By Elyssa Pachico
Last January in northern Nicaragua, as a crowd of hundreds blockaded the Panamerican Highway late into the cool Monday night—soaking tires in gasoline before setting them on fire, hurling rocks at police and TV cameramen, bringing traffic to a standstill for 10 miles—the words once again began appearing in news reports and political speeches and inside the National Assembly debate halls: No Pago, No Pago!
In the months that followed, the refrain was hardly absent from the airwaves—not on May 12, when a group of 20 people smashed the windows of a truck belonging to a local microfinance organization, or in early September, when some loan officers were so harassed by protesters barricading their office doors and badgering the clients who attempted to enter that they decided to stop showing up to work altogether.
These incidents are only a few examples of the bad feeling that microfinance institutions (MFIs) have inspired among a section of the rural population in north and central Nicaragua. Confronted by the bold protests of the Movimiento de Productores, Comerciantes y Microempresarios de Nueva Segovia, or more colloquially as the No Pago (I Won’t Pay) movement, politicians are growing increasingly nervous that the group’s protests are scaring away international investors and could strike a heavy blow against the country’s shaky economy.
The first signs of unrest appeared more than a year ago, following remarks made by President Daniel Ortega at a political rally in the northwestern province of Jalapa. The region was simmering with tension after a large microfinance corporation had six debtors arrested. Their families chose to barricade the highways for 11 days in protest.
“We need to end this policy of usury,” Ortega told a crowd on July 12. “Instead of protesting on the streets, protest before the offices of usurers and plant yourselves before them. Stand firm, for we support you!”
Ten days later, borrowers behind in their loan payments tried to burn down a microfinance office in the department of Nueva Segovia. Some time afterward, debtors stormed another MFI and refused to let personnel leave the building; the resulting showdown with police left one civilian blinded from a rubber bullet.
The No Pago movement, which has been estimated by the media to consist of somewhere around 10,000 members, has largely been fueled by complaints that MFIs charge interest rates that are too high, leaving borrowers swamped in unmanageable debt. Nicaragua has the greatest number of MFIs in Central America, with an estimated 450,000 clients and an approximate $400 million portfolio. Clients in the economy’s informal sector typically take out small loans in order, for example, to buy an oven to make and sell corn goodies known as rosquillas or start up a fruit-vending stand or purchase some cows and pigs. The 19 institutions that make up ASOMIF, a national microfinance association that has borne the brunt of the movement’s wrath charge, on average, between 10% and 12% annual interest. The Fondo de Desarollo Local, the largest microfinance institution belonging to ASOMIF, handles 75,000 clients and charges an 18% interest rate. Omar Vilchez, the former Sandinista mayor of Jalapa and the big-bellied, big-voiced de facto leader of No Pago, has demanded that the maximum interest rate be lowered to 8%, a number that government officials have called unthinkable.