In recent years, the "No Pago" movement (a movement for non-repayment of loans) has created concern around the increased risk of loan non-repayment by Kiva borrowers in Nicaragua. As a result, last year Kiva posted a loan alert on Nicaraguan loans, warning lenders about the potential risks of lending to entrepreneurs in Nicaragua. Earlier this month though, the government passed a new microfinance law that has addressed many of these concerns. As a result, the situation appears to have resolved itself and the "No Pago" loan alert is being removed.

We will update this page if there is any additional information available.

The momentum behind the No Pago movement appears to have largely dissipated, as a result of the National Assembly's passage of a law in April 2010. This new law allows delinquent borrowers (as of June 2009) to re-negotiate loans with more favorable interest and terms. Borrowers who were part of the No Pago movement were required to approach MFIs to re-negotiate their loans by May 12th of this year. While many borrowers did approach MFIs to re-negotiate their loans, it still only accounted for a small percentage of the members of the No Pago movement.

For Kiva lenders who previously lent to Nicaraguan borrowers: 

• if your loan had default coverage, then even if your loan was affected, the MFI will cover your loan for the full amount.
• if your loan did not have default coverage by the MFI: If the borrower you lent to did not approach their MFI before May 12th, their loan cannot be re-negotiated under the terms of the No Pago movement resolution. Kiva is working closely with its Lending Partners in Nicaragua to see if any Kiva clients have re-negotiated their loan under this law and will message to lenders accordingly.

For Kiva lenders considering making new loans in Nicaragua: it seems that as a result of the passage of this law and since the term for re-negotiation has passed, the microfinance situation is calmer in Nicaragua that previously. Kiva will continue to update the Kiva lender community if the situation changes significantly.

Status update on ADEPHCA from Kiva Staff on March 22, 2010:

Please note that Kiva considers ADEPHCA to be an especially high risk partner organization. This organization is very small and started working with Kiva before certain core risk and due diligence policies were put into place. As a result, ADEPHCA would normally not fit under Kiva’s partnerships criteria today because they do not have any audited financial statements, they do not have effective internal controls, and they currently have no other sources of funding than Kiva. Kiva continues to allow ADEPHCA to raise funds on the website with the clear and full disclosure that these are very high risk loans, in part because ADEPHCA provides loans in some of the poorest and most remote areas of Nicaragua where there are almost no other options for funding, and we believe these loans could still be of interest to some lenders even after considering the increased risk. 

Status update on ADEPHCA from Kiva Staff on January 11, 2010:

As mentioned in previous updates, last year Kiva became aware of weaknesses in ADEPHCA that caused a reduction in their star rating and fundraising limit. Kiva Staff has been working to understand more fully ADEPHCA’s current financial situation. While we do not have any new information to share, we hope to be able to give a fuller update to lenders next month, after a Kiva staff visit to ADEPHCA. We appreciate your patience.

Status update on ADEPHCA from Kiva Staff on October 14, 2009:

Kiva Staff is aware of the high delinquency rate for ADEPHCA. We are working with the organization to understand the situation more fully and decide next steps. We will be providing a fuller update in the coming weeks. We appreciate your patience.

Status update on ADEPHCA from Kiva Staff on April 16, 2009:

During routine partner monitoring at ADEPHCA, Kiva became aware of certain weaknesses including difficulty in accessing other sources of funding. This has caused us to reduce ADEPHCA's star rating from 3 to 1. In the coming months, Kiva will continue to work closely with ADEPHCA and provide additional updates as appropriate.

About ADEPHCA

The Association of the Atlantic Cost for Human Advancement and Development (ADEPHCA by its Spanish acronym) is a small nonprofit, nongovernmental organization located on the Caribbean Coast of Nicaragua that works in and with communities of Indigenous and Mestizo peoples and people of African descent (“Afro-descendents”). ADEPHCA was founded in 1987 by leaders from the coastal region to promote the ancestral and historic autonomy of the coastal communities. Within these communities, ADEPHCA has promoted community development projects as varied as infrastructure, housing, forestry, and the environment. Their microcredit program began in 1999 with a grant from the Japan International Cooperation Agency (JICA) and technical assistance provided by JICA and the U.S. Peace Corps.

ADEPHCA provides microcredit loans to entrepreneurs with established small businesses that can benefit from a small influx of capital to improve and/or expand their businesses. The principal strategic objective of the microfinance program is to promote the integral development and strengthening of small and micro-businesses in the towns and communities of indigenous, afro-decedents and coastal mestizos, which in turn contribute to the reduction of poverty and increase the standard of living of Nicaragua’s Caribbean Coast. ADEPHCA is the only organization in the region that currently lends to the most marginalized poor: those that cannot access credit through the commercial banking system or even the larger microfinance institutions. Through their partnership with Kiva, ADEPHCA is able to offer loans at half the interest rate they charge for other loan products.