Nicaragua's Country Risk Affects Micro-financing

The "No Payment" movement is scaring US and European investors, threatening the arrival of $70 million worth of funds for micro finance companies.

Monday, August 30, 2010

"In the last Central American Microfinance Conference the challenges and opportunities faced by the sector were discussed and the Guatemalan moderator, Reynold Walter, concluded by highlighting that governments should discourage 'no payment' movements, which received a round of applause from the attendees.

Political instability is another crucial factor for companies considering financial investments in Nicaragua.

Douglas Carcache, writing for, comments that, "international funders meeting their Central American clients in Costa Rica indicated, according to María Auxiliadora Vanegas from Nicaragua's Women's Development Fund (FODEM), that they feel the country is becoming too risky to continue investing in, primarily due to the political situation".

What is needed to give confidence back to investors is a law regulating microfinance activity that protects investors.

More on this topic

Nicaragua: Recovery in Microfinance

June 2015

Nearly three years after the crisis caused by the No Pago movement, the sector is growing at an annual rate of 12%, driven by traditional credit, micro-insurance, and health services.

The microfinance sector is beginning its gradual and cautious return to agriculture, the sector most affected by the No Payment Movement, and is taking risks in projects by small agritourism farms.

Alba Caruna Exempt From New Microfinance Act

June 2011

The Alba Caruna cooperative may continue to operate as second-tier bank with microfinancers beyond regulation of the new law.

The exclusion was requested after taking into account that the cooperative not only provides loans to its members but also to third parties.


Nicaragua Makes Progress with Microfinance Act

May 2011

The Law for the Promotion of microcredit proposed by the government is starting to make sense for the private sector.

For the Nicaraguan Association of Microfinance Institutions (ASOMIF), discussion of the governmental law is starting to find more points in common than differences with regards to the current needs of the sector, and is progressing well.

Nicaragua: Micro-finance Association Law

September 2010

By October it is anticipated that the law will be approved after seven years in the National Assembly.

Freddy Torres, member of the National Assembly's economy committee, indicated that progress had been made, adding that they are awaiting a final review by a Peruvian microfinance expert before sending it for approval by the Assembly.

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