Instituto de Investigaciónes Socioeconomicas y Tecnologías (“Insotec”), one of the newest additions to MCE’s Microfinance Institution (MFI) portfolio, was initially founded in 1980 as a technical assistance agency to support the political and economic role of small businesses in the Ecuadorian economy. Over the course of the following decade, Insotec recognized that its technical assistance clients could also benefit from financial assistance to develop and expand their businesses — thus, in the early 1990s, Insotec’s microfinance portfolio was created.
More than 25 years later, Insotec operates as an NGO and maintains a strong social focus that goes above and beyond the provision of credit. As of the end of 2017, Insotec managed a portfolio of over $40 million, reaching nearly 15,000 borrowers via 14 branches in the central Andean and coastal regions of Ecuador, complementing its loan products with a variety of insurance products and health and education services. 41% of Insotec’s borrowers were women and 67% were rural. Insotec’s social focus is evident across several aspects of the business:
- Technical Assistance: Insotec’s agriculture and animal husbandry portfolio —representing 61% of the MFI’s gross loan portfolio as of the end of 2017— includes informal technical assistance from loan officers and branch managers.
- Prudent Product Design: clients are front and center when Insotec designs new products, always ensuring that its borrowers benefit from the product. Insotec’s “Credito Amigo” product, for example, was designed specifically for borrowers affected by the earthquake that struck Ecuador in April 2016.
- Health Brigades: Insotec has a social development department, which organizes health brigades in communities where Insotec operates. Insotec brings two doctors and two nurses to perform general check-ups for individuals in these communities, available to both Insotec borrowers and other members of the community. In addition, community members receive a health kit with over the counter drugs to combat minor illnesses. In 2017, Insotec organized a total of 27 health brigades.
- Conservative Lending Practices: Insotec uses conservative lending practices in order to avoid over-indebting its clients, allowing a maximum of four parallel loans (including Insotec’s loan) and a maximum repayment capacity of 60% of the borrower’s discretionary income.
Insotec serves primarily low-income microentrepreneurs in rural areas, with a strong focus on the agricultural sector (representing over 60% of Insotec’s gross loan portfolio). The MFI offers microloans ranging from $600 – $10,000 with loan terms from 12 – 36 months depending on the appropriate needs of the borrower. All Insotec borrowers have the option to receive various insurance products (health insurance, life insurance, and credit life insurance) as well as business and financial literacy education. In addition, Insotec offers a lower interest loan for repeat clients with at least three previous loans with Insotec and a good repayment history.
In Q1 2018, MCE approved a 36-month facility for $1 million; which was disbursed in two tranches (in March and April 2018). This loan also includes a technical assistance facility to be performed by Grameen Foundation over the next year, a result of savings generated by an interest rate reduction from 8.5% to 8.0% offered by MCE. Together, Grameen Foundation, MCE, and Insotec will design the product and reporting milestones for this facility to advance Insotec’s strategy plan for social development across Ecuador.