FONPRODE and the future of financial inclusion from Spanish Cooperation

AutorJosé Moisés Martín Carretero
CargoHead of Department, Fund for the Promotion of Development Office. Spanish Agency for International Cooperation for Development.

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In 1998, the Spanish Cooperation launched the microfinance program, through the creation of the Microcredit Fund, managed from the Spanish Agency for International Cooperation for Development.

Since then, FCM has actively contributed to the financial inclusion of hundreds of thousands of people through its credit program to microfinance institutions, the technical assistance programs and the conducting of numerous activities and studies on evaluation, organization and management. From its work during these 13 years, the Microcredit Fund has contributed to establish AECID as one of the major international donors in microfinance and financial inclusion. AECID not only maintains an active portfolio of loans of close to 500 million Euros, but has also strengthened its partnerships with key bilateral and multilateral actors such as the World Bank, Inter-American Development Bank, African Development Bank and the United Nation’s Capitalization Fund. Its main area of influence is in Latin America, but has a special interest in increasing the work in sub-Saharan Africa and Southeast Asia.

Similarly, in Spain, AECID has strengthened its viewpoint and its training in micro-management, not only through its work with various NGOs, but also with the academic and the private sector.

Through this experience, the Spanish Cooperation has accumulated an important practical, theoretical and methodological background in microfinance management. However, the past two years have seen a turning point in relation to the approach of the AECID to the financial inclusion. There are several factors that have catalyzed this new period.

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Firstly, the microfinance sector itself and financial inclusion are facing a major debate about their goals, their social impact and their results in terms of development. The evidence of impact on development and poverty reduction of microcredit as an instrument is currently being argued of both theoretical and practical grounds, both in the academic sector and when it comes to public opinion. Indeed, access to credit constitutes "a human right" according to Professor Mohammed Yunus, but the fact that this is necessary to achieve poverty reduction does not necessarily mean it is enough. In fact, indiscriminate and uncritical use can even be counterproductive. The dramatic cases of default in payment and delinquency with microcredit programs, which have arisen in recent months, indicate that a misdirected...

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