MICROCAPITAL BRIEF: Incofin; Microfinance Institutions Fundenuse, Fundeser, MiCrédito Operate Satellite-based Weather-index Microinsurance for Coffee, Grain Farmers in Nicaragua

Belgium’s Incofin Investment Management recently launched an insurance plan with Nicaraguan microfinance institutions (MFIs) Fundacion para el Desarrollo de Nueva Segovia (Fundenuse), Financiera Fundeser and MiCrédito to help 6,000 coffee and grain farmers be better prepared for climate change. The program utilizes “satellite imagery to measure the magnitude of droughts and storms, triggering payouts” when those events exceed predetermined thresholds. These payouts are received in bulk by the MFIs, which apply them to retail borrowers’ loans depending on the impact of the event on each borrowers’ location. Incofin and Fundeser are also working on a similar initiative expected to protect an additional 12,000 farmers in case of flooding.

The insurance is underwritten by AXA XL and AXA XL Reinsurance, which are controlled by French insurer AXA, and the Nicaraguan government’s Instituto Nicaraguense de Seguros y Reaseguros (Iniser). The program has been under development since July 2017, when it received financial backing from the Multilateral Investment Fund (MIF), a member of the US-based Inter-American Development Bank (IDB) Group; the Dutch development bank, which is known by its acronym FMO; and Incofin CVSO, a fund managed by Incofin.

As of January 2019, Fundenuse has 21 branches and 169 employees. As of 2017, it reported total assets of NIO 971.8 million (USD 29.8 million) and a net 12-month cash increase of NIO 56 million (USD 1.7 million).

As of 2016, Fundeser reports to the US-based Microfinance Information Exchange (MIX) total assets of USD 66 million, a gross loan portfolio of USD 52 million and 30,000 active borrowers.

MiCrédito is a MFI that was founded by the Canadian NGO Mennonite Economic Development Associates (MEDA) in 2004 to target the underserved rural microlending market in Nicaragua. According to MIX, MiCrédito had total assets of USD 14.7 million and a gross loan portfolio of USD 11.87 million as of 2016.

Incofin is a for-profit firm that has about 325 investments in 65 countries as of January 2019. This portfolio, valued at USD 1 billion as of 2019, comprises the following funds: agRIF, BRS Microfinance Coop Fund, Fairtrade Access Fund, Fonds pour l’inclusion financière en République Démocratique Congo (FPM), Incofin CVSO, Invest in Visions, Rural Impulse Fund II, Volksvermogen and a loan portfolio of vdk Bank.

Research Associate, Tiannah Steele

Sources and Additional Resources

Incofin description of insurance program in Nicaragua – post-launch
https://incofincvso.be/en/2018/unique-incofin-initiative-protects-nearly-eighteen-thousand-nicaraguan-coffee-and-cereal-growers-from-the-impact-of-climate-change/

Incofin description of insurance program in Nicaragua – pre-launch
http://www.incofin.com/incofins-rural-finance-partnership-technical-assistance-program-promotes-smallholder-resilience-to-climate-change-through-innovative-agricultural-insurance/

Fundenuse homepage
https://www.fundenuse.com.ni/

Fundenuse financial reports
https://www.fundenuse.com.ni/informes/vista-estados-financieros/

Fundeser homepage
https://www.fundeser.org.ni/index.php?mod=portada

MIX Profile for Fundeser
https://www.themix.org/mixmarket/profiles/fundeser

MiCredito homepage
https://www.micredito.com.ni/

MIX Profile for MiCredito
https://www.themix.org/mixmarket/profiles/micredito-nicaragua

AXA XL homepage
https://axaxl.com/

Iniser homepage
https://www.iniser.com.ni/