FUNDESER started in 1997 as a rural agricultural development initiative designed to deliver basic financial and non-financial services to Nicaraguan agricultural workers. In 2000, FUNDESER began specializing in rural microfinance and expanded to reach communities where people were struggling with poverty and financial exclusion. Headquartered in Managua, FUNDESER now has more than 18 branches across Nicaragua.
From 2004 to 2008, FUNDESER experienced its biggest growth spurt. The number of clients jumped from about 4,000 in 2004 to almost 32,000 in 2008 and the portfolio grew from $2.6 million to $21.5 million dollars respectively. These years were considered the “best time” for the institution from the employees’ perspective. While the average growth rate in Nicaragua´s market was 30 percent, FUNDESER´s was more than double that, reaching 70 percent.
These “exceptional” numbers were the results of a very flexible credit methodology with little supervision of adherence to the risk policy in loan underwriting, coupled with a staff incentive policy that rewarded portfolio growth and disbursement over portfolio quality. During the 2008 global financial crisis Nicaraguans struggled with high food and oil prices and a steep decline in remittances, among other problems. Additionally, as the economy deteriorated, the microfinance industry in the country was deeply affected by a political and social movement of delinquent borrowers known as the No Pay Movement.