This study analyzes the major characteristics and future trends of the microfinance market in Nicaragua.
The study provides an overview of the players in the Nicaraguan microfinance market. Findings include:
Microfinance players are looking at consolidation, specialization and differentiation;
Competition in specific segments of the market is high, but there is still significant unmet demand for financial services for the micro, small and medium enterprises segment;
Portfolio of MFIs has grown 300 percent in the past four years;
NGOs have led the microfinance industry, although several of them will transition into different forms of institutions in future;
Banks are entering the microfinance and consumer credit sectors;
Microfinance sector needs to increase scale to decrease costs and increase average balance per client to achieve greater profits per service unit.
Finally, the paper states that Nicaragua’s microfinance sector is entering a new phase of development. Specialization, differentiation and diversification of products and segments will play a determining role in the development of the institutions and their ability to compete successfully.