Don’t Give Up on Microcredit
After a deluge of bad press, corporate buyouts, and over ambitious mistakes, microfinance’s own credit score took a serious hit over the last 18 months. It’s important to remember however, that any innovative program is only as successful and impactful as its directors are thoughtful and present.
Despite discouragement from all directions, Liga Masiva, an organic sourcing company that acts like an international farmers market (connecting farmers in Latin America directly with consumers in the US), forged ahead in launching their own microcredit program, Socios. Socios was designed to provide affordable credit directly to Dominican coffee farmers with whom Liga Masiva already had a strong working relationship, to help them build credit and make it through the pre-harvest season. We helped by advising on the structure for the seed investment in the program, and by connecting Liga Masiva with a law firm in the Dominican Republic.
Read founder Emily Kerr’s post below to hear about the program’s successes and lessons learned.
Loans to Farmers Work.
When we started working with farmers in the Dominican Republic, we asked them how we could be of service to them. The most urgent need they identified? Access to credit to maintain farms before harvest. Most of the farmers had no access to capital at that time. And the ones that did were charged rates as high as 24 – 36% annually.
In 2010, after discussions with farmers, Liga Masiva tried to partner with a microfinance institution to get the farmers access to the credit they needed. Yet after 21 different institutions, not a single one had terms were acceptable to either the farmers or us….