WCCN recently completed a study that confirmed the overwhelmingly positive impact that microfinance has on borrowers’ businesses, their lives and their children’s lives. This study was the result of almost three years of planning, fieldwork and analysis of data collected in a nationally representative survey of 826 borrowers from nine microfinance institutions, most of which receive loans from the NICA Fund. This is the second study published by WCCN on this topic. In fact, WCCN and the International Foundation for the Global Economic Challenge (FIDEG), a Nicaraguan research center, carried out a similar study in 2002 that provided the methodological basis for the design and implementation of the current study. This research project was conceived as a North-South collaborative project in which FIDEG and WCCN had the opportunity to work side by side, from the initial design of the study to the final drafting of the document and the presentation of the report.

On September 27th, 2007, in Managua, WCCN debuted a book in Spanish detailing the findings. The event was organized by the Nicaraguan Association of Microfinance Institutions (ASOMIF). Most of the attendees were linked to the microfinance industry, and there was a very interesting conversation about the results. The event was introduced and closed by Alfredo Alaniz and Armando Garcia, Executive Director and President of ASOMIF, respectively. I provided an overview of the study and presented two additional chapters that were under my care. I was joined by my colleagues Soren Hauge, Professor of Economics at Ripon College and member of the NICA Fund Oversight Committee, who designed the methodology of the study; Sonia Agurto, director of FIDEG, who led the research and surveying teams, presented the findings of the longitudinal study; and Francisco Barquero, NICA Fund’s Representative in Nicaragua, who oversaw the implementation of the entire study and presented the chapter on the impact of microfinance on agriculture and livestock borrowers.

The study came out at a very important political moment in Nicaragua, and we hope it will contribute to enriching the discussion and understanding of the role and impact of microcredit. The reality is that with Daniel Ortega’s government we have seen erratic and confusing positions and policies regarding the role of credit in the national development strategy. Some of the main developments with the new administration regarding microfinance operations are the following: First, the Venezuelan Bank of Economic and Social Development (BANDES) opened an office in Nicaragua and, in a move that many in the cooperative movement called non-transparent, disbursed $9.6 million in subsidized loans to seven Sandinista cooperatives. Second, Ortega’s administration launched a very politicized credit program called “Fair Microcredit, Zero Usury,” with a total budget of $2.2 million for 2007, with the aim of providing subsidized loans in popular markets in Managua. Finally, the National Assembly has just approved the creation of a National Development Bank, a first-tier bank that will have $8 million dollars in start-up capital to provide subsidized loans to small and medium-sized rural producers.

WCCN is very proud of its leadership role on the topic of the social impact of microfinance in Nicaragua. We are currently preparing a special report in English on the main findings of the study to make it available to all our supporters.