A letter from WCCN’s Executive Director

Without a doubt, 2009 ranks among the most challenging in WCCN’s 19 years in microfinance. Nicaragua’s microfinance industry witnessed “a perfect storm,” with a deteriorating economic climate resulting from the global economic crisis, plus a polarized political environment resulting from undemocratic trends during President Daniel Ortega’s three years in office. As if that weren’t enough, during the last two years, the Nicaraguan government promoted a politically motivated non-payment movement and – through action or omission – facilitated the movement’s expansion to several areas of the country hardest hit by the economic crisis.

Those factors affected our Nicaraguan microfinance partners in one way or another. For some, portfolio quality dropped with record rates of under-performing loans. Still, all demonstrated incredible resilience. Not a single partner missed a payment. Some microfinance institutions in Nicaragua closed the year with net losses, mainly because they had to expense high amounts of money as loan loss provisions to protect against the increasing risk in their portfolios. At the same time, PRODESA, ProMujer and PAC are among other partners in Nicaragua that performed quite well despite the difficult environment.

Besides navigating these turbulent waters last year, WCCN joined MicroPlace and continued the Latin American expansion initiated in late 2008. In fact, during 2009, WCCN raised about $800,000 in investments on MicroPlace. We also gathered new partners: two in Guatemala, one in Honduras, one in El Salvador and two in Nicaragua, for a total of 22 microfinance partners.

As Emily Allred explains in the cover article of this edition of Grassroots Connections, WCCN also made legal and operational changes to the loan fund. On Dec. 9, WCCN changed the name of the NICA Fund to the Capital for Communities Fund. After 10 years with the country-specific name, this change reflects our current expansion to other Latin American countries. As a result, the investment offering of the Capital for Communities Fund allows investments in other countries in the Latin American region.

This edition of Grassroots Connections also includes an article by Walberto Lazo from one of our new partners in El Salvador. He explains the fascinating and unique lending model that Fundación Campo employs. Additionally, we share an article by Caroline Reddy, a University of WisconsinMadison student who participated in our January study tour to Nicaragua. She wrote about WCCN’s partnership with the Nicaraguan housing organization Habitar. To provide information related to WCCN’s expansion, we also offer an introduction to Ecuador and our new partners there, FACES and INSOTEC. Our regular sections include a loan portfolio report and a profile of an end-borrower loan recipient from a partner agency. Lastly, I wrote a note in memory of two long-term supporters who recently passed away.

I hope you find our edition informative, enjoyable and inspiring. We strive to connect you with people we work for on the ground, primarily through our newsletter.

Sincerely,

Carlos Arenas
WCCN Executive Director