You are currently browsing the tag archive for the ‘Nicaragua’ tag.
> Posted by Center Staff
Nicaraguan protesters during an earlier period of "No Pago" movement activities.
One of our most-read series here at the Center blog has covered the Nicaraguan microfinance industry’s crisis and subsequent progress toward recovery. Senior Analyst Sergio Guzmán has provided nearly all of the posts, which are assembled below to give you an overview of the unfolding story.
- Nicaraguan Microfinance in Crisis – November 5, 2009
The microfinance industry in Nicaragua is under siege by a politically motivated group of borrowers who call themselves the No Payment Movement (Moviemiento No Pago). - Ley Moratoria (Moratorium Law) Passes in Nicaragua – March 23, 2010
In November of 2009, we reported that the microfinance industry in Nicaragua is under siege by a politically motivated group of borrowers. Calling themselves “No Payment Movement,” they pressured the government to lower their interest rates, suspend debt recovery trials, and grant grace periods on repayment. - Nicaragua’s Microfinance Crisis: Looking Back, What Did We Learn? – January 24, 2011
The Nicaraguan microfinance industry suffered a profound crisis in 2009 and 2010 as a result of both the international financial downturn and the domestic No Pago (No Payment) Movement. Read the rest of this entry »
> Posted by Sergio Guzmán
Nicaraguan protesters during an earlier period of "No Pago" movement activities.
It seems like it is too good to be true, but the “No Pago” Movement leaders have agreed to have their members individually negotiate with MFIs the restructuring of their loans. This is a major concession from the movement that rallied and protested in front of MFI branches and even successfully lobbied the National Assembly to pass a Moratorium Law forcing MFIs to renegotiate loans. This created a major setback for MFIs in the country who saw their portfolio’s quality deteriorate and their investors flee during the height of the protest.
The “No Pagos” wanted collective bargaining rights in order to restructure their loans in the laxest possible way. Neither the MFIs nor the government gave in to their requests and now the movement’s 1,500 members (down from estimates of 5,000 – 13,000 at the height of the crisis) are approaching their financial service providers in a bilateral effort to renegotiate their obligations.
Why did they give up? As Omar Vilches, leader of the movement, explained, the members did not want to jeopardize their future ability to obtain loans and were facing pushback from the MFIs who did not want collective bargaining. Read the rest of this entry »
> Posted by Center Staff
Nicaragua’s MFIs are playing an important social and economic role, and some are rebounding from the No Pago (No Payment) Movement crisis, according to local and international reports.
The No Pago crisis, in which thousands of clients refused to pay back their loans, combined with the international financial downturn and political interference to leave many MFIs illiquid in 2009 and 2010.
However, the Nicaraguan Foundation for Economic and Social Development (FUNIDES), in its Economic Situation Report 2011, recently said MFIs were important to the country’s economic and social development because of their service to over 270,000 low-income people.
Nicaragua’s MFIs generate employment and help reduce poverty, according to the report, which was covered by Microfinance Focus on April 14.
Meanwhile, some MFIs appear to be making headway despite the No Pago turbulence, Barbara Magnoni reported in the February issue of the MicroCapital Monitor. Some MFIs have reached pre-crisis credit quality, wrote Magnoni, pointing to successes by Pro Mujer Nicaragua, which now serves 26,000 clients, and the Fondo de Desarrollo Local. Read the rest of this entry »
> Posted by Center Staff
The Nicaraguan microfinance industry suffered a profound crisis in 2009 and 2010 as a result of both the international financial downturn and the domestic No Pago (No Payment) Movement. Heightened by political interference, these events took a toll on Nicaraguan MFIs and left them both illiquid and unpopular. As reported by La Prensa, more than 100,000 clients have stopped receiving credit. The industry served some 324,000 clients before the crisis, while today it serves an estimated 225,000. Total portfolio dropped from US$420 million in 2008 to US$170 million at present. Despite heavy write-offs, members of the Nicaraguan microfinance institution association (known by its Spanish acronym, ASOMIF) have an estimated portfolio at risk of 19 percent. There have been cases of failure.
Although this news is bleak, there are glimmers of improvement. The sector appears to have stopped deteriorating and overt support for the No Pago from the government seems to have lessened. The IMF has put some pressure on the government to support the microfinance sector. A few institutions are seeing signs of recovery. According to an IMF Document, the Nicaraguan government will seek the approval of a Microfinance Law that will enhance “the supervision, transparency, and efficiency of the sector… in particular, the regulatory framework applicable to unsupervised microfinance institutions.”
In previous posts we examined the nature of the No Pago Movement and the Moratorium Law. Here, we ask: What can the microfinance industry as a whole learn from these events? Read the rest of this entry »
Facebook
Twitter
Recent Comments