A Letter from WCCN's Executive Director

Summer was a busy time for WCCN, so I would like to update our supporters on some of the news from the past few months. 

First of all, WCCN has two new board members, John Kessler and Dr. Scott Hagen. John is one of the four founders of Isthmus Engineering and Manufacturing Cooperative in Madison.  Isthmus Engineering is a worker-owned and democratically managed cooperative that designs and builds custom automated machinery for factories. John had his first contact with WCCN in 1985 when he and his wife joined us in a brigade to pick-up cotton in rural Nicaragua at the height of the Contra War. According to him, getting to know the desperately poor farmers was one of the most moving and memorable experiences of his life. John brings a wealth of knowledge as a problem-solving businessman who for a very long time has shared WCCN’s mission and goals.

Scott is a pediatrician at American Family Children’s Hospital and University of Wisconsin Hospital and Clinics, and an Assistant Professor of Pediatrics at the University of Wisconsin School of Medicine and Public Health. He has been honored as one the “Best Doctors in America 2011”. He is currently involved in projects that focus on the education of health care providers in Uganda and Ethiopia. His overall interest is on the allocation of appropriate resources to improve health care for children in countries that have limited resources and educational opportunities.  Dr. Hagen brings a wealth of experience on health issues in developing countries that will be very useful as WCCN explores opportunities to work on that topic.

Second, WCCN just finished successfully piloting a new financial product on trade receivables financing, that for simplicity sake we named fair trade financing. We consider this pilot as phase one, and it was implemented with producer coffee cooperatives in Central America. During this first phase of the pilot WCCN disbursed $1.4 million in short-term loans to three producer organizations in Nicaragua and Honduras, to be used as working capital for the coffee harvest. The loans were fully repaid as planned. We have started our second phase of our pilot, this time in South America, financing producer cooperatives in Peru and Ecuador. The main lesson of the first phase of the pilot is obviously that the trade receivables finance model works, that if it is well-designed and properly implemented it can be successful, as demonstrated during the pilot. Once we have finished the second phase of the pilot we anticipate becoming more deeply involved in this type of lending.

Last but not least, we are currently working on our first loan in local currency, as opposed to a loan in “hard currency’, such as US dollars. Facilitating loans in local currency is a step forward in our lending history as it protects our partners and end-borrowers against currency risk. WCCN will be protected as well by hedging the loan through MFX a company created by the microfinance industry for this specific purpose. To be able to make transactions through MFX, a loan fund such as WCCN needs to be evaluated by MicroRate, a leading rating agency in microfinance, to assure MFX of the soundness of the organization proposing the transaction. MicroRate approved WCCN to transact with MFX and we are currently working on the final steps for the transaction. We will keep you informed about this process and other development in the months to come.

Sincerely,