Evaluation: Variable Payment Obligation Programme’s Cash Flow-based Financing Alongside Acceleration

The Variable Payment Obligation Programme, was launched in April 2016 in Nicaragua with: Palladium (since acquired by Palladium) as the main contractor, and responsible for technical assistance for the loan product; Agora as the Enterprise Growth Services (EGS) delivery partner; the Miller Centre of the University of Santa Clara as an advisor for the loan product and the third party funding mechanism; and Banco de América Central (BAC) as the Local Bank Partner (LBP). The VPOP provides cash flow-based financing, alongside Enterprise Growth Services (EGS) to dynamic small and growing businesses with ambition to grow. The annual revenues of participants prior to participating range between $70k and $220k. The VPOP seeks to demonstrate that bundling an appropriate credit product with adequate EGS, can lower the borrower’s risk of default and increase the loan’s impact on the business’ growth in a financially sustainable manner, and aims to showcase that banks can offer financing based on cash flow rather than collateral. A learning focussed evaluation was undertaken to assess progress and performance of the Phase 1 Pilot as of November 2017.


Key findings so far:

  1. Proof of concept has been achieved, albeit at a slower pace than intended. The cash-flow based lending product + enterprise growth services (EGS) is additional to the market
    • Agora’s adaptations of EGS to participating enterprises’ needs have been key to success.
  2. There is a mixed picture of sustainability
    • The bank product is profitable
    • It is too early to tell if the product will be institutionalized.
    • More realistic costing is required for EGS to be self-sustaining, although;
      • The product is introducing a EGS payment culture in Nicaragua

Executive Summary
Full Report
Management Response