The Inter-American Development Bank (IDB) approved a loan of up to $5 million to Nicaragua’s Foundation for the Promotion of Local Development (Prodel), paving the way for the non-profit organization serving the base of the pyramid to expand financing for basic community infrastructure and incremental home improvement projects.
Prodel will use proceeds from the IDB loan to expand financing to local governments, microfinance institutions, credit unions and microcredit companies, so they can boost lending for home improvement projects. The Foundation further plans to expand its lending to municipalities in the north, central, and western parts of the country to support local basic community infrastructure projects that use an innovative methodology in which communities work with local governments to plan and co-finance infrastructure works.
According to a recent IDB study, 78 percent of the families in Nicaragua either do not have a roof over their heads or live in poor quality or inadequate housing. Government data shows that the country’s housing deficit was estimated at 957,000 units in 2007, of which 64 percent had qualitative problems.
Under the community infrastructure program, Prodel finances small- to medium-sized projects (averaging $70,000) that seek to improve streets and pedestrian access to the neighborhoods, as well as introduce sewer drainage systems, drinking water microsystems, and access to energy (preferably alternative). The program includes the implementation of innovative design and construction methodologies of community infrastructure projects, as well as a range of different repayment methods for the works based on the type of infrastructure project and adapted to the income flows of families and municipalities.
Under the home improvement program, Prodel plans to expand its financing for home expansions and improvements such as the connection to new services introduced through the community infrastructure projects, such as the installation of water pipes into the home, construction of bathrooms, electrical systems, etc. Besides financing, the program will provide construction-related technical assistance for home improvements that low-income populations would not normally be able to access.
The IDB loan to Prodel has a five-year term and will be complemented by $7 million from Prodel’s own resources and $2 million from other sources.