WCCN expands lending to El Salvador and Guatemala
Indigenous borrowers from CDRO, one of WCCN’s new partner agencies in Guatemala, show of the proceeds of their loans. Photo by Michael Kienitz.
We are very excited to report that during the last few months, WCCN was able to establish its first set of partnerships with microfinance organizations in El Salvador and Guatemala. As a result, WCCN currently has operations in three Central American countries, lending $9.3 million to 17 different microfinance organizations, which are reaching around 350,000 borrowers.
WCCN’s 25-year history and 18 years of experience working in microfinance, our broad understanding of the microfinance industry in Central America, and the committed board, staff, and supporters have made it possible to succeed in this expansion process. To date, the entire expansion process has moved very smoothly. Our strategy was designed last June, and started with elaborating market and legal feasibility studies of the microfinance industry in El Salvador, Guatemala and Honduras, the first three countries identified as initial targets. Once we obtained a very good understanding of the current financial situation of microfinance organizations in each country we started the process of contacting the organizations that our studies showed us had the most potential. The next step was to meet face-to-face with the selected organizations.
Last August we took advantage of the Central American Conference on Microfinance, held in Guatemala City to set up meetings with the selected organizations, all of who were attending the conference. A group of staff and some board members were able to have initial discussions through contact with representatives from 15 different microfinance organizations from the targeted countries. Six organizations were selected as the most promising ones, two in each country.
A Guatemalan family shows off the loom they use to weave cloth. Their business is supported by a microloan from FONDESOL, one of WCCN’s new partners. Photo by Michael Kienitz.
The rest of the story fits our traditional pattern, as we followed a relationships-based model of operating that has proved to be very successful during the last ten years in Nicaragua. By the end of last year, WCCN’s Regional Representative, Francisco Barquero visited El Salvador and Guatemala and conducted in depth due-diligence reports on the prospective organizations in these two countries. Until then, that was part of Francisco’s work routine, but only in Nicaragua. The due diligence reports and all the financial information of the prospective partners was carefully analyzed by WCCN’s staff in Madison and submitted to the board of directors for consideration. Due to the good financial standing of the prospective organizations and their strong social impact, WCCN’s board of directors approved the proposed loans.
On December 1st, 2008, WCCN disbursed its first loan in El Salvador. Padecomsm was selected as our first partner outside of Nicaragua. Then, on January 5th, 2009, WCCN disbursed a second loan in El Salvador to Fundación Campo. Guatemala followed and on February 19th, WCCN disbursed its first loan to the Guatemalan microfinance organization, Fondesol. Finally, in March, we plan to disburse a loan to a second organization in Guatemala called CDRO.
Our first stage of expansion will be complete after Honduras. In January, our regional representative traveled there to conduct the next round of due diligence reports on prospective organizations in that country. If approved by the board, we plan that, by April, WCCN will disburse its first loan in Honduras, as we are currently in the process of evaluating Credisol, a microfinance organization located in the remote eastern side of the Honduran Atlantic Region.
We want to thank and recognize the support, commitment and hard work of our board and staff during this expansion process. I also would like to thank our members (investors and donors) for your continued support. WCCN is committed to expanding opportunities to people in need of working capital in all Latin America, as a way of supporting their efforts to escape poverty. We believe that WCCN has the advantage of being an organization with a success story in Nicaragua, that there is no doubt that it is one of the most fascinating, but at the same time challenging, countries to operate any kind of financially sustainable project. We are pleased to find that WCCN’s success in promoting microfinance in Nicaragua is a model that can be replicated in other countries as well.
By Carlos Arenas, WCCN Executive Director
and Emily Allred, Loan Fund Manager