VZCZCXYZ0004
RR RUEHWEB

DE RUEHMU #1071 2332109
ZNR UUUUU ZZH
R 202109Z AUG 08
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 3053
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE

UNCLAS MANAGUA 001071 
 
SENSITIVE 
SIPDIS 
 
STATE PASS OPIC: LOREN RODWIN 
 
E.O. 12958: N/A 
TAGS: EINV EFIN EAID ECON PGOV PREL NU
SUBJECT: NICARAGUA: APPLICATION FOR OPIC FINANCE - FINDESA 
 
REFS: (A) STATE 83795, (B) MANAGUA 932 
 
¶1. (U) Summary.  Embassy Managua has reviewed OPIC's proposal to 
include Nicaragua's FINDESA as part of its $54 million loan to the 
Global Microfinance Facility (GMF).  We conclude that there are no 
reasons why the loan should not proceed.  End Summary. 
 
Company Standing 
---------------- 
 
¶2. (U) FINDESA, founded in 1993, is one of Nicaragua's largest MFIs representing approximately 25 percent of the country's microlending market ($150 million, 75% of its portfolio is outside of Managua). In 1999, FINDESA expanded its portfolio of services and applied for a formal banking license. Upon issuance of its license in 2002, FINDESA fell under the formal supervision of the Superintendent of Banks. FINDESA subscribes to FOGADE, Nicaragua's deposit insurance corporation. The company has extensive experience in lending to small- and medium-sized enterprises throughout Nicaragua, particularly in the agricultural sector. Currently, FINDESA is looking to expand its activities in other Central American countries such as Honduras. To diversify its markets and reduce country risk, FINDESA's Board of Directors has taken the decision to grow its business in Nicaragua from internally generated capital. New capital, such as a loan from GMF, will be used to expand its business in other markets.
 
¶3. (SBU) The Superintendent of Banks reports that it views FINDESA 
as a financial institution in good standing.  Post has no derogatory 
information on FINDEA or its officers. 
 
Recent Events 
------------- 
 
¶4. (SBU) In support of an incipient political movement against MFIs, 
President Ortega accused Nicaraguan MFIs of "usurious lending" 
practices.  In July 2008, some protests turned violent in the 
northern department of Nueva Segovia (Ref B). One protest resulted 
in the kidnapping of a local MFI branch manager.  Another resulted 
in protesters setting fire to an MFI storefront in the city of 
Ocotal.  Still others resulted in road closures and the barricading 
of various MFIs. 
 
¶5. (SBU) Members of the financial community have commented that Ortega's rhetoric has contributed to the radical nature of these protests and a corresponding increase in country risk. Evidence suggests that the leaders of the protests are politically connected to Ortega's party, the Sandinista National Liberation Front (FSLN), and that their purpose is to force small farmers to do business with ALBA-CARUNA (an FSLN-controlled, Venezuelan-funded rural cooperative bank). Otherwise, MFIs in Nicaragua are well regarded. At competitive interest rates, they have funded the expansion of many small agricultural producers in rural areas and small merchants in urban areas. Collectively, the current portfolio of MFI loans total some $600 million, a substantial proportion of total lending in Nicaragua.
 
SANDERS