After the storm, the prospect of fresh funds from abroad has improved the business environment for microfinance.
Wednesday, March 7, 2012
"Between seven and ten million dollars could return to the portfolio’s belonging to Nicaraguan microfinance institutions this year, a product of the emerging recovery in the confidence levels of international creditors", writes Gisella Canales on Laprensa.com.ni.
"The situation is a little clearer," said Alfredo Alaniz, executive director of the Nicaraguan Association of Microfinance Institutions (ASOMIF), who expects industry growth to return in 2012. According to the executive, credit lines of more than $80 million were not renewed and 100,000 farmers and business owners were left without credit.
The sector went into crisis in 2009, precipitated by factors such as the Non-Payment Movement (in which thousands of debtors joined together to claim an inability to pay off their debts), falling livestock prices and the global financial crisis.
For Alaniz, "the recently passed microfinance law will impact positively on the confidence of creditors because there will be now be a regulatory body (the National Microfinance Commission or CONAMI) to monitor activities closely."
Eelco Mol, Latin America manager of the Dutch firm Triple Jump, said that the funding provided to six institutions will grow by between $3 and $4 million in 2012. Currently there is $8 million invested. "Confidence in the sector is returning slightly, the crisis which was felt strongly here has more or less passed. We cautiously hope that there will now be more options, we see that there is more confidence in microfinance and we see that customers are resuming their plans to get more funding", he said.
So far this year microfinancers have provided loans totaling $197 million, above the $184 million lent at the end of 2013.
Microfinance companies expect to close 2014 with a loan portfolio of approximately $206 million, representing an increase of 11.5% and 4% increase in the number of clients served, compared to last year.
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).
International creditors, headed by the BCIE, have frozen the funds earmarked for microfinance institutions in Nicaragua.
The frozen funds amount to about $30 million, representing 20% of the total portfolio balance of microfinancers belonging to the Nicaraguan Association of Microfinance Institutions, ASOMIF.
Foreign funding may not arrive, so support is being sought from domestic banks.
The possibility of external funding being log jammed making it impossible to use in programs for 2012 has led the Association of Microfinancers in Nicaragua to seek alternative financing nationwide.
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