Fondo de Desarrollo Local
Financiera FDL is a microfinance institution in Nicaragua, focused mainly on MSMEs.
Amount
€ 3,674,000.00
Type of investment
Debt
Development impacts
- Local economic growth
- Financial inclusion
- Food security & rural development
Beneficiary locations
Investment field
Financial Institutions
Activity
The project consists in providing a loan to Financiera FDL S.A., a legal entity created as a result of the transformation of FDL Asociación, a Non-Profit Organization into a regulated financial institution (or ‘Financiera’).
With this transformation, the institution is now supervised by the Banking Superintendence of Nicaragua (SIBOIF2). Financiera FDL S.A. was actually created as a subsidiary of FDL NGO and started operations in May 2016, taking over all credit activities of FDL NGO. The latter has ceased credit activities and will focus on capacity building and technical assistance services only, while remaining main shareholder of Financiera FDL S.A.
FDL is historically the first MFI in Nicaragua in terms of portfolio size and number of clients and agencies. The institution has a strong focus on rural areas and agriculture and a clear social mission. In the context of FDL’s transformation into regulated “Financiera”, this follow-on investment will enable the institution to consolidate, grow its loan portfolio and increase its contribution to the development of the local market by offering financial services to micro, small and medium entrepreneurs in the rural and urban sectors.
Activity
FDL is one of the main finance providers in rural areas, very much engaged in serving the agricultural and agro-industry sector (34% of Portfolio), other key sectors being commercial and housing. As of Dec. 2015, FDL counted 70,060 customers (52% women) with an average loan size of USD 1,298.
Currently FDL’s offer is made of loans, insurance services and remittances. FDL counts with a ‘Development Portfolio’, offering innovative financial products to support the productivity of small farmers and promote environment-friendly development.
The transformation into Financiera is a big step for the institution and opens new development opportunities, such as the possibility to offer deposit products in the future. FDL has been engaged in this transformation process since several years and managed to implement successfully significant changes to comply with SIBOIF’s requirement. Main improvements were made on organizational structure, policies and procedures, IT and HR capacity etc.
Development impacts
-
Local economic growth
As a MFI, Financiera FDL is dedicated to MSMEs and mirco-entrepreneurs. 1/3 of the portfolio of the institution shall be dedicated to commercial MSMEs, 1/3 to small agri-businesses and another 1/3 to housing and consumers.
In the framework of the institution's transformation into Financiera, the institution will be able to offer deposit products in the mid-term (from 2018/9 onwards)
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Financial inclusion
As a MFI, Financiera FDL is dedicated to MSMEs and mirco-entrepreneurs. 1/3 of the portfolio of the institution shall be dedicated to commercial MSMEs, 1/3 to small agri-businesses and another 1/3 to housing and consumers.
Access to credit for micro-entrepreneurs is the core business of the institution.
Access to savings is relevant as the new fianciera license of FDL will enable mobillization of savings from 2018 onwards
FDL already has remittances services. They are also planning to develop further payment services. A study is ongoing with IFC to launch a new payment platform.
FDL already has several micro-insurance products in place
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Food security & rural development
FDL's core strategy is to reach underserved rural areas (75,2% of the portfolio in Dec. 2015). Main primary sectors supported are cattle, coffee, basic seeds, bananas, fruits etc.
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Equity
