The Financial Services Promotion Program for low Income Populations — or PROMIFIN (Programa de Fomento de Servicios Financieros para Poblaciones de Bajos Ingresos) (www.promifin-cosude.org), is a plan financed by the Switzerland Development Agency and by Cooperacion COSUDE, and it is executed by Triodos Facet (www.triodosfacet.nl) with the backstopping of Faceta Central from Guatemala.

The program’s governmental counterparts are the Comision Nacional de la Pequeña, Mediana y Microempresa in Honduras, the Secretaria Tecnica de la Presidencia and the Fondo de Credito Rural in Nicaragua, and the Banco Multisectorial de Inversiones in El Salvador. This program also includes official entities in charge of regulating and supervising micro financing institutions.
In the private sector, the programme works with different financial institutions (banks, NGOs, micro-financing institutions, credit and saving cooperatives, among others) which provide micro financing services, risk assessment, technical assistance for micro-financing institutions, and others. The programme joins activities with institutions aiding on microfinance in Nicaragua and Honduras as well as common interest goals oriented to the promotion of financial services.

Financial Literacy – Education for living
Description of the process. As a result of the rapid emergence of financial services providers, especially in credit related areas, it has been necessary to develop regulations that help to support the demand for financial services, so that all micro financing organizations grow competitively. This type of regulations is indispensable to help to prevent problems related to high-indebting that can arise if the increasing demand for loans augments without control.

People with low income share the same objectives as the rest of individuals; for example the need to live well and to have financial stability for themselves and their families. However, the lack of resources and available options takes them to a state of desperation and inertia quite often. Managing wisely the little money they have access to is a determining factor to satisfy their everyday needs, face emergencies, or take advantage of the opportunities that may come in their way. Generally, poor people have limited access to knowledge and skills that are needed to manage their financial resources effectively.

Financial literacy has a primary objective, to provide knowledge and skills to manage financial resources effectively. When people know about how to take wise financial decisions, it is possible to plan and achieve objectives. So when people outline their objectives and plan how to accomplish them, it is a lot easier to obtain satisfying results.
It is now that the Financial literacy Project sets a very noticeable presence. Financial literacy goes beyond the simple transfer of how to manage income. Another important objectives in the project is to create an attitude that makes people aware of the importance of saving, controlling their spending, managing their debts, and, finally, foster a disciplined management of income and its sources. Saving habits are the foundations of promising investment opportunities that will, eventually, allow improving the living standards of people. They also promote sustainable development of individuals in any society.

PROMIFIN-COSUDE has supported, in Nicaragua and Honduras, the adaptation, innovation, and implementation of a methodology developed by Freedom from Hunger to promote the expansion and application of the program Financial Education for the Poor. This methodology incorporates the use of participative techniques for teaching adults. A careful analysis about the actual economic conditions and the active involvement of the participants in the financial education program, who are, at the same time, apprentices and managers of their own income, has allowed for the implementation of methodologies and strategies to train and transfer knowledge, which is also a simultaneous process of learning and development.
The Financial Education Program includes different modules that instruct people on how to manage their money effectively by the taking the most assertive financial decisions. The modules present the elaboration and follow-up of budget flows (income and outcome), debt management and the comparison among alternatives to manage expenses, goals, and saving initiatives with financial institutions, as well as the explanation such remittances, insurance, and others.

The execution of the project in rural areas has been aided through the use of printed material (graphics, illustrations, etc) that has made it easier to transfer knowledge and abilities so that those participants who are not literate can learn how to manage their money. As a mean to replicate the project modules, female head of low income rural households were also trained to teach in their communities and share their experience with other women from their localities. These women were chosen because of their commitment and willingness to learn.
Staffs from micro-financing institutions, independent advisors, cooperation programs, training institutions, and other public organizations, interested in financial literacy, which have also contributed to the spread of the project, were also invited to participate in the project to reach other end-user from poor urban and rural areas, who want to have access to loans. For a widespread coverage of the project, PROMIFIN is going to broadcast the project content through an alliance with an institution that trains radio broadcasters.

Main accomplishments.
The Financial Education Program has been in place for about 10 months in Nicaragua and three months in Honduras. So far, the program has trained 1400 people (1100 in Nicaragua and 300 in Honduras), from which 200 people are trainers and 1200 participants of both genders.

Photos of the Financial Literacy course: click here

For more details contact PROMIFIN project manager Juan Vega: Esta dirección de correo electrónico está protegida contra los robots de spam, necesita tener Javascript activado para poder verla   

Contribution: Juan Vega

[Nicaragua, Honduras, El Salvador ref. 3145; Swiss Development Cooperation - SDC, 2003-2009]