Looking back: ITL Loans Update

From 2013 to 2019 Christian Aid supported a transformational programme - Inclusive Value Chains in Central America. This programme aimed to build the capacity of local cooperatives across Latin America, enabling thousands of poor producers to directly access markets where they could trade their goods. This moved them from subsistence to commercial farming, and in doing so significantly improved thousands of lives.

When looking at market systems, it was identified that there were a number of organisations with real potential to enhance their communities’ but which needed additional investment to fulfil this potential. In such situations it was decided that a blended finance approach (part grant, part investment) might work best.

The organisations below all received loan finance based on affordable, patient capital. Below we share an update on these investments.

A Hibiscus Cooperative in Nicaragua received a loan of $174,000 between 2011 and 2013. With this funding they were able to invest in their operations and secure a major contract with Walmart. An initial loan repayment and interest payment were made, and the cooperative was thriving.

However, the contexts Christian Aid and our partners operate in are multi-faceted and constantly changing. The challenging socio-political environment in Nicaragua over the last year started impacting sales. Alongside this, the pandemic significantly increased operational expenses, leading to an equally significant reduction in profit margins. This put the cooperative in a very challenging financial position. The Hibiscus Cooperative consequently approached Christian Aid to consider forgiving the remainder of the debt (the equivalent of approximately £108,000). As Christian Aid’s primary commitment is ensuring sustainable improvements for communities we serve, we agreed to the request. As a result, the cooperative is now able to just focus on sustaining the business through this challenging time.

The Cuna Maya Credit Union Ltd is a private organisation based in Honduras who provides savings and credit services, as well as health and education support for local communities across 16 municipalities. Cuna Maya makes loans for the development of agriculture, generally for coffee and for establishment of farms.

In 2017 Christian Aid provided Cuna Maya with loan of approximately $100,000 to help them invest in more staff and to build their capacity. Two repayments were made in subsequent years totalling $40,000, in addition to interest repayments of 5% per annum.

Unfortunately, similar to the Hibiscus Cooperative, Cuna Maya also faced a number of wider challenges – Hurricanes Eta and Iota resulted in crop losses for members leading to loan defaults. Additionally, as a result of COVID-19 Cuna Maya had to extend their loan repayment periods as members no longer had income as they were unable to work during the quarantine.

In response, the organisation asked Christian Aid for an 18 month loan repayment holiday. This was granted and as a result the cooperative was able to continue to survive and thrive. A couple of months ago a new loan repayment schedule was agreed, with the remaining loan amount and interest (totalling $66,000) now due to be repaid in full to Christian Aid by June 2023.

Cooperativa Mixta Productores Integrados Limitada (COMPROIL) is a Savings and Credit Cooperative serving the municipality of Lepaera in Honduras. This cooperative has a focus on serving micro-entrepreneurs and small producers who otherwise would not have access to the financial system. Comporil received a $100,000 loan from Christian Aid in 2017 to invest in its operations.

Comporil continued to do well over the subsequent years. Capital repayments started from 2019 and continue to be repaid on schedule. To date $60,000 has already been repaid, along with interest repayments at 5% per annum. The remaining $42,000 (which represents loan repayments and interest repayments) is scheduled to be repaid between now and the end of June 2023.

As with the other loans, any repayments from these loans will continue be rechannelled back into ITL, enabling us to fund future projects, and further amplifying the impact of your support.