OPIC REQUEST FOR INFORMATION ON MICROFINANCING

UNCLAS SAN SALVADOR 003508

SIPDIS

STATE PASS OPIC FOR R. GREENBERG
STATE PASS AID/LAC
USDOC FOR 4332/ITA/MAC/MSIEGELMAN
USDOC FOR 3134/ITA/USFCS/OIO/MKESHISHIAN/BARTHUR

E.O. 12958: N/A
TAGS: EINV EFIN ES
SUBJECT: OPIC REQUEST FOR INFORMATION ON MICROFINANCING

REF: SECSTATE 221173


1. The microfinancing sector has grown significantly in
recent years in El Salvador, and its expansion has helped
satisfy micro entrepreneurs' demand for credit. In El
Salvador, the traditional banking sector typically lends
only under strict conditions, thereby excluding many
potentially good clients from their lending operations.
According to USAID's Rural Micro Finances Strengthening
Program (FOMIR-DAI) and the National Commission for Micro
and Small Businesses (CONAMYPE),as of March 2004 there were
512,877 microbusinesses in El Salvador, 191,707 of which had
outstanding credits with an approximately 116 different
microfinancing institutions. The 11 institutions supported
by FOMIR-DAI reported that between June 2001 and June 2003,
the number of loans made grew by 56.9 percent, while their
total value increased by 66.9 percent.


2. The MicroFinance International Corporation (MFIC) has
been working with local microfinancing institutions in El
Salvador since the second half of 2004, when MFIC signed an
agreement to channel remittances through local
microfinancing institutions. This year, MFIC plans to offer
credit to recipients of remittances through microfinancing
institutions. In an effort to promote the productive use of
remittances, loans would only be offered to those willing to
use the credits and remittance flows to invest in their
businesses.


3. MFIC's partners in El Salvador--Sociedad Cooperativa de
Ahorro y Credito de R.L. (AMC),Apoyo Integral, S.A. de C.V.
(Integral),Asociacion de Ahorro y Credito Vicentina de R.L.
(ACCOVI),Fundacion Campo, Fundacion Jose Napoleon Duarte,
and Alianza para el Desarrollo de la Microempresa (ALPIMED)-
-are well-established microfinancing institutions, or, in
the case of ALPIMED, a network of such institutions. Most
belong to the Network of Micro Finance Organization (ASOMI),
founded in July 1998 to provide sectoral representation to
microfinancing institutions. AMC was founded in 2000,
Fundacion Jose Napoleon Duarte in the 1980s, Fundacion Campo
in 1995, and ACCOVI in October 1965. ACCOVI was the first
Salvadorian Cooperative authorized by the Superintendency of
the Financial System to provide nonbanking financial
services, and it has assets of $30.3 million. Integral,
founded in May 2002, is a program supported by the Integral
Support Salvadorian Foundation (FUSAI),International
Action, IDB-FOMIN, and the Duenas Foundation.


4. Post could find no additional information regarding Mr.
Tochisako.


5. Post supports OPIC's proposal to provide $4 million in
financing for MFIC's lending program for microfinancing
institutions. It will further support the operations of
microfinancing institutions in El Salvador and the
development of micro, small, and medium businesses in the
country.

Barclay