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Catalyzing the savings of remittance recipients in Honduras

Jul 24, 2014

The Multilateral Investment Fund (MIF), a member of the Inter-American Development Bank (IDB) Group, recently approved a $644,940 technical cooperation grant for a project with Red Katalysis (“Katalysis Network”), a Honduran civil mutual benefit association that works to strengthen microfinance institutions. The project will benefit 14,000 remittance recipient customers in Honduras who will improve their livelihoods and reduce their future vulnerability through making ongoing savings deposits in a financial institution. Approximately 60 percent of the beneficiaries will be women, and this project will especially seek to support young people who are members of remittance-receiving households.

 

In 2013, the MIF’s annual remittances report indicated that Honduras received $3,121,100 in remittances from migrants. Remittance flows into the country increased by 7.8% in 2013. Despite the large number of Hondurans who receive a portion or all of their monthly remittance income through recurring payments, only 7.9% of these flows are received through a bank account.

 

The project will aim to increase the use of savings by remittance recipients through financial products and services tailored to their needs and preferences. Red Katalysis will partner with the MIF in three main activities. First, it will create a financial inclusion strategy targeted to adult remittance recipients. Second, it will create a savings product targeted to young people who benefit from remittances, and lastly, it will aim to implement new distribution channels through agents.

 

To achieve the last, Red Katalysis will institute the first agent network operated by microfinance institutions in Honduras. This network will facilitate the payment of remittances in previously underserved areas, increase the participating institutions’ number of remittance clients, and support the management of savings products by remittance clients.

 

In the long term, the project hopes to see the benefits of a focused strategy on remittance recipients, and to achieve a savings business model that is both profitable and that makes advances in financial inclusion for  the region.

 

This project is also financed by Australian Aid, which supports projects within the MIF's Remittances and Savings Program as part of its Advisory Committee. 

 

About the MIF

 

The Multilateral Investment Fund (MIF), a member of the Inter-American Development Bank (IDB) Group, is funded by 39 donors and supports private sector-led development benefiting low-income populations and the poor—their businesses, their farms, and their households. The aim is to give them tools to boost their incomes: access to markets and the skills to compete in those markets, access to finance, and access to basic services, including green technology. A core MIF mission is to act as a development laboratory—experimenting, pioneering, and taking risks to build and support successful micro, small, and medium business models. More information can be found at www.fomin.org .

 

About Red Katalysis

 

Founded in 2002, Red Katalysis is a nonprofit organization with 23 members devoted

to offering financial services for micro and small enterprises in Central America: Guatemala, El Salvador, Honduras, and Nicaragua. Red Katalysis provides training, business advisory, and research services for the microfinance sector by executing programs that foster the development and empowerment of its member organizations and promote innovative financial products and services to improve profitability, thereby contributing to job creation, expanding coverage, and combating poverty, in urban and rural areas. Learn more at http://www.redkatalysis.org/

 

 

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