Invest in entrepreneurs in Nicaragua through MiCrédito
Written by Lynn Hamerlinck on 16 July 2021
Lendahand is excited to introduce MiCrédito as a new investment opportunity in Nicaragua. MiCrédito is a microfinance institution with a strong social background. They have been involved in micro-lending since 2004 and have developed a successful micro-lending program for rural populations, who are neglected by both the regulated financial system and by MFIs.
MiCrédito offers loans that can positively impact borrowers, their families, and their communities, targeting the underserved market in rural and urban Nicaragua. By joining Lendahand, the company will be able to expand its microfinance and SME loan portfolio. They focus on serving the base of the economic and social pyramid, mainly focussing on female entrepreneurs and entrepreneurs in agriculture.
Loan at your doorstep
MiCrédito desires to connect with all their clients personally before the loan application process begins. To make this happen, staff members visit rural communities by motorcycle and go door to door to ensure a personal approach. They are local to each office and many have deep ties to their local community. To ensure smooth operations, the company designed an innovative cell phone technology that enables credit officers to run credit checks in the field.
The company’s goal is to invest in the success of local micro-entrepreneurs such as a woman who owns a smoothie bar or a young entrepreneur who started a motorcycle repair business. With a credit of around €1.200 on average, these entrepreneurs get the necessary boost to grow their business. Through these social impact financial services, MiCrédito manages to improve the quality of life of people for more than 8.000 families in Nicaragua.
Making an impact beyond the loan
Besides working toward financial inclusion in both urban and rural communities, MiCrédito seeks to improve gender equality, better health, and finance education in the lives of their clients. Since they observed that the microfinance industry has neglected women in Central America, MiCrédito started to promote gender equality among clients and staff. As a result, of all company loans, nearly 60% is granted to women. And from their 90 full-time employees, over 60% are women.
In Rubenia, a neighborhood in the capital of Managua, the company runs a health clinic where local clients can benefit from medical examinations and preventive health services, all included in the cost of their loans. At the moment, their health program has more than 6.300 beneficiaries.
Along with microloans for businesses, MiCrédito offers student loans, home improvement loans, sanitation loans, and solar product loans to enable the purchase of renewable energy products such as solar panels.
Before a new client receives their first loan, they go through a rigorous process to ensure that they fully understand the significance of debt and interest. MiCrédito invites their clients to come together to be educated on finances, as financial education is crucial for the entrepreneurs’ prosperity and growth. The educational sessions provide answers to many commonly faced situations to first-time bank account holders: how to use an ATM, how to change your PIN, the purpose and benefits of savings, etc.
Poverty in Nicaragua
Nicaragua is a small Central American country with a population of 6 million. In 2014, the country boasted a GDP growth rate of 4.7%, more than twice the average for the region. However, it remains the second most impoverished nation in the area after Haiti and continues to face critical challenges in ensuring access to basic goods and services.
In 2019, Nicaragua had negative growth of - 3.9%. Despite the COVID-19 outbreak, the IMF forecasts GDP growth to rebound from -6% in 2020 to 0% in 2021. Still today, financial penetration in Nicaragua remains low, and access to finance is scarce, especially amongst lower-income farmers and small-scale entrepreneurs in rural areas. At the moment, only 14% of the population can borrow from a formal source, and just 8% have a savings account. By investing in microfinance institutions like MiCrédito, you can contribute to better financial inclusion in Nicaragua. Stay tuned for their first project coming soon on our project page.