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More and better financial products for rural areas of Central America

Mar 31, 2016

The Multilateral Investment Fund (MIF), member of the Inter-American Development Bank (IDB) Group, approved a refundable financing of US$2.5 million and a US$287,000 grant for a project that will improve the productive conditions of rural residents in Central America through the access to new financial products that are flexible and tailored to their needs and demands. Specifically, the project will supportthe Society for the Inclusion of Microenterprise in Central America (SICSA), second-tier financial institution created by REDCAMIF, so that it can grant financing to 12 to 14 microfinance institutions interested in testing new rural financial products. 

According to a MIF report, in the majority of Central American countries credit to the agricultural sector accounts for roughly 3% of total credit offered by regulated financial systems (Costa Rica, El Salvador, Honduras, Panama, Dominican Republic), with a higher percentage in Guatemala (8%) and Nicaragua (10%). Even so, there is a significant number of microfinance institutions (MFIs) devoted to serving the rural sector that have a presence there, but they face the following problems: On the supply side, MFIs do not have permanent long-term financing, methodologies or trained employees to implement financial products and services that better meet client needs. On the other side, there is an unmet demand on the part of rural clients in terms of higher amounts of credit to invest in productive assets, longer term loans (between 26 and 48 months) and different modalities and mechanisms that facilitate the use of resources when necessary (i.e. line of credit). 

REDCAMIF, with support from Luxembourg-based Appui au développement autonome (ADA), has conducted a number of research activities in conjunction with national networks and affiliated MFIs on the needs of rural clients, through market studies, surveys, and focus groups in several countries, which resulted in the selection of four financial products to be developed by the 12 to 14 MFIs of this project. The four selected products are: 1) a productive credit line makes funds available to the client up to a specified limit and for a specific period of time, 2) financial microleasing, governed by a contract in which the lessee uses equipment or an asset owned by another entity and the lessee pays to use the item, 3) loans for rural women entrepreneurs will facilitate access to credit for women who are having difficulty starting or expanding their businesses because they do not have collateral and 4) energy efficiency loans primarily used to purchase capital goods intended to achieve energy efficiency.

The MIF’s financing of SICSA is catalytic, since it will provide resources to interested MFIs so that they can begin pilot testing of the products. This project will be conducted in the following Central American and Caribbean countries: Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama and the Dominican Republic.


SICSA is a second-tier corporation that began operations in 2009. SICSA was born as a result of the REDCAMIF initiative, with the mission to provide quality financial services to microfinance institutions in Central America and the Caribbean, and thus contribute to the economic and social development of micro, small, and medium-sized enterprises in the region. SICSA has operations in seven countries (Costa Rica, El Salvador, Honduras, Guatemala, Nicaragua, Panama, and the Dominican Republic), lending to MFIs in the region. Learn more at

About the MIF

The Multilateral Investment Fund is the innovation lab for the Inter-American Development Bank Group. It conducts high-risk experiments to test new models for engaging and inspiring the private sector to solve economic development problems in Latin America and the Caribbean. The MIF addresses poverty and vulnerability by focusing on emerging businesses and smallholder farmers with the capacity to grow and create economic opportunities. Learn more at


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