A Study about Emerging Lessons in Agricultural Microfinance
Overview of case studies: The case studies span three continents and a variety of institutional characteristics. The organizations highlighted differ in portfolio size, ownership and age. Their lending styles also run the gamut from individual to solidarity group and village banking loans. Some institutions finance loans through savings mobilization, and others via interest-bearing lines of credit from international donors. Finally, some institutions are devoted primarily to rural or agricultural lending, while others maintain a modest rural lending programme as a mechanism to diversify their portfolio or enhance outreach.
Summary: Confianza is a small regulated MFI in central Peru that, today, provides agricultural loans, alongside a range of rural, urban, small business, housing and consumer loans to low-income clients. From its beginnings as an InterAmerican Development Bank-funded NGO programme in 1993 until becoming a regulated microfinance provider in 1999, Confianza’s loan portfolio was almost exclusively devoted to solidarity group loans for agricultural purposes. When a combination of factors, including plunging commodity prices, led to an arrears rate of over 50% in 1999, Confianza was forced to make a set of swift, substantial changes in order to survive.
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