The Inter-American Development Bank’s Multilateral Investment Fund today announced the approval of a $1.5 million grant for El Salvador’s federation of credit unions, FEDECACES, to support a project to improve access to financial services and remittances for poor people in rural areas.
The project supported by the MIF, an autonomous fund administered by the IDB, seeks to strengthen the management and financial capacity of credit unions in FEDECACES and help them provide better services to low-income clients. The federation has 29 member institutions that operate in 13 of El Salvador’s 14 departments.
Under one of the project’s components, FEDECACES and the credit unions will obtain support to integrate their remittances services and automate their information and operational systems in order to cut costs and increase efficiency. FEDECACES and credit union staff will receive training on promoting and managing these services.
The project will also help the credit union federation define a marketing plan for their remittance services to build stronger links with Salvadoran expatriate associations and to evaluate potential strategic partners in countries where these migrants reside. According to El Salvador’s Central Bank, their nation received over $1.9 billion in remittances last year.
The credit unions will also develop new financial products tailored to the needs of families who receive remittances, including savings, payments and transfers and microloans.
Other components will assist FEDECACES in modernizing its systems and procedures and in designing a management and financial consulting program for its member institutions. They will also provide support to the federation and credit unions that choose to be regulated under El Salvador’s new legislation for non-bank financial intermediaries, which offers this industry an opportunity to begin a process of strengthening and expansion.