September 11, 2011

As part of an ongoing effort to fully migrate risk ratings to our new and enhanced risk rating system, Kiva has conducted a re-assessment of the level of risk posed by this institution.

During this re-assessment, our analysts were able to gather updated operational and financial information about the institution, as well as speak with key members of the staff. 

Kiva's new risk rating system, which now includes half stars, has enabled us to display Fundación Paraguaya's risk rating with a higher level of granularity. As a result, Fundación Paraguaya's risk rating will now be displayed as 4.5 stars instead of 5 stars. 

We have prepared a blog post with more information on Kiva's new and enhanced risk rating system, along with a chart showing the relative magnitude of the overall changes for Kiva's portfolio.  To view that, please go here: http://www.kiva.org/updates/kiva/2011/09/07/kiva-risk-ratings-now-with-half-stars.html.

Fundación Paraguaya has been informed of the change in the display of their rating on Kiva's website.

Fundación Paraguaya is a financially self-sustaining social enterprise, which promotes entrepreneurship in urban and rural areas through three inter-related strategies:

1) A Microfinance Program aimed at smaller microentrepreneurs and emerging microentrepreneurs, who are generally neglected by other microfinance institutions

2) An economic education program for children and youth (Junior Achievement)

3) A financially self-sufficient and award-winning agricultural high school, which teaches organic agriculture and entrepreneurial skills to low-income youth from rural areas, transforming them from poor campesinos into rural entrepreneurs.

The three programs are separate in budgetary and financial terms, but are closely integrated at the operational level so that each program enriches, and is enriched by, the other two. This synergy gives value added to each of the three programs and is the driving force behind our business model. It is also an important ingredient in the success of our microfinance program.

At Fundación Paraguaya we seek to take our customers out of poverty through the following strategies:

•Direct delivery of financial and non-financial products

•Strategic alliances with like-minded organizations 

•Clear focus on the growth and development of our customers and their suggestions

We at Fundación Paraguaya believe that any goal can be achieved as long as the response to the following two questions is “Yes”: 

1) Is it worth the time/effort, etc? (This addresses motivation) 

2) Will I be able to accomplish it? (This addresses skills)

Our Microfinance Program is a profitable, well-managed business. During the last five years, return of equity has averaged 10%. In 2005, it was cited in the Inter-American Development Bank's League of Champions as the sixth most profitable microfinance program in Latin America. In 2004, 2005 and 2006, the program also won Honorable Mention in the Financial Transparency competition run by the World Bank-sponsored Consultative Group on the Poor (CGAP).

Our Microfinance Program differs from those of the competition in two key respects. First, our program concentrates on lending to smaller microentrepreneurs and emerging entrepreneurs, whose credit needs are generally neglected by the major microfinance institutions. The average loan size of our competitors is about $600; ours is less than $450, and our loans start as low as $40. Second, we offer our microfinance customers more than just loans. Thanks to our distinctive business model, we also provide a range of educational, business advisory and community development services to customers and their families. This enables the Fundación to position itself as a development, rather than a purely financial, institution, which gives it a competitive advantage over the regulated financial institutions (financieras) which are our major competitors.

 Fundacion Paraguaya can be contacted via email at burt@fundacionparaguaya.org.py

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