FINCA International - Innovations and Partnerships

Innovations and Partnerships

While the original village bank credit and savings program remains the core product in the African programs, FINCA has partnered with leading insurance companies to offer health and life insurance products, health care, and business-interruption coverage in response to the AIDS crisis occurring in Africa. FINCA Uganda, which is a world pioneer in microinsurance, has partnered with AIG to provide life insurance, to ensure that the death of a village bank member does not result in hardship for the other village bank members or the family of the deceased as the client's loan is paid off. Generous funding from the Bill and Melinda Gates Foundation is making it possible for FINCA and the Johns Hopkins University Bloomberg School of Public Health's Center for Communication Programs to provide HIV/AIDS prevention education by using FINCA Malawi's established network of village bank groups.

In the Newly Independent States (countries of the former USSR), FINCA's product offerings have expanded to include larger, individual loans, collateralized by office or specialized equipment, vehicles, or property.

Three of FINCA's most successful programs, Ecuador, Uganda, and Kyrgyzstan have transformed into regulated deposit-taking institutions (MDIs). MDIs can accept savings from the public and then lend those savings to fuel much faster program outreach.

On January 24, 2004, USAID, FINCA and Visa International launched a major public-private partnership that aims to bring new efficiency and security to microfinance clients in the developing world utilizing electronic payment products. The partnership has tested how Visa solutions can provide FINCA and its clients both cost- and time-saving processes, allowing FINCA to expand its outreach to more of the world's poor by minimizing loan transaction times for both clients and microfinance providers; lowering transaction costs for processing loans; providing microfinance clients more secure access to their loan capital; reducing the possibility of cash theft; expanding the variety of financial service products available to FINCA's clients; and introducing a new market segment to participating commercial banks.

In November 2006, FINCA Afghanistan received a $10 million grant from USAID as part of an $80 million rural microfinance project to promote development and stability in Afghanistan. The project, the Agriculture, Rural Investment and Enterprise Strengthening (ARIES) Program, will also complement USAID's existing Alternative Livelihoods Program and will help establish a market-based, wholesale Rural Investment Fund to provide financing to cooperatives, farmers' associations, and small and midsize enterprises throughout the country, in a push to eradicate the cultivation of opium poppies.

Since establishing its program in Afghanistan, FINCA has offered a line of sharia-compliant microfinance products, developed after careful vetting with local religious leaders, and confirmed through a fatwa acquired from Al-Azhar University in Cairo, Egypt (the world’s most respected Islamic institution of higher learning). Its current line of murabaha loan products is based on an agreement where the seller (FINCA) expressly mentions the cost he has incurred on the commodities to be sold and sells it to another person (the client) by adding a markup on the original cost, which is known to the buyer. It is one of the most popular modes of exchange used by banks in Islamic countries, such as Afghanistan, to promote interest-free transactions (interest being forbidden by Islamic law. Aside from being Afghanistan’s first sharia-compliant microfinance organization, FINCA Afghanistan can perhaps claim to have created the world’s first murabaha group-lending products.

In May 2009, FINCA, in partnership with HSBC, launched an innovative, prepaid card in Mexico. As part of that initiative, FINCA has presented two case studies on the development and implemention of new products, strategies, technologies, and other innovations in the provision of financial services for microfinance clients in the developing world.