Servicios financieros para la pequena y la microempresa en Centroamerica

Liberalization and structural adjustment are expected to favor small productive enterprises. Credit is not always needed, however. The experience of the small farmer credit programs of the past should help in avoiding major mistakes in program design. The main issue is how to promote the financial viability of the nongovernmental organizations in charge of credit programs. The paper explores several determinants of financial viability, including interest rate policies that consider protection from inflation and full cost recovery. Vigorous loan collection is emphasized. Successful programs mobilize voluntary savings or behave as if they were funded by depositors. Those development organizations willing and able to pursue strategies based on financial viability will survive and flourish in today"s more competitive environment; otherwise, they will perish. (Author abstract)