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Multiple pathways to improve access to finance in Nicaragua

Sesame producers who now have access to credit thanks to the partnership between FDL, Nitlapan and anchor firm Nicaexport.Sesame producers who now have access to credit thanks to the partnership between FDL, Nitlapan and anchor firm Nicaexport.

A partnership between USAID’s Enterprise and Employment Program (E&E, managed by CARANA) and one of Nicaragua’s leading banks will open up $20 million or more in credit for 500 of the country’s small and medium entrepreneurs. The alliance will help the Banco de America Central (BAC) create an SME division for farmers in Nicaragua’s most remote, impoverished regions. E&E will work with BAC to develop a methodology of credit analysis and portfolio management tailored to SMEs. Correspondingly, E&E will provide financial training to BAC loan recipients to better manage their businesses.

Alongside this initiative, E&E developed a symbiotic access-to-finance mechanism for small producers who have already benefited from the project’s market linkages and technical assistance. E&E connected microfinance organization Fondo de Desarrollo Local (FDL), research institution Nitlapan and exporter anchor firms from the various value chains strengthened through E&E. FDL commits to finance producers who receive technical assistance from Nitlapan and have a secure buyer through an agreement with an exporter. Nitlapan trains these small producers in good agricultural practices to ensure they can make the most of newly acquired financial resources. Anchor firms swiftly adopted this approach to expanding their production base and have furthered this arrangement with FDL and Nitlapan to increase small farmers’ capacity and supply.

FDL manages a $50 million portfolio, and make almost half of their loans to agricultural endeavors. Nitlapan is part of the Universidad de Centro América (UCA) and is dedicated to developing innovative rural and urban development methodologies.

Published July 2012