REDCAMIF is the largest network of microfinance institutions (MFIs) in Central America and currently consists of 129 affiliated MFIs in 7 countries with more than 760 offices throughout Central America. Together these MFIs serve over a million customers.
In March 2011, the P&D Network sent a technical mission to REDCAMIF in Guatamala, providing expertise and support the first phase of the micropension project, focusing on micropension product characteristics and the development of a management information system.
The official launch of the REDCAMIF micropension scheme in Guatemala will take place on the 30th of August, in the rural area of Santa Cruz de El Quiché. This date has been chosen in accordance with the Mayan Calender, which marks this day as the ´8 Kej´. The 8 Kej is an appropriated day to carry out initiation ceremonies that are celebrated to ask for strength, to ask for gestation and for people protection. The launch of the micropension scheme in Nicaragua is scheduled for September.
Setup of the REDCAMIF micropension scheme
REDCAMIF´s micropension scheme is unique in the world: the micropension product is distributed through 10 MFIs in 3 countries (Guatemala, Honduras and Nicaragua), whilst the pension savings of its participants are pooled in a regional trust constituted in the Central American Bank.
REDCAMIF started the development of its micropension product in 2008, with the objective to contribute to the decrease of poverty of the micro and small entrepreneurs, non-salaried and low-income population, as well as their families in Central America by introducing a product for medium and long term creation and gathering of patrimonial resources. Saving income improves the life conditions of low-income populations when retiring, and generates resources for their old-age.
Initially, REDCAMIF's micropension scheme targeted only small business owners, since research showed that close to 5 million small-business owners lacked any form of pension provision. But the scheme is now expanded to include informal sector workers as well.
Figure 1: Steps for the Retirement
REDCAMIF's micropension product will in principle focus on providing old-age pension income. However, when a financial basis starts to grow amongst the clients, the possibility to offer additional products will be analyzed.
According to REDCAMIF, the micropension product will not only bring benefits to the low-income client segment, which is now provided with a tool for old-age income security, but also provides MFIs with the opportunity to bring in new clients as well as offering an additional product to their current clients.
Figure 2: Number of Active Borrowers and Market Participation by REDCAMIF Country.