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> 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
We wish this was a joke, really we do. According to BBC Mundo, “The mayor of Zaragoza, Spain, launched a campaign to alert its inhabitants who have yet to pay the outstanding contributions to the cemeteries, that it shall remove the remains of their loved ones.” According to the source, stickers will be placed on the gravestones of those persons who have failed to pay upkeep fees. Warning of action was sent in March, via collections notices in the mail, and given the lack of response, the mayor chose the course of action described.
Talk about appropriate collections practices, eh? This seems like a very eerie, unorthodox, and frankly Scrooge-like way of collecting past-due debts. Does anyone have examples of inappropriate collections practices they want to share?
Happy Halloween and Feliz Dia de las Brujas to everyone!
Image credit: Albus Dumbledore
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> 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
The Council of Microfinance Equity Funds (CMEF) recently responded to the Reserve Bank of India’s invitation to comment on the Malegam Committee Report.
Sixteen members of CMEF, which brings together the leading private entities that make equity investments in MFIs in the developing world, have invested Rs. 8.1 billion (813 crores; US$178 million) of equity in Indian microfinance institutions, and other members are in negotiations with potential investee institutions. As direct investors in MFIs, CMEF members place great importance on their corporate governance role as board directors, shareholders and guardians of the double bottom line.
The CMEF concern is that “Although implementation of many of the proposed recommendations would indeed add to a sustainable development of the sector — through the enhanced institutionalization of transparency in pricing, client protection and corporate governance — it is our opinion that several recommendations could seriously set back the clock for microfinance in India.” Read the rest of this entry »
> Posted by Elisabeth Rhyne
CGAP has just come out with an important new Focus Note analyzing recent microfinance repayment crises in Nicaragua, Morocco, Bosnia, and Pakistan—“Growth and Vulnerabilities in Microfinance.” Reading it set me thinking back to the Bolivian repayment crisis of 1999-2000 and to the lessons that came out of it.
The Bolivian crisis had all the same hallmarks as recent crises. New entrants, in this case consumer lenders, came in with very aggressive growth strategies, as second movers behind the more established MFIs. They tolerated and even welcomed multiple borrowing. Borrower difficulties were triggered by a recession, which in turn triggered a virulent—and politically motivated—debt protest movement. At one point protestors piled all the computers of MFI branches into the street and set fire to them. At the height of the crisis, the outlook for Bolivian microfinance was bad. But today, Bolivian microfinance is thriving, and that includes all of the leading microfinance institutions who experienced the crisis.
A number of key short- and longer-term actions made it possible for Bolivian microfinance to survive, recover, and move to a more stable footing. Read the rest of this entry »
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