Opportunity International Canada Honduras Progress Report short version July 2017 It s a well-known African Proverb, but it applies just as well to our partnership in Honduras: If you want to go fast, go alone. If you want to go far, go together. Thank you for choosing to go together with us at Opportunity International Canada (OIC) and with our Implementing Partner in Honduras, Instituto para el Desarrollo Hondureno (IDH). Together we have been able to have an amazing impact throughout Honduras with sustainable, innovative, client-centric microfinance programs. Together we have been able to expand IDH s geographic footprint in the country. Together we have generated jobs both for staff and clients. Together we have opened doors for the next generation. IDH is incredibly thankful to you and we at OIC want to add our personal thanks as well. Victor Funes (pictured to the right), who many of you have met here or there, said to us in April, Don t lose your way back home. In others words, make sure you come back! They value our partnership on multiple levels. IDH continues to blossom throughout the country logistically, staff-wise, and with branch expansions. Together we have over a dozen projects happening in Honduras with Canadian donor funding. This tremendous reach would not be possible without YOUR partnership. At the mid-point of this year, we want to report back to you on how your funds are making an impact both nationally and personally in Honduras. Following is a short overview on IDH s progress, a client story, and the Rotary Project for more details and the full report, feel free to contact Steve Rickard at the Rotary Club of Calgary West. Again, thank you so much for your partnership! Opportunity International Canada 1
Who is IDH and how do they fit into the picture at Opportunity International? The Opportunity International Network is made up of two groups Support Partners, like Opportunity International Canada 1, who mobilize funds for the developing world, and our partners in the developing world who we call, Implementing Partners partner organizations based in those countries, employing nationals, and rolling out holistic microfinance. In the Opportunity Network, some of the more recent Implementing Partners have taken on the Opportunity brand, but other partners, especially those with a long history, like our partners in Asia or Latin America, go by their local names. And so it is in this context that Instituto para el Desarrollo Hondureno (IDH) fits. IDH is our feet on the ground in Honduras and has been offering microfinance loans and training for over 40 years in Honduras. IDH was one of Opportunity Canada s first partners when we began almost 20 years ago and in recent years out partnership has scaled up to the point where Canadian donors, government (both federal and provincial), community groups like Rotary, and OIC events have raised over $2.5M for IDH in the last five years. Francisco Banegas is IDH s CEO. He began with IDH as a Board Member and stepped in as interim-ceo about five years ago. In December 2016 the Board appointed him as a full time employee and CEO of IDH. Francisco is a businessman, an accountant by profession, and quite a creative visionary. He invests in his team and together they have made steady progress at IDH. As part of developing the corporate culture at IDH, Francisco models and teaches to all new staff, the Three Passions at IDH: Passion for IDH; Passion for the Clients; and Passion for Results. We trust that this report will present all three. IDH Update July 2017 A. Key Indicators Instituto Para el Desarrollo Hondureno (IDH) continues to be sustainable and has made tremendous progress as an organization over these recent years. Over the last four and a half years, IDH has grown is Asset base over 300%, and its Loan Portfolio over 400%. Thank You and OIC donors and partners have been instrumental in this growth! IDH continues to keep its excellent industry ratings and has retained their Triple AAA CAMEL 2 Rating from Covelo, a 4 Diamond Transparency Certificate with the Microfinance Information 1 Other key Support Partners (SP s) include Opportunity Australia, Germany, UK and the US. 2 CAMEL stands for Capital, Asset, Management, Earning, and Liquidity Opportunity International Canada 2
exchange Redcamif, and an A+ rating (the highest in its category) with the Honduran Government bank of Banhprovi. B. IDH s Growth IDH and its Board of Directors are very pleased with the staff s performance and IDH s growth in general. The financial portfolio is growing, as is the geographic footprint, and the transformational programming. IDH s 2017 goals include adding at least two new branches this year and closing 2017 with 15 branches and 9,000 clients. Despite the competition in Honduras, the demand is still outstripping supply in the microfinance industry. This past winter, IDH hired a consulting team with a two-pronged purpose: 1) to further investigate the market s growth potential, and in alignment with Francisco s focus on the Three Passions, 2) to tap into the local IDH branches and test their customer service levels. C. New Product Growth In December s report, we shared that IDH had developed additional micro and SME-level loan product lines in order to meet both ends of the client-need continuum. We introduced the ecostove, solar-panel, and SME-level loan products. As of this spring there are 382 solar-panel loan clients, 10 eco-stove clients, and 927 SME clients. Regarding SME specifically, IDH started with two SME loan officers, now they have ten, and by the end of 2018, they plan to have 20 SME loan officers with at least one at each branch location. Serving the SME segment of the market is key for both IDH as well as for Honduras as Opportunity International Canada 3
a country. SME clients generate jobs and each of IDH s SME clients have 3-6 employees. An average SME loan is $5K USD, for a 30-month period, and statistically creates 5 jobs over that time. IDH s CEO said that in an SME-driven community, where SME loans are available, it is possible to create 100% employee in a country where 50% unemployment is the norm. This is truly transformational. As living proof of this, pictured to the right with her team is Maria Danelia Lopez (3 rd from the right). Maria is both an SME-client and an ecostove client. She has a tortilla producing business and two moto-taxis. She employs seven women from her community! D. Branch Updates the last 10 months: Thanks to Canadian donor support IDH has opened two new branches over the past 10 months, a larger, regional branch, in San Pedro Sula (providing support and oversight for some of the smaller branches in the North), and a micro-branch in La Ceiba. As of this month, July, IDH has opened another branch in El Progresso, Honduras. They are also planning to open branches in Copan and Puerto Cortes. Statistics on the branches funded by Canadian donors, partners, and events, as well as IDH s growth plans are available on request (in the full report). E. Personal Impact - Client Story On the April Rotary Insight Trip, we had the privilege of meeting IDH SME client Miriam Avila. Our bus wound through the Tegucigalpa neighbourhood and as we got out, we continued on foot through a narrow walkway past two layers of houses, and came upon Miriam s little tortilla factory. Over the years we have met many tortilla makers for they are the bread and butter of their families, neighbours, and countries literally and figuratively. But we have never experienced anything like this! Miriam takes making tortillas to a whole new level. Opportunity International Canada 4
During our visit with her she graciously answered our questions and proudly showed us around her factory. You may be thinking that using the word factory is a little overstated. We thought so too when we read our itinerary for the day but we quickly changed our minds upon arrival. With a loan from IDH, Miriam bought an automated tortilla maker and she has truly scaled up. Miriam and her tortilla maker don t just make 600 tortillas a day or 6000. She and her team make 6,000 tortillas an hour! Miriam is in her early thirties, has a secret recipe, and has registered her brand. More importantly, she employs 25 people in her tortilla making business. Because IDH invested in her, she is invested in the lives of her daughter and her employees; she has created successful, sustainable livelihoods in her community! Why do we love the Opportunity methodology so much? Because it works well and with dignity! In the midst of a country with 50% unemployment, Miriam is able to employ 25 people. AND she has dreams to grow her business, buy a new property, expand her tortilla factory and add a bakery AND employ 50 people! Because of donors like you investing in us, and because of us investing in IDH, and IDH investing in Miriam, and Miriam investing in her clients 26 families have employment, 90 kids will go to school each morning, with breakfast in their stomachs, shoes and a clean school uniform on, and a lunch in hand. They are going to have a GREAT tomorrow, because of YOU. Thank you for investing in Opportunity s work in Honduras. Through it you are blessing IDH staff and clients alike! Opportunity International Canada 5
Appendix A Rotary HECD Partnership Project-Specific Update Thank you for your strategic generosity through the HECD Program! As reported in December, Phase 3 HECD funds were wired to IDH in November. Phase 4 is in process and Phase 5 is currently being launched. The HECD goals of hitting $1M over ten phases / years has already been surpassed and HECD is still going strong and expanding across the country thank you so much! Many of you have participated in Phase 4 and we re excited to report that Phase 4 funds will be designated towards the SME (small and medium enterprise) loan portfolio at the Santa Barbara IDH Branch. SME funding is critical for a country s foundation and we thank you for prioritizing it with Phase 4. In April we conducted our sixth Rotary Insight Trip to Honduras. We had an intense schedule, covered many cities and projects for our due diligence, scouted out plans for Phase 5, and met with our Host Club the Rotary Club of Real de Minas (District 4250). The picture above of Victor Gutierrez, Carmen and Julio Villalta is from the November OIC trip, and the photos below are from the April visit. They have been an exceptional Host Partner. Below to the left are Carlos Pineda Calderon, the Host RC President (D 4250), and Bill Fitzsimons, the HECD Phase 5 point person (D 5370). And the right are John Gilvesy (D 7080), Jim Louttit (D 7070), and Carmen Villalta (D 4250). Santa Barbara Branch Update Doing Well! As noted in the December report, the Santa Barbara team is getting rave reviews! They have been an incredibly successful team, under the leadership of Ramone, and it shows. They have been open for two and a half years, their portfolio is growing, they have had no staff turnover, and in fact were in the process of welcoming on-board a new loan officer when we were there this spring. Opportunity International Canada 6
In April we spent timing specifically with the staff (pictured to the right) as well as some of their clients and covered all areas, micro, individual, and SME clients. Rotarians from the Rotary Clubs of Calgary West, Calgary Chinook, High River, Toronto Sunrise, and Tillsonburg all participated on this trip. If any of your Rotary Clubs would like to hear first-hand about the trip, projects, or client stories, we can connect you directly with a local Rotarian as we all have stories to share. Statistically: The Santa Barbara branch continues to grow and by last October, just two years after opening, already was serving over 1,000 clients. The updated spring statistics are a little lower as a number of the Santa Barbara clients have seasonal businesses, and thus the demand is higher in the late summer and leading into the fall. As noted above, the branch has just hired a fifth loan officer this past March, which also notes additional growth is expected. The branch s repayment rate continues to be excellent and they continue to maintain their sustainability. Santa Barbara stats Oct 31, 2016 June 30, 2017 Total Clients 1014 971 Percentage of Women Clients 46% 46% Loan Portfolio - in USD $966,609 $1,025,657 PAR - Percentage in Arrears 0.80% 1.58% Repayment Rate 99.2% 98.4% Sustainability Level 100% 100% The SME Product Line HECD Phase 4 has raised funds designated towards the Santa Barbara SME loan portfolio. This is filling a critical need in Honduras and we thank you for it! What follows is a combination of the SME updates in both the December report and this July report. This provides context in case the December report cannot be referenced or in the case the Appendix is a stand-alone, removed from the longer July narrative. SME loans: At the upper end of the client continuum, IDH has identified an unattended market. Small-SME (small and medium enterprise) clients, locally known as Micropyme clients, are the backbone of many developing-country economies. These clients have a business already and need a slightly larger loan to grow it. Their loans average $5K USD Opportunity International Canada 7
and are typically too large to qualify for traditional microfinance loan, but too small to qualify for a loan from a national bank thus, they are left unattended. IDH recognizes the value in serving these clients: first of all, larger loans (relatively-speaking) help IDH maintain its sustainability, and secondly, while not everyone is an entrepreneur, everyone does still want to work, and helping grow SME businesses promotes growth and generates jobs. SME s fill the economy s missing middle and are crucial to providing jobs for others in their communities. As more jobs are created, more income is made, the community s purchasing power increases, other spin-off businesses are created due to demand, and the whole community prospers in the long-run. The Chinese Proverb that says a rising tide lifts all boats is a great visual as IDH grows this segment of the market. While IDH has been quietly serving this target audience for a couple of years, it is prioritizing the growth of this segment throughout 2017 and 2018. Mario Amador (pictured to the right) heads up IDH s SME Initiative and we met with him in person when we were there in April. As of this spring, IDH has 927 SME clients and ten SME loan officers. By the end of 2018, they plan to have 20 SME loan officers with at least one at each branch location. SME clients generate jobs and each of IDH s SME clients have 3-6 employees. An average SME loan is $5K USD, for a 30-month period, and statistically creates 5 jobs over that time. IDH s CEO said that in an SME-driven community, where SME loans are available, it is possible to create 100% employee in a country where 50% unemployment is the norm. This is truly transformational. Greetings and Thanks from the Santa Barbara Team On a personal note, I wrote Ramone asking for a new picture of the team to include with your summer report. He was thrilled to send a couple of photos for the Rotarians! However, two of the three photos were of the motorcycles (I think that must be for Jim Louttit!) and the one of Opportunity International Canada 8
the team is a very formal and solemn indeed! But Ramone noted in his email that they all have new uniforms on and they wore them specifically for your picture! IDH, and specially the Santa Barbara team, join together with us, in sending you a huge Thank You for your continued partnership and wonderful support! They are already looking forward to your Spring 2018 visit! Respectfully submitted by: Jannalee Anderson, July 2017 A few additional photos from the April 2017 Rotary Trip many more available Opportunity International Canada 9