CREDERE

91% of businesses in Colombia have fewer than 10 employees 

64% are women led 

78% have never held a government contract 

Government contracts are transformative for business growth and job creation. Small businesses that win a government contract grow beyond the scope of that contract. 

Therefore, as part of their peace building and inclusive growth strategy, the Colombian government has issued a mandate to do more business with small and women led businesses.

But financial cost late payments and barriers to access finance are the leading causes preventing their participation

CREDERE is a new service that streamlines access to credit for small businesses in the public procurement marketplace. It has been co-designed with government, financial institutions, and small business associations and is being piloted in Colombia. 

The CREDERE software works by consuming open data about contract awards. When a small or medium sized business (including women-led businesses) is awarded a government contract, CREDERE invites them to view financial products that have been made available to the platform by participating financial institutions. If the SME wishes to apply for a product, CREDERE partially pre-populates their application based on the contract award data and allows them to upload any additional information needed by the financial institution. The financial institution is then notified, reviews the application, and, ideally, approves it. 

This solution serves small businesses and small women-led businesses. These businesses are increasingly being invited to bid on government contracts (due to inclusive growth and sustainable procurement policies) but lack the financial capital to deliver the contract. 

According to a nationally representative survey of small businesses (2018), 47% of SMEs say winning a public tender played a “momentous” or “very important” role in chartering their growth. So, we know that it will have a huge impact on these companies to have the access to credit they need to participate in public procurement. 

We also believe that these businesses can deliver great goods and services  (therefore benefiting the beneficiaries of the government services as well). 

We have already been working with the President’s office, the procurement authority in Colombia, and local governments to design and implement reforms to improve participation of small and women-led businesses in public procurement. We have also already supported them to collect and publish high quality contract award data (enabling us to analyze the current rates of participation of small business in public procurement across sectors and geographies). This new service aligns perfectly with the strategic priorities of both the national and local governments. Banks and business associations are also excited about the potential. 

We are currently piloting CREDERE in the city of Bogota and have reached 1300 SMEs so far. Of these 1300, 13 have submitted applications and 7 have been approved for a total of 120,000,000 pesos. 

We want to scale CREDERE across all of Colombia and plan to bring CREDERE (or something similar) to other countries and contexts. As part of this we need to work on two important things. First, we need to figure out how we can better align CREDERE with the needs and ways of working of financial institutions to make it simpler and more streamlined to grant the small businesses access to credit. Second, we need to design an sustainable business model for the solution. These are the two areas we are interested to Solve as part of this program. 

This solution is uniquely possible because we have already worked with governments to publish open data about the award of public contracts using the Open Contracting Data Standard, making it possible to create alerts for banks to consume and automate the processing of credit pre-approvals. The approach will be replicable in any jurisdiction that has implemented the Open Contracting Data Standard.

Our theory of change is that small businesses struggle to participate in public procurement because of a lack of financial capital. By making it easier for them to have access to credit, they will be able to deliver the contract (thereby providing public benefit), and grow their businesses (having a positive impact on the lives of their owners and employees). 

Within 1 year, we want to have 500 credit applications approved to small businesses (including at least 50 women led businesses) for a total of 2,000,000 USD. 

We developed the Credere software and website. The software is openly licensed and its backend and frontend documentation are available on github.

Lindsey Marchessault, Director of Data and Engagement, responsible for the overall success of this project. 

Oscar Hernandez, Head of Latin America, coordinates our engagement with senior levels of government and financial institutions and ensures that partners are engaged and committed.

Yohanna Lisnichuk, Technical Lead, oversees the successful development, testing and maintenance of the software.

Sebastian Bererra, Senior User Design Manager, leads on research and design activities.

Georg Neumann, Head of Communications,  advises and oversees communications strategy related to Credere.

Since June of 2022.

At the Open Contracting Partnership, we highly value diverse talent to help further our mission and work around the world. We currently operate in various countries and timezones, and we actively seek to understand each other – our cultures, our communication and how we best work together.

We continuously seek diverse people, and a space where they can fully contribute their unique perspectives and challenge us to go further. As such, we have the following already in place:

• Recruitment. We want to attract diverse people from a range of backgrounds to our organizations. Therefore we advertise all roles through a range of channels to attract a diverse pool of candidates for every role.
• Performance and compensation. We have carefully created a performance review and compensation process that is fair and transparent. We have also built in a whole organization review point, where we will look at data across our team to check for any potential biases e.g. gender, cultural and linguistic diversity.
• Learning and growth. We have committed to working with our team to understand specific things we need to work on, and learning on unconscious bias and forming an inclusive diversity strategy that is relevant to OCP.

https://www.open-contracting.org/people-culture/

Our solution provides value to :

small businesses, by connecting them with financial institutions and making it easier for them to apply to financial products

financial institutions, by connecting them with small businesses strong enough to win government contracts and can therefore be good applicants and clients 

governments, by helping them to succeed in their mandates to do more business with small and women-led businesses

So far, the work has been grant funded, but we are actively working towards a sustainable business model and have begun to document some options. We feel we still have some work to do to demonstrate the value of CREDERE to beneficiaries before moving to a subscription or fee based model.