIZATION

Colombia’s Fragile Path to Peace Begins to Take Shape

26 AUG 2022

InSight Crime is charting the progress of President Gustavo Petro’s agenda as he looks to revolutionize Colombia’s security policy, opening dialogue with guerrillas, reforming the military and police, and…