Financiera Fondo de Desarrollo Local - Nicaragua
Financiera Fondo de Desarrollo Local (FDL) is a Microfinance Institution with closed to 8,000 clients and 34 branches out of 46 offering the initiative presented to the 10th European Microfinance Award.
Climate change impacts the whole economy in Nicaragua, but the agricultural sector in particular (e.g. the coffee sector) struggles due to irregular cycles of droughts and floods, increasingly extreme temperatures, and initial desertification. This leads to an increasing vulnerability and decreasing resilience of farmers, as crops face for instance early flowering, rust and disease, which are reducing yields and lowering the farmers’ capacity to pay. Without relevant information on how to adapt to changes and/or credit constraints for required investments, farmers are not able to strengthen their resilience.
FDL decided to react to the consequences of climate change by providing local interventions to increase not only clients’ resiliency, but also the resilience of the ecosystem.
FDL’s “Green Microfinance-Plus” reduces transaction costs, combines technical assistance with payments for ecological services and adapted loans for water-harvesting and irrigation systems, and incorporates silvopastoral agroforestry models for the intensification of cattle production based on integrated and sustainable natural processes, including pasture improvement, seed management and diversification, and soil conservation.
Loans are provided for green microfinance in the coffee/cacao highlands (crédito ambiental cambio). Since 2015, loans are provided for the Dry Corridor (crédito ecomicro) to foster mitigation and adaptation practices and since 2013, loans are provided for agroforestry-related income diversification activities (e.g. establishing cocoa and coffee plantations as tree/shade balancing areas for corn and bean production) in the buffer zone of forest reserves. FDL’s green financial products are accompanied by technical assistance.
The 2 partners involved are Nitlapán (the Institute of Research and Development of the Universidad Centroamericana de Nicaragua, which provides technical assistance and applied research) and the Local Development Fund Association.