H/OSCP currently supports the microcredit banking program of FUNAFAM in Ocotal (Fundacion Nacional de Apoyo a la Familia y la Mujer). This project evolved after many years of donating material aid such as medical supplies, an ambulance for the hospital, a water purification system and an incinerator for the hospital. The intent is to help women and men of Ocotal become self-sufficient rather than simply to provide donations. The initial micro credit project, Banco Comunal, was begun in 1994 by John Stanton who was the Field Coordinator for HOSCP. He started with $2,000 in seed money and instructions from our past Coordinator Nancy Eckel. The initial project was modeled after Muhammad Yunus’ Grameen Bank of Bangladesh.
H/OSCP’s current project, FUNAFAM, was formalized as a Nicaraguan institution in 1998. It is a financial institution catering to the poor. The objectives of the project are to increase the quality of life for both the client and his/her family, to promote solidarity within the bank and the community, and to promote the self-empowerment of women. Any person with an income-generating project and who would benefit from an initial small investment of $60, is eligible for a loan with FUNAFAM. Loans are based on “business needs”, not client wants.
The loan process works in the following way. The clients form solidarity groups of 4-6 women. They are required to attend an initial workshop at the FUNAFAM office that goes over the rules of the bank. Next, the FUNAFAM staff visits the prospective client group in their neighborhood. If the group is determined to be trustworthy, loans are distributed one week later. Group loans are for 3, 6 or 9 months. Payments are delivered to the FUNAFAM office by one member of the group. Payments can be made weekly, biweekly or monthly. The FUNAFAM staff makes periodic visits to the clients’ businesses. Training is provided as needed. The project works using social collateral. All members of each solidarity group are responsible for all of their loans.
The first loan is $60 maximum. After successful use and repayment of the loan, the client may increase the loan size. Although clients would prefer to borrow money at low or no interest, project sustainability can only be reached when all costs are covered by the clients. Individual loans are available for clients with a more established business. These loans can be paid monthly and last up to 36 months. Any loan can be restructured if the client has difficulty repaying the loan.
Some examples of the clients who take out loans with FUNAFAM are a seamstress, a woman who owns a small store, a woman who sells clothing in the market, a woman who sells ground coffee, tamales and tortillas. Clients use their loans for many reasons including the following; purchasing equipment (a freezer for a small store, a gas stove for a bakery, a large grinder for coffee and corn), buying bulk supplies (fabric for a seamstress, flour for a bakery) or buying inventory (clothing and shoes for a market stall, supplies for a small grocery store). Clients use their earnings for various reasons including; home repair (new roof, latrine…), education (primary, secondary, university), personal improvement (food, glasses, furniture…) and medical expenses
FUNAFAM is 100% Nicaraguan run. With more investment from Sister Cities, more clients could expand their businesses and improve their lives.