Microfinancing and the Environment

Central American Microfinance Institutions (MFI) and their networks have been focussing on financial tools to provide basic financial services for the poor. The success of their economic performance is reflected in financial ratings and indicators of the MIX (Microfinance Information Exchange, Inc. is the leading business information provider dedicated to strengthening the microfinance sector).

Recently, awareness is rising that attention must also be given to their social mission of improving the quality of life for their clients. Social Performance Management (SPM) systems contribute to generating information necessary for decision-making orientated at these social results. Moreover, it visualizes the different interest groups, allowing the MFI to offer specific products for specific needs.

In 2007, the Center for Rural Development studies (CDR) developed a social performance management system for FINDESA (Nicaraguan Financer for Development). In 2008, FINDESA asked CDR to elaborate environmental indicators to be inserted in the SPM system.

Although environmental regulations may exist in the country, many small and micro-enterprises (SME) are not revised as their informal character does not allow for a trustful and cost-effective follow up. In order to mitigate the negative impacts that these businesses might have on the environment, other measures have to be taken. MFI's can play a strategic role in this process, as the SME's are their main clients.

Credits:

A Company (Marije van Lidth de Jeude) with CDR (Ariana Araujo)

Client: FINDESA

Location: Central America

Status: Completed

Year: 2007-2008