Testimonial at the SIDI General Meeting: resilience and social impact of Financiera FDL

présentation Julio Flores AG SIDI

This year’s General Meeting was an opportunity for SIDI to invite one of its partners to testify. Julio Flores, Managing Director of Financiera FDL, came to present the activities of this microfinance institution (MFI) which operates in Nicaragua, the 2nd poorest country in Central America.

The fruitful exchanges between Julio Flores and SIDI shareholders continued the following morning with a question and answer session. This time allowed us to go into more detail about FFDL’s business and its formidable resilience in the face of crises.

The NGO Fondo de Desarrollo Local (FDL) was created in 1993 by the Jesuits, following the civil war. FDL’s aim is to improve the living conditions of the most vulnerable Nicaraguans by providing them with loans, training and support services to help them develop their businesses, at a time when banks are not interested in this group. Financiera FDL has become the first MFI in the country and one of the largest in Central America. The institution mainly targets low-income people, farmers, breeders and micro-entrepreneurs in peri-urban areas. Thanks to its 38 branches, La Financiera has a strong territorial coverage, enabling it to provide 70% of its loans in rural areas, to populations with little access to credit.


Financiera FDL and its resilience to crises.

FDL’s growth was first slowed by the crisis between 2008 and 2011. In addition to the global economic crisis, an anti-MFI “Movimiento del no pago” (non-payment movement) has developed. It has led to a decline in the number of customers and payment defaults in the microfinance sector. FDL, despite a decline in portfolio and customers of around 50%, managed to restructure, before creating, alongside the NGO, the financial company Financiera FDL (FFDL) in 2016. To structure this financial company, FDL has chosen “international partners who share its vision”. As a result, SIDI became a minority shareholder.

A second crisis affected the country from 2018 to 2021. Politico-social conflict (murderous repression by the authoritarian regime) and economic instability led to a three-year contraction in GDP. Mass migration (10% of the population fled the country) was caused by persecution of civil society, including the Church. The number of FFDL customers has plummeted. This recession and drop in activity were exacerbated by the Covid crisis. Several MFIs have gone bankrupt, while FFDL’s portfolio has once again shrunk by 50% (more than $6 million in losses in 2018 and 2019)

FFDL overcame a number of challenges in order to emerge from the crisis: renewing its customer base, consolidating its portfolio and building up reserves. To support it, SIDI participated in the recapitalization of FFDL and made a 5-year subordinated loan (total outstanding amount of over €1.7 million in 2023). This second acquisition brings SIDI’s stake in FFDL to 4.4%. Backed by the support of its international shareholders, FFDL was able to negotiate with lenders to maintain its credit lines.

FFDL has achieved a spectacular turnaround. The portfolio has been growing since the end of the crisis, with a forecast +12% in 2024, which will enable us to recover the $6 million in losses recorded in recent years. All this has been made possible by the serious management and expertise of the company’s management team.


FFDL, an MFI with a strong social and environmental impact.

Nicaragua is one of the countries most exposed to climate change. The economy is partly based on cattle farming (54% of agricultural land), and the deforestation rate is the second highest in Central America. These activities are highly polluting and destructive, while severe droughts reduce agricultural yields by 20 to 40%.

Over the years, the MFI has developed a comprehensive range of support services for producers and breeders in the transition to agro-ecology. Support for producers in agro-ecological practices focuses on themes such as water management or arboriculture combined with animal husbandry. This technical assistance is paid for in part or in full by FFDL, depending on the customer’s standard of living.

To improve producers’ incomes and reduce poverty, FFDL supports product processing, such as packaging coffee for export. This on-site processing of raw materials by producers creates added value, reduces the number of intermediaries and enables them to sell their produce at a higher price, guaranteeing local producers a better income.

FFDL seeks to maximize its impact, and the results are there. According to an independent survey partly financed by SIDI, in 2023, more than 60% of FFDL’s customers will report an improvement in their standard of living. The structure adapts its loan amounts and terms according to customers’ needs. It grants loans from 14 months on average (for traders and businesses) to 36 months for agricultural activities. This earned FFDL a Microfinance Index award in 2023. (see related article).

FFDL has demonstrated impressive resilience, while maintaining a strong social and environmental dimension, with a focus on financial inclusion in rural areas and environmental protection.

For Julio Flores, “although SIDI is a minority shareholder, it is very much involved in FFDL’s key moments. SIDI’s active participation in FFDL’s governance through the involvement of a volunteer consultant (on its Board of Directors) is decisive”.

Trip to Ecuador for SIDI shareholders

Here’s a testimonial from one of them with Alicia, a farmer and customer of Banco Codesarrollo, the Ecuadorian social and popular economy bank in which Sidi has been a shareholder since 2016.

Meeting in Ecuador – by Nathalie Verhulst, SIDI shareholder

Experiencing solidarity and ecological development

In Ecuador, as elsewhere, social and climate issues are linked. The experience of Alicia, a farmer in the sierra in the north of the country, shows us how solidarity and the desire to develop a sustainable economic system can bear fruit on a territorial scale.

Alicia is the manager of “Rayon de soleil”, a SIPAS (Système familial Intégré de Production Agricole Soutenable) farm, i.e. a one-hectare, self-sufficient farm that takes into account climate change issues through the rational use of resources and plantations that prevent runoff and maintain humidity. She is president of her village community “San Petro alto”. As well as being self-sufficient, each farm in the community markets different processed products – cakes, cheese, roast guinea pigs, etc. – to avoid competition between farms.

Leader in agro-ecology

Alicia and her husband were able to transform their farm into a “SIPAS” thanks to micro-credit provided by Banco Codesarrollo and technical support from the FEPP (Fonds Equatorien Popularum Progressio) social group.

The ecological stakes of “SIPAS” are very high in Alicia’s home province of Imbabura, a highly fertile region in northern Ecuador where intensive potato cultivation leads to erosion and pollution.

The village community thus became aware of the role of the primary forest, and stopped clearing it. It has even started to reforest, which helps to limit the effects of wind on farms.

Funder, FEPP’s educational foundation, trains villagers in the “SIPAS” model. In addition to reforestation, Alicia and her family have started using biogas from the farm’s waste processing instead of wood for heating and cooking. The waste is also used for compost and animal feed. Water management – reservoirs, drip irrigation – guarantees the rational use of spring water and rainwater.

Village of solidarity

In addition to non-competition, each farm contributes to a common fund which helps to deal with individual difficulties – illness, claims, etc. – within the community.

The “Rayon de soleil” farm is a training ground for other farmers in the village, who come to learn about new techniques for self-sufficiency and sustainable production.

Banco Codesarrollo and Funder are two FEPP tools whose motto is “Better love, happiness and peace”. Alicia illustrates this with a big smile when asked what her project has changed for her: “It’s changed everything. We’re doing well economically. We’re showing the way to our neighbors and friends. For example, we all have passionflowers, but only ours produced fruit. Our neighbors have been able to copy our technique.

Solidarity with Lebanon

[chapeau]Faced with the unprecedented explosion that hit the port of Beirut and its inhabitants on August 4, the President of FTL, a long-standing partner of SIDI, is calling for solidarity to help the victims.[/chapeau]

SIDI has been a long-standing partner of the FTL (Fair Trade Lebanon) association, which seeks to promote the economic and social development of rural areas in Lebanon, in particular by supporting small cooperatives and family farms. SIDI played a decisive role in the creation of its marketing subsidiary FTTL (Fair Trade Lebanon Tourism Limited), of which it is a founding shareholder, and provides significant technical support to maintain its activity.

The devastating explosion in the port of Beirut in Lebanon on August 4 killed around a hundred people and destroyed the homes of hundreds of thousands of families, leaving them homeless. The President of the FTL association, Philippe ADAIME, testifies to the seriousness of the situation, which he describes as “unprecedented” in a country already heavily plagued by corruption and tested by the political and economic crisis since 2019. The association is appealing for solidarity to enable it to help those hardest hit by the explosion, and is planning, in conjunction with the country’s agricultural cooperatives, to respond rapidly to the disaster by financing the production of food baskets for disaster victims.

Click here to read Philippe Adaime’s testimonial