The First German Fund for Microfinance approved a €1.4 million loan in US dollars to Organización de Desarrollo Empresarial Femenino (ODEF). The loan was aimed at assisting the organization in its transformation process into a “Financiera” (non-bank financial institution) and to help to finance its portfolio growth. ODEF was established in 1989 as part of an initiative to bring an integrated development credit scheme to poor Honduran women and ranks amongst the top three players in the Honduran microfinance market. ODEF transformed into a Private Financial Development Organization in 2005, which allowed it to start accepting deposits from its credit clients and lower its cost of funding.
Jose Francisco Funez is from Choloma, a rough suburb of San Pedro Sula, which owes its recent growth to the maquila industry. After several years as an employee for various US and Chinese operated maquilas, working in difficult conditions for an income insufficient to feed his family, Jose Francisco decided in 2005 to create his own business, recuperating and purchasing the textile remnants of the maquila industry in order to produce and sell women’s underwear.
Initiating the business was difficult, but he managed to purchase two sewing machines and started working from home with his wife. The couple was quickly overwhelmed by client demand. Lacking working capital, they approached ODEF and secured an initial loan of 5,000 Lempiras (USD 260) in June 2006 to purchase textiles.
They repaid the loan in eight weeks and subsequently secured four other loans of 10,000 Lempiras ($520), each repaid very quickly. The funding from ODEF allowed the couple to purchase additional sewing machines and to gradually hire three employees to meet the growing demand. More recently, the company secured a 30,000 Lempiras loan (USD 1,550) to purchase a small vehicle in order to sell its production on the markets without the need of wholesalers.
Jose Francisco and his family’s standard of living has greatly increased thanks to his initiative and the funding provided by ODEF; the small business now derives enough revenues to pay three salaries and to put the couple’s children to school without requesting them to work in the evening. The family lives in a stone house, protecting themselves from the hot summer weather and the hurricanes which regularly affect the region.
DB Microfinance Invest No. 1