MICROCAPITAL BRIEF: Members of “No Pago” Movement in Nicaragua Propose to Pay Back Microfinance Debts Over 10 Years, Government Would Repay $25m Upfront

Members of the “No Pago” (No Payment) Movement, in which thousands of Nicaraguan borrowers refused to pay back outstanding loans beginning in 2009, have proposed a deal wherein the government would immediately repay debts to microfinance institutions (MFIs) worth USD 25 million and the debtors would pay the government back over ten years. The US-based Center for Financial Inclusion cites Nicaraguan newspaper La Prensa as reporting that borrowers recently agreed to support the incumbent president of Nicaragua in return for government repayment of debts, allowing microentrepreneurs and producers to reduce their current debt burden and resume borrowing from MFIs [1].

Barbara Magnoni, President of EA Consultants, reported in the February edition of the MicroCapital Monitor that many MFIs have witnessed improvements in portfolio quality and sustained customer demand since the turmoil began in 2009 [1,2].

By Rohan Trivedi, Research Associate

About The Center for Financial Inclusion (CFI):
The Centre for Financial Inclusion (CFI) is an initiative of US-based nonprofit ACCION International. The centre works with microfinance experts, regulators, banks, investors and academics in an effort to increase financial inclusion by connecting the microfinance community to capital markets and technology.

Sources and Additional Resources:

[1] Center for Financial Inclusion Blog: “Nicaraguan MFIs Forge Ahead in Wake of ‘No Pago’ Crisis”, http://centerforfinancialinclusionblog.wordpress.com/2011/05/02/nicaraguan-mfis-forge-ahead-in-wake-of-no-pago-crisis/

[2] “Mission IS-possible: Lessons After a Shake-out in Nicaragua”, by Barbara Magnoni, MicroCapital Monitor, February, 2011, https://www.microcapital.org/downloads/monitor_volume6/MicroCapitalMonitorPreview_Feb2011.pdf

La Prensa: “No Pago retoma inestabilidad”, by Lucia Navas, http://www.laprensa.com.ni/2011/04/10/nacionales/57479

MicroCapital.org story, February 15, 2011: “MICROCAPITAL BRIEF: ACCION’s Centre for Financial Inclusion Offers Lessons Learned from Nicaraguan Microfinance Crunch, Reiterates Six-Point Agenda For “Recalibration” of Industry Worldwide”, https://www.microcapital.org/microcapital-brief-accions-centre-for-financial-inclusion-offers-lessons-learned-from-nicaraguan-microfinance-crunch-reiterates-six-point-agenda-for-“recalibration”-of-industry-wor/

MicroCapital.org story, November 9, 2010: “MICROCAPITAL BRIEF: Vice President of the Economic Commission of Nicaragua Urges the Passing of a Microfinance Law in Wake of “No Pago” Movement, Liquidation of Microfinance Institution Banco del Exito’s (Banex)”, https://www.microcapital.org/microcapital-brief-vice-president-of-the-economic-commission-of-nicaragua-urges-the-passing-of-a-microfinance-law-in-wake-of-no-pago-movement-liquidation-of-microfinance-institution-banco-del-ex/

MicroCapital Universe Profile: Center for Financial Inclusion (CFI), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Center+for+Financial+Inclusion+%28CFI%29

Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/

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