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Non-profit microlenders, Kiva and FINCA, join forces to strengthen the entrepreneurial community for refugees in Guatemala

Santiago Martin Perez is a weaver. When business is good, he hires neighbors to work with him. With Anderson Caleb (credit officer).

Photo credit: FINCA/Dawn Deeks.

Natural disasters, widespread violence, and rampant unemployment are among the causes cited by hundreds of thousands of migrants who have left Guatemala for a better life.

This month, Kiva announced a new deal motivated by the goal of strengthening economic resilience for Guatemalan entrepreneurs and supporting migrants returning to their home country.

“By increasing the ability of Guatemalans to thrive financially where they live, we meaningfully reduce their need to travel abroad in search of a living wage.”

The Kiva Refugee Investment Fund has provided $1.5 million USD of financing in support of microfinance loans to be disbursed through its lending partner FINCA Guatemala over the next two years. Facilitated by the impact-first investment team at Kiva Capital Management, it is the first agreement of its kind between a Kiva fund and a FINCA Impact Finance subsidiary.

The funds will be used to help returning migrants and local entrepreneurs establish livelihoods—as well as help prevent further displacement of Guatemalan people.

Why are Guatemalans leaving their country?

Increased access to loans and other financial services will help address the need for economic opportunities in Guatemala, where poverty has increased to include over half the population since COVID-19.

But the phenomenon of Guatemalans and other Central Americans fleeing their home communities—more than two million people have left Guatemala, El Salvador, and Honduras since 2014—is driven by more than the pandemic or simple economics.

Though these countries are not at war with any nation, organized crime and government corruption riddle daily life with the violence and political instability that define active conflict zones. Homicide rates are astoundingly higher than in the U.S., and the pandemic dissolved what was left of any social safety net.

Compounding these issues, in November 2020 Hurricanes Eta and Iota destroyed crops and blocked access to Guatemala's western mountains, leaving thousands—many of them women and young people—no choice but to risk the monumental dangers of seeking asylum in the U.S.  This has added to the ongoing humanitarian crisis of Central American immigration, and over 280,000 Guatemalans were apprehended at the borders of the U.S. and Mexico in 2021 alone.

While violence and conflict still force many Guatemalans—including an increasing number of women and young families—to flee, creating financial opportunities can give them a reason to stay. A 2021 study conducted Catholic Relief Services found that access to stable jobs, safe education, and arable land promote a sense of rootedness in communities, creating participation in social compacts and leadership roles.

Bringing refugees home

To support her family while her husband was out of work due to a car accident, Maria borrowed loans from FINCA to grow her weaving business.
Photo credit: FINCA/Dawn Deeks.

The Kiva Refugee Investment Fund (KRIF) seeks to advance long-term economic and social stability. Refugees have historically been excluded from traditional financial services, and Kiva's focus on scaling refugee lending has unlocked capital to bring them access. Since 2016, Kiva has provided more than $27 million USD of financing to over 28,000 refugee borrowers, the majority of whom are women.

By promoting financial inclusion for the 80 million displaced people living in the world today, KRIF aims to help refugees throughout the world settle and thrive in their new communities.

Read a Kiva borrower story: She escaped alone to Uganda. Now Leoniya runs a small business in her refugee community.

"Over Kiva's history, we have worked in more than 90 countries, often partnering with mission-aligned financial service providers, like FINCA Guatemala, to expand economic opportunity to some of the most financially-underserved communities in the world," Kiva Chief Investment Officer Chad Sterbenz says of the impact.

A key feature of KRIF’s partnership with FINCA Guatemala is that it aims to help refugees create a better future for themselves when they return home. With 25 years of providing loans and social services to Guatemalan citizens, FINCA is well-positioned to aid migrants coming home, with branches near the Mexican border and established operations in the highland regions where the highest numbers of migrants have left.

“Kiva is happy to partner with FINCA Guatemala given its proven track record to provide comprehensive financial services to microentrepreneurs and its mission alignment to serve vulnerable populations,” says KRIF Investment Director Nicolas Lafaye.

Make a loan to a refugee or internally displaced person

KRIF’s $1.5 million USD investment seeks to help support refugees as they return as well as help those who have remained behind during the last turbulent years.

“We aim to help Guatemalans feed their families and invest in their communities without ever leaving home,” said FINCA Guatemala CEO Fermin Sanchez.

“By increasing the ability of Guatemalans to thrive financially where they live, we meaningfully reduce their need to travel abroad in search of a living wage.”

An impact-driven mission

Along with building an economic foundation for thousands of Guatemalan people, the Kiva-FINCA partnership is expected to contribute to six of the Sustainable Development Goals adopted by the United Nations in 2015: 

  • No poverty 
  • Gender equality 
  • Decent work and economic growth 
  • Industry, innovation and infrastructure 
  • Reduced inequalities 
  • Sustainable cities and communities 
  • It’s a collaboration that could serve as a model in other countries where the most valuable resource—their people—are forced to abandon their communities. 

“FINCA and Kiva share common values and a common social impact mission of building the financial health of people who are underserved by the traditional banking system,” said Andree Simon, CEO of FINCA Impact Finance.

“We look forward to building on this partnership between Kiva and FINCA to serve those who are most vulnerable to political, environmental, and economic instability.”

About the author

Nicolas Lafaye

As a Regional Director for Latin America and the Caribbean, Nicolas is responsible for prospecting potential MFI partners and strengthening Kiva's presence in the region by conducting frequent due diligence visits. Nicolas joined Kiva in February 2010 after having spent two and a half years in Hong-Kong working for Societe Generale Corporate & Investment Bank as a Financial Controller for all support functions in the Asia-Pacific region. Before that, he spent a year in Vietnam working for the French NGO 'Enfants du Mekong' as an Auditor & Operational Controller supervising more than 200 educational programs and ensuring the NGO's expansion. Nicolas is based in Lima and is half Peruvian by his mother. He holds a Master'€™s Degree from Paris Dauphine University in International Affairs and speaks fluent French, English and Spanish.