PRO+CLIMA microloans: microfinance products and services for micro, small and medium farmers to invest in adaptation technologies that improve their climate resilience, incomes, and sustainability in Costa Rica
Fundecooperación para el Desarrollo Sostenible
Non-governmental organization (NGO)
In Costa Rica, agriculture and livestock are at the forefront of being impacted by both climate change and public policies reforms. Due to the important place of the sector in the national economy, it is crucial to support the micro, small and medium farmers to transform their activities towards sustainable one. Hence, the PRO+CLIMA microloans are a custom-made microcredit which allows micro, small and medium farmers, usually excluded from traditional credit services to access financing options and services to implement sustainable practices and improve their economic condition and climate resilience, while offering financial incentive to the farmers implementing the strategies.
In 2015, the implementation of the Adapta2+ program in Costa Rica, supported by the Adaptation Fund, started, which led to the beginning of the design of the PRO+CLIMA microcredit scheme and its integration in the Credit Program that Fundecooperación has been implementing since 2007. Between 2015 and 2018, the adaptation technologies and practices to be financed at farm level (especially focused on micro and small farm holders) part of PRO+CLIMA were identified, and the microloan was fully designed and validated. In 2018 the PROCLIMA microcredit was launched and the first loans were allocated. The microcredit is also implemented in collaboration with the Ministry of Agriculture and Livestock supporting policies, the national Mixed Institute of Social Help for more financial inclusion, and the National Insurance Institute which provides to address every transformational aspect, including the formalization of the farmers activities and the protection of their assets. Overall, the microcredit has benefited 905 individuals since its start date and is currently benefiting 491 individuals. Of the latter, 12% (62 credit operations) are benefiting from the PRO+CLIMA microcredit. The project does not have an end date as it is based on a revolving funds. The microcredit portfolio is USD $5,381,9975 in 2019 of which USD $ 527,423 correspond to portfolio of the PRO+CLIMA microloan. However, it is important to specify that the microcredit is based on revolving funds, and presents the advantage to be flexible for customers, with adjustable interest rates that may be modified according to the investment plan. Due to the 2020 pandemic, the portfolio balance shows a lower amount compared to 2019. However, the microcredit is planned to support 60 farmers in 2021 with USD $300,000.00.
The key results of the activity are: • Inclusivity, supporting vulnerable population In 2020, 253 farmers were among the beneficiaries of the revolving credit program, which include vulnerable population (indigenous people, young and women); and 86 new clients in economic vulnerability have received guarantees • Increasing resilience of medium, small and micro farmers. Farmers must implement adaptation and mitigation technologies, such as subscribing to an agriculture and livestock insurance, the use of efficient equipment, the improvement of the soil carbon sequestration and/or animal’s genetic, and reduce use of pesticides and insecticides, efficient equipment, the implementation of efficient water systems, soil conservation techniques. • Sustainability of the Fund The revolving fund has exceeded its placement goal. • Creation of alliances The Foundation created strategic public, private national and international alliances to implement the project.
Enabling factors: - Existing microcredit programs of the Foundation (trained staff, working administrative and financing mechanisms), - Adaptation Fund’s financing, - Collaboration of the national, technical, and local entities, - Public policies such as the National Decarbonization Plan. Constrains: - The pandemic impacted the microcredit portfolio mostly due to their limited allocation rather than their recoveries. Individualized solutions were designed for each client, - The lack of education of beneficiaries, which impeded the implementation of the new practices. Training and tools are developed and implemented in communities.
PRO+CLIMA is expanding as it offers the opportunity to the farmers, usually excluded from traditional credit services and that increasingly need support to face climate change, to improve their production and their resilience supported by experts. By working with strategic allies and accompaniment process, it also ensures the insertion of the beneficiaries into formal and national processes and receive guarantees. In this context, the revolving funds allows to grow the capacity in supporting more beneficiaries, while the marketing approach of the activity creates loyalty, and benefit from returning clients as new ones join. Indeed, the established conditions of the microcredit serves as an advertising and regulatory base. The initiative is replicable by other organizations and in other sectors; and the Foundation shares its knowledge about the innovative approaches facilitating training and technical assistance between its peers and others at international, national, and local levels.
Building resilience positively impacted the communities’ response to COVID-19 as the implementation of sustainable practices decrease its economic impacts. Due to the pandemic, virtual activities have been developed and are carried out on multimedia platforms to train actors and communities. Moreover, virtual management tools were created and are used to attend, monitor, train and formalize microcredits as well as manage disbursements for activities renewal and the sustainability of others. A virtual formalization scheme as well as analysis and remote monitoring schemes and individualized arrangements were established. An alliance with the Correos de Costa Rica allows to obtain documentation safeguarding all health guidelines.
SDGS & Targets
Deliverables & Timeline
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PRO+CLIMA benefits the micro, small and medium farmers (men, women, youth, and indigenous people) located all over the country. To do so, alliances with technical (INTA, CORFOGA, CNP), local and national organizations (municipalities, agriculture centers, institutes) and public institutions (ministries, institutes and directions) have been created.
Carolina, PRO+CLIMA microloans: microfinance products and services for micro, small and medium farmers to invest in adaptation technologies that improve their climate resilience, incomes, and sustainability in Costa Rica