What is Microcredit?The provision of small loans or microcredit to poor people to help them engage in productive activities including growth of very small businesses is called Microcredit. The term may also include a broader range of services, including credit, savings, and insurance.
Major Microfinance Organizations in Honduras
Name |
Name of the Individual |
Contact Information |
Comments |
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Adelante |
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Allderdice |
April |
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Coca-Cola |
lmanley@na.ko.com |
http://www.businesswire.com/news/google/20070322005518/en  |
Coca-Cola USAID partnership on water and sanitation |
Finca Honduras |
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Finsol |
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Fundahmicro |
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FUNED |
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ODEF |
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Worldrelief |
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Wells Resource Center for water, sanitation and environmental Health |
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Water Partners |
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-->Really interesting organization. recommended by Larry Harrington although I think this is the same organization that Andra Tamburro from Water Advocates recommended |
Microcredit projects that already exist in Central America
In general Microcredit projects can range anything between lending to an individual to implementing a project which would help the whole community at large (generally with the aid of the government or a Non-governmental charitable institution). The current Microcredit projects in Central America are mainly concentrated on Small size businesses. Microcredit in Central America has been growing at a steady pace of 20% in the last decade with Honduras among the lower end of growth spectrum.
How Microcredit works?
All the Microfinance orgnanizations in Honduras seem to follow the grameen model for lending pursposes, in this model an organization assigns a number of officers to a community to familirize with the situations on ground and gather loan applications. Once the loan applications are reviewed they decide on potential borrowers (usually the limit is 5 people) and form a group of with all them as members. Then they give money to 2 members of the group (the loan could range from anything between $50 to $5000) and monitor repayments for a two year period. If the two borrowers do return the money on time they extend the loans to everybody else in the group, this dynamics creates a peer pressure among the borrowers to make payments on time.
How Microcredit can be used to help Aguaclara?
The best way would be to convince different villages in Honduras to form commercial Water boards and use them as representatives to apply for the Microcredit loans in lieu for paybacks based on the collection of water taxes from each individual family in the village. Since many of the Honduras villages already have a water board and most of them keep tax records it would be easier for the Microcredit institution to verify their credit worthiness and provide them the initial investment required to build the water treatment plant and pay the Aguaclara/APP employees working on the project.