
In the October newsletter, Envest Latin America Representative Francis Soza Huete described Envest’s Partner, MiCrédito, in Nicaragua and her recent visit to the MFI. MiCrédito is the largest MFI in Envest’s portfolio, both in terms of asset size and amount lent from Envest. It is also a regional MFI, stretching cross border to Costa Rica and Honduras, as Francis mentioned briefly in her article. In this article, I will explore that expansion in more detail and emphasize how unique and impactful it is.
MiCrédito was founded in 2004 by the Mennonite Economic Development Associates (MEDA). Its mission is to deliver financial services that empower micro and small business entrepreneurs, enabling them to create positive social impact. Women have consistently comprised around 60% of the borrowers demonstrating a significant commitment to women’s empowerment. The portfolio is generally allocated to 50% commerce, 20% service, 20% agriculture, and 10% to miscellaneous activities such as production, livestock, personal loans, fishing, and home improvements.
I first met Veronica Herrera, Director of MiCrédito, at a microfinance conference in Mexico in 2013, and it was there that she mentioned the possibility of expanding outside Nicaragua. In the late 90s and 2000s, there was quite a bit of discussion in the microfinance sector about the possibility of MFIs expanding into neighboring countries. There were very few examples of this actually happening, and most microfinance observers considered it risky and impractical. Veronica’s vision was to serve the Nicaraguan diaspora in the rest of Central America. It was an interesting idea but seemed far-fetched to me at the time.
MiCrédito launched MiCrédito Costa Rica in 2018 with an office in San Jose. The thinking behind MiCrédito Costa Rica was that there is a large Nicaraguan diaspora living in Costa Rica, some of whom are undocumented and would benefit from MiCrédito’s services. There is a pronounced economic disparity between Nicaragua and Costa Rica, which causes many Nicaraguans to cross the border to find work. These Nicaraguans face the typical challenges of being undocumented and occupying low paying jobs with little future. This segment represents 90% of MiCrédito Costa Rica’s clientele. MiCrédito Costa Rica serves the Nicaraguan diaspora by accepting Nicaraguan identification documents and collateral pledges that are located in Nicaragua.
MiCrédito Costa Rica functionally operates as an extension of MiCrédito Nicaragua. MiCrédito Nicaragua clients can make loan payments at the MiCrédito Costa Rica office and vice versa. MiCrédito’s expansion into Costa Rica has enabled a segment of the Nicaraguan population living there to access credit, which they would otherwise be unable to obtain from a reputable lender. The implementation of a group lending program increased the participation of women from 34% in 2022 to 50% in 2024. This suggests that the culture of innovative products to deliver social impact that is a characteristic of Mi Credito Nicaragua has been embraced in the culture of MiCrédito Costa Rica.
In December 2023, MiCrédito Holding, the holding company of both MiCrédito Nicaragua and MiCrédito Costa Rica, acquired Financiera Finca Honduras (Finca) after months of market research and negotiations. The acquisition will allow MiCrédito to serve the Nicaraguans living in Honduras as well as the local population. Envest agreed to allow the funds from its loan to be used for the purchase of Finca Honduras before equity had been raised to facilitate the purchase. With the acquisition of Finca, MiCrédito is able to advance its vision of establishing a regional presence in Central America and serve segments of the population that are neglected by traditional banking institutions. Finca is now named MiCrédito Honduras. MiCrédito retained the leadership team of Finca and empowered them to initiate changes that would enhance their ability to serve the Honduran microfinance market. Veronica Herrera is very pleased with the transition. The Honduran entity sets itself apart from the Nicaraguan and Costa Rican entities by accepting customer savings.
As of the end of 2024, MiCrédito is truly a regional MFI with MiCrédito Nicaragua, MiCrédito Costa Rica, and MiCrédito Honduras, all operating within MiCrédito Holding Company. The vision and leadership of Veronica Herrera allowed MiCrédito Nicaragua to expand its impact into two neighboring countries while continuing its strong social impact within Nicaragua.
MiCrédito’s Non-financial Services
Services and training for low-income borrowers has remained the consistent hallmark of MiCrédito though its 20-year operating history. It facilitates training programs for borrowers which include topics such as numeracy, basic accounting, and basic marketing. Health education programs are available to borrowers, which include access to reproductive health services including Pap smears and prenatal examinations at reduced cost. MiCrédito has developed an online marketplace in which borrowers can promote and sell their products to other MiCrédito borrowers.
MiCrédito initiated an internship program for students of finance that provides real world experience in finance while making a tangible difference for low-income Nicaraguans. Many of the participants have been hired by MiCrédito upon graduation.
Veronica empowers the members of the MiCrédito team and fosters a sense of community and shared purpose. This culture of empowerment made the transition of Finca Honduras into MiCrédito Honduras very smooth. Veronica served as CEO of MiCrédito Nicaragua from its inception in 2004 to 2024 when she transitioned to CEO of MiCrédito Holding Company. Moises Valle, a member of the MiCrédito Nicaragua management team since 2016, has taken the role of CEO of MiCrédito Nicaragua. The transition has been seamless.
MiCrédito is a rare example of an MFI that has expanded across borders to have a regional scope of operations. It is an open question as to how replicable MiCrédito’s cross border expansion model is across the microfinance sector. There was a clear pathway for MiCrédito to expand via the Nicaraguan diaspora in neighboring countries. MiCrédito Nicaragua’s focus on gender and economic empowerment via a committed team has proven to be replicable in Costa Rica and Honduras. The Envest team is proud to partner with this visionary MFI that is able to replicate innovative products and practices in other countries to expand its social and economic impact.