Monday, November 14, 2011

Passport Series: Dominican Republic: Part 2: Microfinance

This month’s Passport Series is all about the Dominican Republic! This vibrant Caribbean nation offers a rich fusion of European, African and indigenous cultures and boasts hundreds of miles of tropical coastline. Follow us throughout the month of October as we learn about The Dominican Republic as a nation, its microfinance sector, and the work that Kiva does there!

Microfinance Sector in the Dominican Republic

The Dominican Republic microfinance sector is relatively large compared to other Caribbean nations reporting to Microfinance Information Exchange (MIX). According to MIX, as of 2010, the Dominican Republic has a total microfinance loan portfolio of $584.5 million USD with 365,114 active borrowers, far exceeding the portfolios of the next two largest reporting nations; Haiti ($56.9 million USD) and Jamaica ($14.7 million USD). In addition, there are more than 318,000 depositors with over $539 million USD in the bank.

Dominican Borrower - Photo Credit: Nick Hamilton

Currently there are thirteen Microfinance Institutions (MFIs) in the Dominican Republic reporting to MIX, including Esperanza International, an active Kiva Field Partner. These institutions are working to reduce the large income gap between the rich and poor that exists in the country by offering financial services to clients such as women and rural farmers who may otherwise not have access to them. As the industry grows so have the overall loan portfolios of the MFIs working in the country, however it is important to note that the average loan size per borrower has stayed relatively consistent over the years. This may indicate that MFIs are targeting more, generally poorer, clients in need of smaller loans versus less clients borrowing larger amounts.

Housing and Microfinance

There is currently a significant lack of adequate housing in the Dominican Republic mostly due to poor economic conditions as well as a surge in Haitian refugees after the earthquake in 2010. According to Habitat for Humanity, there is a 600,000 unit deficit in the country, fifty-five percent of which is poor quality housing rather than homelessness.1 As a result there has been a strong push among the country’s microfinance institutions to offer housing loans to clients. Several large programs have begun to support this sector in an attempt to help boost the availability of housing loans. Patrimonio Hoy, the housing microfinance program of CEMEX, has extended a program to five countries in Latin America and the Caribbean, including the Dominican Republic, to offer a partial credit guarantee of up to $10 million USD from the Inter-American Development Bank (IDB) and help over 750,000 people throughout the region finance a home. In 2009 the Development Innovations Group (DIG) was contracted by Agence Française de Développement (AFD) to deliver a week-long training course on housing microfinance to Dominican microfinance practitioners. The course, presented in Spanish, provided a general mapping of the state of practice for housing finance for clients as well as challenges facing many practitioners within the field.2 In addition, ACCIÓN, a major player in the microfinance industry, has placed a growing importance on access to housing loans for microfinance clients. As of 2008, the ACCIÓN Latin American and Caribbean housing loan portfolio was more than $230 million USD and nearly 108,000 borrowers.3 Building on the existing microfinance infrastructure and delivery system, housing loans have become an important aspect of the overall microfinance industry of the Dominican Republic.

Kiva’s Field Partner in the Dominican Republic

Esperanza International Dominican Republic, a partner of HOPE International has been a Kiva Field Partner for almost five years. Esperanza International started official operations in the Dominican Republic in 1999, and currently has nine branch offices in the country as well as two in Haiti. The organization’s key principles are:
• Address the root causes of poverty, especially those impacting children,
• Focus on families and communities as the agents, planners, implementers and evaluators of the development efforts,
• Improve the capacity of people to learn from their experiences of development, to be empowered by that process and to lead more fulfilled lives,
• Free people from the bondage and oppression of cultural, social, spiritual and economic forces that inhibit becoming all that is intended,
• Build alliances and partnerships with other institutions with compatible goals,
• Lead to more technically appropriate and sustainable activities and practices that contribute to self-sufficiency and self-reliance,
• Encourage systems that ensure accountability and integrity, and
• Improve the leadership, management and organizational skills within the families and communities of a project area.

Kiva Field Partner, Esperanza International - Photo Credit: Nick Hamilton

In addition, Esperanza International offers several nonfinancial services including pre-paid health insurance plans, a life insurance program, business planning and literacy programs. These services help ensure that clients have every opportunity to succeed when they begin as a business owner.


Click on Esperanza International to help make a loan to a borrower in the Dominican Republic!

Stay tuned for Part 3 of our Passport Series to read about the work that Kiva is doing in the Dominican Republic.