Nicaragua's micro-credit firms so "no" to lower rates

The executive director of the Association of Micro-Finance Institutions (Asomif) says it's impossible to lower interest rates to 8 percent and lengthen repayment times for small loans.

Thursday, July 24, 2008

Alfredo Alaniz was replying to a proposal from a group of debtors in the Jalapa region after a riot that resulted in injuries and property damage from frustrated borrowers who failed to get more generous terms for their loans.
He said that in any case, Asomif sells its non-performing debts to the government, which offers better terms to avoid more damage to the farm sector in the Jalapa region.
Alaniz said a second option is that the government assumes the administrative costs of these debts while the micro-financiers administer the portfolio, so that they can offer the interest rates the borrowers want.

More on this topic

Microfinancers to Fund Housing

August 2014

In Nicaragua two microfinancers will provide short-term loans for progressive housing construction.

The Microfinance companies which up until now have focused on short-term loans to individuals and microenterprises outside of the banking system, will begin to break into the housing market, offering loans for home improvement and construction.

Lack of Capital in Microfinancers

April 2012

In Nicaragua, the ‘No Pago’ (Non Payment) movement has generated such distrust in international sources of finance that this year credit lines -which were $80 million-, have barely reached $5 million.

MFIs received less than $5 million in the first quarter of 2012 from international lending institutions, which directly affects their ability to offer more microloans, said Alfredo Alaniz, executive director of the Association of Microfinance Institutions (ASOMIF).

Nicaraguan Financing Companies Oppose “Moratory Law”

April 2010

Asomif will submit a plea for unconstitutionality at the Supreme Court of Justice.

René Romero, president of Asomif, the Nicaraguan Association of Microfinance Institutions, assured that despite presenting this plea, they will observe the new law known as “Moratory Law”, which sets conditions for negotiating debt covenants between debtors and microfinance institutions.

Micro-finance is booming in Nicaragua

July 2008

Micro-finance has grown rapidly in Nicaragua over the last decade. Between the end of 1999 and the end of last year, the total micro-credit portfolio grew at an average 19.4 percent a year, while the number of clients grew by 25 percent a year, according to industry statistics.

Most of the loans have been made to small farmers and artisans who are usually unable to borrow money from the commercial banks.

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