Community: Spring 2005

The NICA Fund

Published, Spring 2005

Genaro and Albertina Lopez live in a squatter village on an abandoned airstrip outside the city of Ocotal, in northern Nicaragua, one of the poorest regions of the country. The poverty they live in is sobering. The floor of their house is dirt. One can see through the spaces between the boards of their hastily built house. They have few possessions, and the clothes they wear are threadbare. By any conventional standard, they appear to be a terrible credit risk.

Genaro and Abertina have received credit, however, from the Foundation for the Development of Nueva Segovia (FUNDENUSE) through a group lending program. FUNDENUSE is one of 13 microcredit groups in Nicaragua that received capital from the Nicaraguan Credit Alternative (NICA) Fund, a credit program administrated by the Wisconsin Coordinating Council on Nicaragua. WCCN is a nonprofit organization based in Madison, , that channels money from socially responsible investors in the United States to alternative credit organizations in Nicaragua.

FUNDENUSE is one of the few microfinance institutions in Nicaragua that uses group lending methods where borrowers co-sign on each other’s loans in lieu of collateral. Because of FUNDENUSE’s group lending program, people like Genaro and Albertina have access to credit and the opportunity to make their lives better through their own efforts.

Genaro and Albertina have a small store in their house and a small nursery outside. They sell fruit trees to neighbors. Genaro also does construction work. The credit gets used to buy tools and stock for all of these ventures. The Lopez family is new to microcredit, but the benefits are already evident: They are building their businesses and improving their lives while making all of their interest and principal payments on time. Albertina says that before she got access to credit, she assumed that she would live poor and die poor. Now she sees hope that she can live a comfortable, dignified life.

Nicaragua has one of the youngest microcredit industries in Latin America. The first microcredit organization in Nicaragua was founded in 1991, and WCCN has been involved since then. In 1998 WCCN launched its current lending program, the NICA Fund, to expand its outreach and partner with the best credit providers in the country, such as FUNDENUSE.

It is fair to say, though, that despite its youth, after a period of learning by doing and after receiving technical assistance from different international organizations, Nicaragua’s microcredit industry is now very well consolidated. In fact, it is the star of the microcredit industry in Central America, with the biggest portfolio and the biggest number of borrowers reached. That is an amazing accomplishment and a sign of hope for a country that is the second poorest country in the Western Hemisphere.

Currently, the NICA Fund is lending to 13 partner organizations, and has an outstanding portfolio of around $5 million dollars. All the partner agencies of the NICA Fund have a 100 percent record of repaying their loans in full and on time.

—C. Arenas

Carlos Arenas is Executive Director of Wisconsin Coordinating Council on Nicaragua. For more information, U.S. investors can call (608) 257-7230 or visit http://www.wccnica.org/nica.html

The information provided in the above article is for historical purposes only. Such information may no longer be current and therefore should not be relied upon.

The information contained herein has been prepared from sources and data we believe to be reliable, but we make no guarantee as to its adequacy, accuracy, timeliness or completeness. We cannot and do not guarantee the suitability or profitability of any particular investment. No information herein is intended as an offer or solicitation of an offer to sell or buy, or as a sponsorship of any company, security, or fund. Neither Walden nor any of its contributors make any representations about the suitability of the information contained herein. Opinions expressed herein are subject to change without notice. The writings of authors do not necessarily represent the views of Walden Asset Management, its parent, or affiliated entities.