Improving the quality of life of low-income populations: focus on Honduras and Salvador

02 September 2021
PILARH

Pillar_scheme_ENThe programme ADA-REDCAMIF II (2018-2021) entitled "Strengthening the social added value of microfinance" aims to improve the quality of life of low-income populations in Central America and the Dominican Republic by providing access to responsible and inclusive financial services. To that end, the programme aims to support microfinance institutions (MFIs) to:

PILLAR 1 - Develop inclusive financial products and services: 19 MFIs received methodological and/or financial support through 22 projects to design a new financial product or service with social added value (an MFI can be supported on several projects);
PILLAR 2 - Using digital technologies to improve their operations: 17 MFIs were supported through 17 projects to implement digital solutions.

In total, 31 MFIs were supported through 39 projects in the 7 countries of REDCAMIF (Nicaragua, El Salvador, Guatemala, Honduras, Dominican Republic, Costa Rica and Panama). Each month, find out more about some key projects of the programme.


PILLAR 1

SUSTAINABLE FINANCING FOR THE ECONOMIC 
DEVELOPMENT OF RURAL ENTERPRISES IN HONDURA

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PILARH OPDF (Proyectos e Iniciativas Locales para el Autodesarrollo Regional de Honduras - Organización Privada de Desarrollo Financiero) in Honduras is one of the microfinance institutions that received technical and financial support from the programme to launch a pilot product development project. PILARH is a leading organisation in the economic and social development of rural areas in Honduras. It offers a diverse range of services, including financing, savings accounts, microinsurance, and remittances, as well as non-financial services such as technical assistance, training, and financial education.

PILARH_1   PILARH_2

PILARH OPDF key figures (as of December 2020)
- total credit portfolio: $20.88 million;
- 14,040 clients, of which 47% are women and 60% are rural clients.

With the support of the programme, the MFI has implemented the "Rural Family Enterprise" project, which incorporates a holistic approach to supporting rural producers in the Lempira and Copán regions, considering the well-being of the family as a development axis. This project aims to provide financing to families to enable them to reinvest in their economic activities and increase their family income level. A financing that meets the basic needs of families, in addition to generating employment.
Funding includes an analysis of the farm, including the economic activities (agricultural and non-agricultural) carried out by family members and how they relate to the markets in which they operate. This approach supports the capitalisation of farms, encourages productive diversification and the use of new technologies. It is combined with training on good environmental practices and financial education.
In particular, the project contributes to improving the economy of rural families affected by the coffee crisis of 2017 and 2018, and to promote the overall development of communities.

Results as of June 2021
- 41 families were supported;
- 22% of the families are led by a woman.

The scope of the project in terms of economic activities was mainly focused on coffee production and then expanded to other staple grains, large and small livestock and sugarcane cultivation, which are essential for farmer production.

 

NON-FINANCIAL SERVICE OFFER TO THE CLIENTS BELONGING TO THE SOCIAL COMMUNITY PROGRAMME THROUGH THE IMPLEMENTATION OF THE POVERTY STOPLIGHT FOR INTEGRAL DEVELOPMENT

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The programme supported the MFI FUSAI (Fundación Salvadoreña de Apoyo Integral) in El Salvador, in its project "Offering value of non-financial services to the clients of the community social program, through the implementation of the stoplight for integrated development". This project aims to provide support in the development of self-diagnosis and family life plans to 100 clients of the Community Social Program (CSP) in 10 rural and/or peri-urban communities.

The stoplight methodology is a tool that allows families to measure their poverty level according to different indicators and to identify personalised strategies to meet their needs. The methodology covers 6 dimensions broken down as follows: 1) income and employment; 2) health and environment; 3) housing and infrastructure; 4) education and culture; 5) organization and participation; and 6) interiority and motivation. Each indicator uses traffic light colors to measure the level of poverty:
- red: extreme poverty
- yellow: poverty
- green: no poverty

This tool is filled out by the client and uses simple images and text to help families identify and visualise their poverty level in an understandable way.

FUSAI has institutionalised this methodology and its indicators in the Salvadoran context, so that they can be applied in vulnerable communities in their intervention areas. FUSAI has also become a hub, meaning that it is authorised by Fundación Paraguaya (creators of the tool and methodology) to transfer the methodology to other institutions. With this approach, families are self-managers of the process, from their self-assessment to the implementation of solutions, and FUSAI can link their needs to complementary financial and non-financial products and services offered.

Results of the support

FUSAI_results   

Results as of June 2021
- 188 self-diagnoses have been carried out;
- 800 credits have been disbursed by the volunteers trained by the project as of December 2020 (closing date of the project).

Through the implementation of the project, FUSAI has made a significant contribution to improving the quality of life of many entrepreneurs in Salvadoran communities. The clients were able to reflect on their reality and became aware of the results of the actions implemented by monitoring their own indicators.
FUSAI continued the work of transforming the "Income and employment" indicator and complemented this activity with financial education, offering workshops to increase sales, develop a business plan, prepare a budget, identify areas of opportunity to increase the supply of their products, among others.


PILLAR 2

THE DIGITAL TRANSFORMATION OF
THE HERMANDAD FOUNDATION IN HONDURAS

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The MFI HDH (Fundación Hermandad de Honduras OPDF) has smartly digitised its operational processes, business development and new products to improve the experience of its clients. To achieve these improvements, the institution has implemented 3 initiatives:

HERMANDAD_results