Case Study

La Financiera Nica: Microfinance Growth Strategy in Rural Nicaragua, Managua, Nicaragua

How did 'La Financiera Nica' decide to set up operations in Nicaragua?
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This document profiles the market survey that the microfinance company 'La Financiera Nic' (Nica) undertook in rural Nicaragua.

The document states that:

  • Nica had the following four objectives:
    • Secure new capital by attracting new shareholders;
    • Lower the cost of capital for portfolio growth by offering savings accounts;
    • Attain lending technology from a foreign consulting entity;
    • Allow original donors to eventually recoup a portion of their original donation.
  • Nica offered individual loans to three sectors: commerce, service and production.

The document describes Nicaragua's internal political conflict and the resultant economic decline.

It goes on to present the results of a market survey that Nica undertook in Jinotega, Nicaragua. The survey found that:

  • The supply of finance was competitive with a wide range of financial institutions such as non-government organizations (NGOs), commercial banks, cooperatives, and government-subsidized programs;
  • The demand for finance came mainly from small and microenterprises;
  • Client credit preferences were varied, ranging from training classes, flexibility in repayments, low interest rates, etc;
  • The break-even projection for opening a new branch was optimistic.

The document then studies the market characteristics of Jinotega, focusing on:

  • The seasonality of coffee production and economic activity;
  • The lack of infrastructure;
  • Sector concentration in retail, small businesses and agriculture;
  • The importance of coffee production for the economy.

The document concludes by providing a country-profile of Nicaragua.

About this Publication

By Moore, E.