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A critical review of CGAP-IADB policies inspired by the Fondo de Desarrollo Local, Nicaragua

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Abstract:

In 2005, the Fondo de Desarrollo Local (FDL) gained the international Inter-American Development Bank (IADB) prize for the best non-regulated microfinance institution in Latin America. A year later, in 2006, the Central American Bank for Economic Integration (BCIE) selected the FDL from 78 Central American MFIs as the winner of its Award for Excellence in Microfinance Management. Its leadership in the Latin American Rural Microfinance Association (FOROLAC), its exceptional outreach to rural producers and its development orientation, coupled with entrepreneurial viability and extraordinary sustainability, contributed with these recognitions. Nevertheless, analysing the incentives and pressures emanating from the current mainstreaming microfinance paradigm, this article expresses deep concerns about the anti-rural and anti-agricultural bias of international microfinance policies and the negative effects that they engender for the further growth of microfinance for a more dynamic and socially inclusive agricultural development in Latin America.

Keywords: AGRICULTURAL FINANCE; CGAP; FINANCIAL SYSTEMS APPROACH; FONDO DE DESARROLLO LOCAL; NICARAGUA

Document Type: Research Article

DOI: https://doi.org/10.3362/1755-1986.2007.016

Publication date: 2007-06-01

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