Workshop on public policies for rural financial services in Nicaragua

Despite significant progress in the banking sector and the rapid growth of the microfinance industry in Nicaragua, the penetration of financial services in rural areas remains inadequate. To address this problem, the Government of Nicaragua is willing to promote public policies to stimulate the development of financial services in rural areas.

A workshop to identify public policies to expand and improve rural services in rural areas was organized on May 29 – 30, 2007 by the Ministry of Agriculture (MAGFOR), with support from IFAD’s team at RUTA, the Interamerican Development Bank, the World Bank and PROMIFIN-COSUDE. The main goal was to deepen knowledge on public policies that could have greater impact on the development of rural financial services, and to gather inputs for public policy formulation. A total of 30 representatives of 21 organizations participated to the event.

The first day including the presentation of the main findings of RUTA’s study on “Public policies and rural financial services in Mesoamerica” by Ignacio Fiestas (IFAD/RUTA) and Hans Nusselder (CDR), and the document “Productive sector access to financial services in Nicaragua” prepared by the World Bank.

The presentations sought to provide inputs on the role of public policies in financial service intermediation in rural areas, and described the lessons learned from different service models being implemented in other countries in the region.

Two discussion panels were organized as part of the event. The first panel dealt with the Nicaraguan experience on financial service expansion in rural areas. It was attended by key institutions working on the subject such as the Local Development Fund (FDL), the Rural Credit Fund (FCR), the NITLAPAN Research Center and CARUNA (NGO). The discussion focused on the main limitations and opportunities facing small and medium size rural producers seeking greater access to rural financial services. The second panel addressed the Development Banking theme, which included presentations on the successful experiences of Banrural in Guatemala and BancoEstado in Chile. The main objective of this panel was to gather specific lessons from those experiences which could be incorporated into the eventual creation of a Development Bank in Nicaragua.

On the second day, all participants were organized in two working groups whose task were to identify the main limitations for rural financial service expansion in Nicaragua and to propose public policy guidelines to help overcome such limitations.

The main proceedings of the workshop, including the agenda and list of participants, are available at: www.ruta.org/financiamientorural.