July 7, 2011

CEPRODEL has been a Kiva Field Partner for 44 months.  During that time, CEPRODEL borrowers have paid back $1,712,625 in loans.

In recent years, the "No Pago" movement (a movement for non-repayment of loans) has created concern around the increased risk of loan non-repayment by Kiva borrowers in Nicaragua.  As a result, last year Kiva posted a loan alert on Nicaraguan loans, warning lenders about the potential risks of lending to entrepreneurs in Nicaragua.  Earlier this month though, the government passed a new microfinance law that has addressed many of these concerns.  As a result, the situation appears to have resolved itself and the "No Pago" loan alert is being removed.

Although the "No Pago" movement appears to be resolved, the impact of the movement — along with the global economic crisis and some climatic events — have caused some of CEPRODEL's clients to have trouble with their businesses.  These troubles, and their impact on loan repayments, have hurt the organization  financially.  That said, CEPRODEL is hoping to make strides towards greater performance given the improvement of the global economic situation and the current successes towards resolving the No Pago Movement.


However, these recent developments have led us to believe that CEPRODEL's risk rating (2 out of 5) may no longer be appropriate given the level of risk posed by the institution.  As such, we have reduced their star rating from 2 to 1 stars.  CEPRODEL has been informed of our analysts’ findings, and their corresponding drop in rating.

We will continue to facilitate CEPRODEL's fundraising on the Kiva website, albeit at a lower level than before.

We will keep this page updated with further updates as information becomes available.

October 4, 2010

On August 24, 2010, Kiva reduced CEPRODEL's risk rating from four to two stars and added alert text to CEPRODEL's fundraising loans. This was the result of a deterioration in CEPRODEL's loan portfolio due to a number of reasons, as discussed in our previous update.

Prior to Kiva's learning of this deterioration, CEPRODEL had increased their postings to Kiva's website. Approximately $100k in additional loans were made after this deterioration had occured, but before Kiva had become aware of the issue and adjusted CEPRODEL's star rating and fundraising limit.

Once we became aware of the issue, Kiva paused the settlements procedure as a precaution. This was done in the event that we needed to refund loans to lenders who had lent new funds after Kiva became aware of the deterioration, but had yet to decide on a course of action. As a result of the settlements pause, on September 1, 2010, CEPRODEL's delinquency rate increased to 40.38%.

During this time, we carefully reviewed the options that would best protect our lenders while simultaneously not putting CEPRODEL (and ultimately other lenders' funds) in jeopardy. After reaching out to CEPRODEL to discuss these issues, we decided to proceed with the refund to the affected lenders. This was done because at the time these lenders made these loans, they did not have the same information on CEPRODEL's portfolio deterioration as Kiva itself had. Also, in this particular situation, we wanted to make sure not to increase Kiva's overall exposure at CEPRODEL.

Once the refunds have been issued and settlement has been reactivated, the high delinquency ratio expressed on the Kiva website should fall from its current level of 51.59%.

Special Notice on CEPRODEL from Kiva Staff on August 24, 2010:

CEPRODEL's delinquency rate has been above historical norms recently; as of August 24th, 2010, its delinquency rate on Kiva was at 16.59%. Kiva explored this and related issues through its quarterly financial review process, during which Kiva requests financial statements from its field partners.

An initial investigation has revealed that much of the cause appears to be related to the global economic downturn and its particular effect on Nicaragua. Nicaragua has been hard hit on several fronts in the last year. CEPRODEL has shared that the economic crisis reduced sales for many small businesses, and reduced overseas remittances upon which many borrowers rely for sustenance. In addition, we've heard reports of a sharp fall in the price of beef and pigs; also that Nicaragua was hit by a drought that further hurt agricultural production.

Since CEPRODEL lends heavily in rural areas for agricultural purposes, their borrowers appear to have been especially hard hit by these factors, causing an increase in their delinquency. The organization hopes that things will start to stabilize with the new agricultural cycle in September. However, given this challenging situation, Kiva has felt it necessary to reduce CEPRODEL's risk rating from four to two stars.

Kiva will continue to work closely with CEPRODEL and provide updates as appropriate.

Update from Kiva Staff on July 19, 2010:

In order to help you better understand the potential risks of lending to entrepreneurs in Nicaragua, Kiva continues to provide information on the “No Pago” movement (a movement for non-repayment of loans).

The momentum behind the No Pago movement appears to have largely dissipated, as a result of the National Assembly's passage of a law in April 2010. This new law allows delinquent borrowers (as of June 2009) to re-negotiate loans with more favorable interest and terms. Borrowers who were part of the No Pago movement were required to approach MFIs to re-negotiate their loans by May 12th of this year. While many borrowers did approach MFIs to re-negotiate their loans, it still only accounted for a small percentage of the members of the No Pago movement.

For Kiva lenders who previously lent to Nicaraguan borrowers:

  • if your loan had default coverage, then even if your loan was affected, the MFI will cover your loan for the full amount.
  • if your loan did not have default coverage by the MFI: If the borrower you lent to did not approach their MFI before May 12th, their loan cannot be re-negotiated under the terms of the No Pago movement resolution. Kiva is working closely with its Field Partners in Nicaragua to see if any Kiva clients have re-negotiated their loan under this law and will message to lenders accordingly.

For Kiva lenders considering making new loans in Nicaragua: it seems that as a result of the passage of this law and since the term for re-negotiation has passed, the microfinance situation is calmer in Nicaragua that previously. Kiva will continue to update the Kiva lender community if the situation changes significantly.

Special notice on Ceprodel from Kiva Staff on June 17, 2010:

Kiva recently conducted on-site monitoring at Ceprodel in order to re-assess the level of risk posed by this institution. The analysts found that some of the components that Kiva looks at during our due diligence process did not merit a 5-STAR rating and adjusted the rating to 4.

About CEPRODEL

Founded in 1991, the Centro de Promoción del Desarrollo Local (CEPRODEL) is a nonprofit organization (NGO) based in Managua that develops community-based socioeconomic programs to help alleviate poverty throughout western Nicaragua. CEPRODEL develops and provides funding for housing cooperatives for low-income families, provides microfinance loan services to small business owners and livestock and agricultural workers, and has promoted renewable energy and improved water quality by offering loans and subsidies for solar panels, water tanks, filters and pumps.

 

As of September 2011, CEPRODEL's 106 employees work in 12 offices that serve more than 8,500 clients (49% of whom are women) and numerous cooperatives. The majority of CEPRODEL’s programs aim to boost income for the women of Nicaragua.  Such women are often the primary breadwinners in their households, where many of the men have emigrated to the United States, Costa Rica, El Salvador or Spain in search of additional economic opportunities.

In November 2008, the European Microfinance Platform recognized CEPRODEL's “Renewable Energy and Improved Water Quality Microfinance Initiatives for the Rural Sector” with the 2nd European Microfinance Award for Social Responsibility.  Its application was also selected as one of the "seven most innovative and promising case studies to disseminate alongside the three winners”, in hopes of inspiring the microfinance sector. The case study was published in European Dialogue Number 2, May 2009.  Additional honors awarded to CEPRODEL include Mix Market/REDCAMIF Certificate of Transparency (2005/2009) and Mix Market/REDCAMIF Certificate of Recognition (2008).

Funders of CEPRODEL have included Sostenica, Inc., Inter-American Foundation, Dutch International Guarantees for Housing, BCIE (Banco Centroamericano de Integración Económica), Katalysis Bootstrap Fund, the European Union, Swedish Cooperative Centre, INCOFIN, Oikocredit and Blue Orchard.

In addition, CEPRODEL is affiliated with Habitat for Humanity, the Association of Microfinance Institutions from Nicaragua (ASOMIF), PROMIFIN, the Local Development and Housing Networks, and the International Network of Alternative Financial Institutions (INAFI).

Join the Fans of CEPRODEL Kiva Lending Team or Make another loan to a CEPRODEL client when available!


Repayment Performance on Kiva

    This Field Partner All Kiva Partners
  Start Date On Kiva Oct 8, 2007 Oct 12, 2005
Total Loans $4,168,200 $625,499,400
Amount of raised Inactive loans $0 $397,125
Number of raised Inactive loans 0 334
Amount of Paying Back Loans $426,500 $120,621,050
Number of Paying Back Loans 695 132,551
Amount of Ended Loans $3,741,700 $504,481,225
Number of Ended Loans 7,220 634,883
Delinquency Rate 0.17% 4.66%
Amount in Arrears $491 $3,619,396
Outstanding Portfolio $293,289 $77,690,214
Number of loanDelinquent 10 17,035
Default Rate 0.18% 1.11%
Amount of Ended Loans Defaulted $6,847 $5,607,074
Amount of Ended Loans $3,741,700 $504,481,225
Number of Ended Loans Defaulted 30 17,325
Currency Exchange Loss Rate 0.00% 0.11%
Amount of Currency Exchange Loss $75 $679,982
Refund Rate 5.65% 0.73%
Amount of Refunded Loans $235,300 $4,592,300
Number of Refunded Loans 450 5,127

Loan Characteristics On Kiva

    This Field Partner All Kiva Partners
  Loans to Women Borrowers 63.26% 74.18%
Average Loan Size $525 $418
Average Individual Loan Size $526 $654
Average Group Loan Size $703 $1,837
Average number of borrowers per group 3.4 8
Average GDP per capita (PPP) in local country $3,636 $3,409
Average Loan Size / GDP per capita (PPP) 14.45% 12.27%
Average Time to Fund a Loan 7.78 days 5.8 days
Average Dollars Raised Per Day Per Loan $67.51 $72.17
  Average Loan Term 11.07 months 10.52 months

Journaling Performance on Kiva

    This Field Partner All Kiva Partners
  Total Journals 1,456 313,681
  Journaling Rate 18.55% 42.14%
  Average Number of Comments Per Journal 0.07 0.07
  Average Number of Recommendations Per Journal 2.78 1.77

Borrowing Cost Comparison (based on 2013 data)

    This Field Partner Median for MFI's in Country All Kiva Partners
  Average Cost to Borrower 22% PY 27.00% PY 33.35% PY
  Profitability (return on assets) 1.3% 0.9% -1.49%
  Average Loan Size (% of per capita income) 71.00% 40.00% 38.01%

Country Fast Facts

Field Partner Staff

Jose Luis Aguirre
Carlos Alegría
Mateo Avalos
Miguel Calderon
Beyra Cano
Jose Vitmar Cerrato
Elizabeth Cruz Perez
Rafael Estrada
Leonardo Funez
Gilberto Galo
Marvin Garcia
Griselda González
Sebastian Hernández
Eddy Jiron
Arlen Lopez
Ricardo Lopez
Rudy Miranda
Luz Marina Mora
wendy peralta
Mercedes Perez
María José Rostran
Jairo amador Ruiz
Eddy Sanchez
Edwin Sanchez
Karen Soza
kiva user
Octavio Vasquez
Karla velasquez
Danis Vilchez
Guissell Zapata
Melvin Zeledon