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)

The Vice President of the Economic Commission of the National Assembly of Nicaragua, Freddy Torres, reportedly warned Nicaragua’s citizens in November 2010 that the country may lose up to USD 400 million if a microfinance law promoting regulation is not approved before year’s end. He argues that microfinance institutions (MFIs) in Nicaragua would forego this amount of investment from international funders over a 5-year period if the industry continues without improved regulation. The President of the Association of Microfinance Institutions of Nicaragua (Asomif), Alfredo Alaniz, noted that the controversy surrounding the proposed law focuses on which entity would serve as the watchdog to enforce the new regulations. Torres replied that any MFI whose assets total USD 2 million or more would be under supervision of the Superintendencia de Bancos (Siboif) while smaller MFIs would be supervised by the Ministry of Governance [1].

This debate came in the wake of an order by Sibiof to liquidate Nicaraguan MFI Banco del Exito (Banex) for granting loans to clients who were too far in debt or has been referred for legal action regarding collections. Such loans reportedly represented 29.9 percent of Banex’s total loan portfolio [2]. Banex reported a gross loan portfolio of USD 137.8 million and total assets of USD 178.5 million as of fiscal 2008, according to the Microfinance Information Exchange.

Many MFIs in Nicaragua experienced challenges since the No Pago movement began in 2008 and President Daniel Ortega announced to protesters in July 2009, “Instead of protesting on the streets, protest before the offices of usurers and plant yourselves before them. Stand firm, for we support you!” [3].

About the Association of Microfinance Institutions of Nicaragua (ASOMIF Nicaragua): The Association of Microfinance Institutions of Nicaragua (ASOMIF Nicaragua) is a network of 19 microfinance institutions (MFIs) that was founded in October 1999 by Nicaragua’s National Assembly. The association represents approximately 290,000 clients throughout the country and aims to serve as a forum for information exchange among Nicaraguan MFIs.

By Diana Baide, Research Assistant

[1] La Prensa. “Pais puede perder US$400 milliones” by Lucia Nacas, 4 November 2010

http://www.laprensa.com.ni/2010/11/04/economia/42646

[2] La Prensa. “Preparan acusacion contra ex directives del Banex” by Lucia Navas, 4 November 2010

http://www.laprensa.com.ni/2010/11/04/economia/42647

[3] NACLA. ” ‘No Pago’ Confronts Microfinance in Nicaragua” by Elyssa Pachico, 28 October 2009

https://nacla.org/node/6180

MicroCapital. “NEWS WIRE: ‘No Payment Movement’ Attacking Microfinance Industry” by MicroCapital Team, 6 November 2009

https://www.microcapital.org/news-wire-nicaragua-no-payment-movement-attacking-microfinance-industry/

MicroCapital. “MICROCAPITAL BRIEF: Nicaraguan Microfinance Institution Banco del Exito (Banex) to be Liquidated” by Jennifer Shevock, 9 September 2010

https://www.microcapital.org/microcapital-brief-nicaraguan-microfinance-institution-banco-del-exito-banex-to-be-liquidated/

MicroCapital’s Microfinance Universe profile: Association of Microfinance Institutions of Nicaragua

https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Association+of+Microfinance+Institutions+of+Nicaragua

Browse MicroCapital’s Microfinance Universe and add your entry to the wiki at:

https://www.microcapital.org/microfinanceuniverse/

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