“If you go out into the real world, you cannot miss seeing that the poor are poor not because they are untrained or illiterate but because they cannot retain the returns of their labor. They have no control over capital, and it is the ability to control capital that gives people the power to rise out of poverty.” ― Muhammad Yunus
Nicaragua is widely recognized as poorest country in Central America and second poorest in Western Hemisphere, suffering from underemployment levels exceeding 40%. Because government lacks resources to provide “safety net” available in developed countries, a very high percentage of Nicaragua’s population of six million suffer physical and mental deprivations of poverty: hunger, sickness, illiteracy and hopelessness.
At same time that quality jobs are not available, small entrepreneurs have difficulty finding resources to sustain or expand their businesses. Traditional financial institutions have not found it cost effective to provide credit for this sector.
Providing microcredit—the lending of small amounts of money at low interest to people in developing world—to the world’s poor had its humble beginnings in 1976 when Muhammed Yunus loaned $27 to a group of 42 villagers in Bangladesh. Since that time, microcredit has proven to be one of the most effective strategies for improving lives of poor people throughout the world.
This is also the case in Nicaragua. The small farm and business loans offered by CEPRODEL and FUDEMI (made possible by SosteNica and others) have allowed thousands of entrepreneurs and their families to improve their lives. It has also improved the economic conditions of the communities in which these families live and work by injecting funds, which flow in a multiplier effect from one farm or business to another.
Twenty-five years after its inception, CEPRODEL manages an average of 10,000 loans a year, many of which go to first time borrowers each year. The average loan is under $700 and can be used for commerce, business, farming and ranching, handcrafts, education, and home purchase or improvements.