MICROCAPITAL STORY: Cordaid of the Netherlands Loans $559k to Latin American Microfinance Institution FINCA Honduras

CGAP (Consultative Group to Assist the Poor) reported in its recent list of transactions that Cordaid (Catholic Organization for Relief and Development AID), a Dutch development organization, lent USD 559,017 to FINCA Honduras, a Latin American microfinance institution (MFI) under the FINCA (Foundation for International Community Assistance) network.

Founded in 1997, Cordaid is a Dutch Catholic foundation that supports 1,000 development and welfare organizations in 40 countries. Cordaid also provides emergency aid, health care and poverty alleviation through participation and entrepreneurship programs for isolated and disadvantaged members of society. Its microfinance unit was started in 2000 when Cordaid realized the need for more specialized financial services in serving disadvantaged individuals.

The most recent financial data provided by the Microfinance Information Exchange (MIX) shows at the end of 2004, Cordaid had total assets of USD 63.5 million with USD 35.4 million allocated to microfinance investments. As of 2004, the microfinance arm of Cordaid held 90 active investments, with 25 percent of investments in Latin America and the Caribbean and 23 percent of investments in South Asia.

FINCA Honduras, founded in 1989, is a chapter of FINCA, a network of associations that provides financial services to low-income entrepreneurs. FINCA was founded in 1984 under the village banking method, which encourages poor individuals to form financial support groups and allows them access to working capital using the group as collateral for the loans. FINCA Honduras provides village banking services as well as individual loans to micro-entrepreneurs.

According to 2007 financial data provided by the MIX, FINCA Honduras had total assets of USD 7.7 million and a gross loan portfolio of USD 6.6 million. At the end of 2007, the microfinance institution had 22,194 active borrowers and claimed female micro-entrepreneurs to be its main clients, with 81.3 percent of borrowers being women. FINCA Honduras also reported a return on assets of 3.86 percent and a return on equity of 11.58 percent in 2007.

Additional Resources:

CGAP (Consultative Group to Assist the Poor): Home, List of Recent Transactions – April 2008

Cordaid: Home, About, Emergency Aid and Reconstruction, Entrepreneurship, Health and Well-Being, Participation

FINCA: Home, About, History, Microfinance and Village Banking, FINCA Honduras

MIX Market: Profile for FINCA Honduras

MIX Market: Profile for FINCA

MIX Market: Profile for Cordaid