According to the 2007H1 _Gran Encuesta Pyme_ by ANIF, 36-51 percent (depending on the sector) of surveyed SMEs had applied for banking credit (mostly for working capital purposes) in the last semester. Of those, 95-97 percent (depending on the sector) were approved, while 83-91 percent (depending on the sector) of those that had not applied stated that they did not need it. At face value, such a result would appear to contradict the aforementioned surveys that reported insufficient access to SME finance<sup>14</sup> . One explanatory factor could be that those SMEs complaining about access to finance are simply not sufficiently creditworthy to receive financing under normal circumstances. Of course, reasons underlying their lack of creditworthiness are diverse and could still represent a legitimate public policy objective – for example, their inability to pledge movable property as collateral. Another potential factor might be the choice of sample<sup>15</sup> : the ANIF survey covers SMEs that are registered with the chambers of commerce and are presumably formal (as can be seen in section 5, these are also the target customers of banks). The sample therefore excludes a potentially large universe of informal/semiformal SMEs that cannot (or choose not to) tap the banking system. This hypothesis is supported by the reportedly large informality in the Colombian corporate sector, as well as by the responses of interviewed credit institutions (see section 4.4).

# **2.3 Public Policy Regarding Financing to SMEs**

Public policy towards SMEs is described in two recent CONPES documents. Following the _Ley Mipyme_ and in response to the objectives set in the previous national development plan for 2002-2006, CONPES document 3280 (April 2004) describes the authorities’ strategy and policy measures for promoting domestic business development. The micro and SME sectors are highlighted as priorities given their importance to the economy, and several instruments of support are described. Non-financial instruments include training programs to increase competitiveness and promote technological development and exports, while financial instruments include programs to support development financing (see below). In terms of SME policy coordination, the Ministry of Commerce, Industry and Tourism ( _Ministerio de Comercio, Industria y Turismo_ , or MCIT) presides over the National System for the Support and Promotion of Micro Enterprises and SMEs ( _Sistema Nacional de Apoyo y Promoción de las Mipyme_ ), which comprises a range of public and private, financial and non-financial, entities. The recently-approved CONPES document 3484 (August 2007) identifies some of the deficiencies in the micro- and SME segments<sup>16</sup> and describes policy measures to promote these sectors as part of the authorities’ national competitiveness strategy (“ _Política Nacional de Competitividad_ ”). One of its components aims to increase financial access

> 14 Another potentially contradictory finding comes from the World Bank Group’s 2006 Business Enterprise Survey for Colombia (http://www.enterprisesurveys.org), in which a sample of 1,000 firms (mostly micro enterprises and SMEs) rank access to finance as the fifth most important constraint, behind unfair competition from the informal sector, crime, taxation, and inadequate educational skills.

> 15 See Claessens and Tzioumis (May 2006) for a broader discussion of the difficulties involved in surveying firms on their ease of access to finance. These include potential problems of endogeneity (e.g. self-selection in survey participation, simultaneity bias etc.) and definition ambiguity (e.g. on what constitutes reasonable cost or quality of service, access versus usage of finance etc.).

> 16 In the case of SMEs, these include low innovation capacity, low use of information technology and communications, limited access to adequate finance, problems in commercializing products, and limited participation in public sector procurement.

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