Spanish Cooperation in microfinance

AutorJosé Antonio Monedero
CargoHead of Unit for Microfinance of the Spanish Agency for International Cooperation for Development (AECID).

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The purpose of the Spanish Cooperation in microfinance, initially through the Fund for Microcredit (FCM) and currently through the Fund for the Promotion of Development (FONPRODE) is to contribute to fight against poverty in developing countries through the promotion and consolidation of microfinance services. With this, the idea is that the provision of such services would meet the needs of economic and social sectors that either have no access to the traditional financial system, or the later does not adequately meet their needs.

In particular, the FCM has sought to promote inclusive financial systems with a capability of providing, in terms of long term profitability and sustainability, complete and adequate financial services to micro-entrepreneurs. As a complimentary objective, the FCM has sought to contribute, along with the other instruments of development for cooperation, the integration of the Spanish cooperation works, abiding to the principles, objectives and priorities established by Law 23/1998 of 7 July, from international cooperation for development of cooperation.

To meet these goals, the FCM has been provided over 12 years of existence (1998-2010) an increasing annual allocation from State Budget, which reached 100 million / year from 2005, which has been mostly allocated to loans offered to microfinance institutions (MFIs) for them to then provide microcredit and other financial services, such as savings or deposits and, more recently, micro-insurance, remittances, or guarantees. A small part of the assignment to the FCM has been used to provide technical assistance to MFIs, and to cover expenses related to the preparation of operations (evaluation of proposals for action, monitoring, inspection).

The FCM has been one of the most ambitious programs of Spanish cooperation, having achieved a strong international presence that resulted, in

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2009, to be considered by the Consultative Group to Support the Poor (CGAP), the second largest donor in the world at a bilateral level, and the fourth in the group of 16 major Financial Institutions for Development, after the KFW (Development Bank of the German Cooperation), the European Bank for Reconstruction and Development and the International Finance Corporation, the financial arm of the World Bank.

The management of FCM, the only refundable fund for Spanish cooperation with a bilateral nature, has been the responsibility of the AECID, who -through its...

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