What happened with the dollar shortage in Bolivia and why it matters for Oikocredit

In 2024, Bolivia, where Oikocredit has 13 partner organisations, found itself in the grip of a severe shortage of foreign currency, particularly US dollars. Oikocredit made its first investment in Bolivia in 2010. The situation worsened considerably over the year, exposing deeper structural weaknesses in the country’s economy and triggering ripple effects far beyond its borders, including for Oikocredit.

Bolivia’s dollar shortage and its impact on Oikocredit

Bolivia depends heavily on the US dollar for international transactions, such as servicing foreign debt and importing essential goods. But as the country’s foreign currency reserves declined, the Central Bank struggled to meet demand at the official exchange rate. 

This imbalance gave rise to a growing parallel market. By mid-2024, the unofficial exchange rate had surged to more than 50% above the official one. In some cases, reports showed the dollar being traded at up to 10 bolivianos, while the official rate remained around 6.96. 

This sharp disparity created serious challenges, particularly for organisations operating internationally. For Oikocredit, the shortage meant that partners with loan obligations in foreign currency, euros or dollars, had to find increasingly expensive ways to convert their locally earned bolivianos into the required repayment currency. 

Why this matters for Oikocredit

Wherever possible, Oikocredit aims to lend in local currency. This helps partners avoid exchange rate risks and makes repayments more predictable, particularly for organisations whose income is entirely in their local currency. 

But local currency lending isn’t always feasible. In Bolivia, access to affordable hedging mechanisms was limited, and lending had to be done in euros or US dollars. This meant that many partners, earning revenue in bolivianos, had to convert their income to repay their loans. 

When US dollars became scarce, or only available at a steep premium on the parallel market, the cost of repayment soared, even for otherwise financially sound organisations. In some cases, partners were simply unable to access the foreign currency they needed, making timely repayment impossible despite their operational viability. 

This kind of currency pressure increases the financial risk associated with those loans. As the likelihood of delayed or incomplete repayments rises, Oikocredit must set aside greater provisions: financial buffers to cover potential losses. These provisions, while a responsible measure, directly affect the cooperative’s year-end result. 

And Bolivia was not an isolated case. Across Latin America, countries such as Peru also experienced macroeconomic and political instability in 2024, further complicating the lending landscape and increasing risk across the region. 

Lending in local currency: Oikocredit’s approach

Oikocredit’s preferred approach is to lend in local currency. This reduces the risk for partners and helps ensure that their repayments align with the currency in which they generate income. It is a core part of the cooperative’s strategy to support financially sustainable impact. 

However, lending in local currency depends on the availability of hedging mechanisms, financial tools that protect against exchange rate fluctuations. And such options are not universally available or affordable in every market. 

In contexts where hedging is not possible, Oikocredit may still need to provide loans in euros or dollars, with the partner bearing the exchange rate risk. Legal frameworks, regulatory environments and broader economic conditions also influence whether local or foreign currency lending is viable. 

In Bolivia’s case, the combination of limited hedging and a nationwide dollar shortage created major challenges, even for well-managed partner organisations. This is why the currency crisis had such a marked impact on Oikocredit’s activities in the country, and why local currency lending remains a key priority wherever conditions allow. 

It was also a turbulent year for agriculture

The foreign currency crisis in Bolivia and broader regional instability came at a time when many of Oikocredit’s partners, particularly in agriculture, were already under pressure.  

Agricultural financing presents significant challenges due to fluctuating market conditions, climate risks and financial instability in many regions. However, agriculture is one of the most socially impactful sectors because it directly supports smallholder farmers, enhances food security and fosters economic development in rural areas. 

Agriculture is one of the cooperative’s most important sectors for social impact, but also one of the most vulnerable to external shocks. In 2024, those shocks came from multiple directions:

• Climate change impacts: Unpredictable weather, floods and droughts damaged crops and disrupted production.
• Commodity price volatility: Fluctuations in global markets made incomes more uncertain.
• Regional instability: Political and economic disruptions further strained operations in rural areas.

These overlapping challenges, from currency shortages to climate extremes, meant that many agriculture partners experienced significant financial strain. In response, Oikocredit worked with them to restructure loans, extend repayment terms, and increase provisions where necessary, always with a focus on long-term resilience. 

This approach reflects Oikocredit’s broader strategy for navigating uncertainty: supporting partners through challenging times while safeguarding the cooperative’s financial sustainability.

Strengthening strategy for the future

Despite strong operational performance, with operating income reaching €85.1 million, the increased risks meant that Oikocredit had to make significantly higher provisions, especially in Bolivia, Peru and the agricultural sector. 

These provisions act as a financial safety net and are essential for sound risk management. But they also reduce the year-end result. In 2024, they led to a net consolidated loss of €8.1 million, even though the underlying business remains stable. You can download Oikocredit’s full 2024 Annual Report here.

Resilience remains strong

Amid these challenges, Oikocredit maintained its financial strength: 

• The net asset value per share remained high at €211.74. 

• Liquidity increased, reflecting sound financial management. 

• The cooperative continued to deliver meaningful social impact across 52 countries.

2024 Result highlights

• Net consolidated result: €8.1 million negative (2023: €1.6 million positive) 

• Operating income: €85.1 million (2023: €59.4 million) 

• Total consolidated assets: €1,147.0 million (2023: €1,156.9 million) 

• Total member and investor capital: €967.0 million (2023: €1,000.8 million) 

• Net liquidity as share of total assets: 14.8% (2023: 11.3%) 

• Net asset value per share (NAV): €211.74 (2023: €214.03) 

• Development financing portfolio outstanding: €1,105.3 million (2023: €1,084.7 million) 

• 487 partners in 52 countries: 2023: 540 partners in 52 countries. 

• Capacity building: 151 current and prospective partners benefitted from 64 initiatives valued at €1.4 million (2023: 85 partners; 40 initiatives; €1.0 million) 

• Environmental, social and governance (ESG) partner average score: 72.2% (2023: 71%) 

• 46,361 individual and institutional investors: 2023: 48,182. 

Looking ahead to 2025

As Oikocredit prepares to mark its 50th anniversary in 2025, it is launching its Invest in Climate Action campaign. This new initiative, part of the cooperative’s Global Learning for Transformation & Advocacy work, aims to raise awareness of the disproportionate impact of the climate crisis on low-income communities, and to promote responsible investment in adaptation and mitigation solutions. 

At the same time, Oikocredit will continue building partnerships that address interconnected challenges: climate vulnerability, gender inequality and economic exclusion. With nearly five decades of experience, the cooperative remains committed to putting people at the centre of finance, even in times of uncertainty. 

In a world where low-income countries face a staggering $4.3 trillion annual shortfall to meet the Sustainable Development Goals — including $1.8 trillion needed for climate action alone — the role of organisations like Oikocredit is more vital than ever. 

Mirjam ‘t Lam, Oikocredit’s Managing Director, said: “Our priorities in 2025 will be to successfully balance impact, risk and return; to continue achieving lasting benefit for partner organisations, people who live on low incomes and their communities, supporting them in building resilience; and to grow our member and investor base while providing a positive financial and social return to all who entrust us with their capital.” 

Oikocredit’s mission and vision

Oikocredit’s success over the past five decades is a testament to its commitment to social impact. By prioritising community development over financial returns, the cooperative has been able to support countless individuals and businesses, proving that finance can be a powerful tool for positive change. 

Through its focus on social impact, rigorous assessment processes and commitment to ethical investing, Oikocredit continues to demonstrate that financial success and social responsibility can go hand in hand. As it moves forward, the cooperative remains dedicated to investing in a better future, where financial capital is used not just to generate wealth but to uplift communities and create lasting social change. 

Do you want to make a difference too?

If you are an individual or institution looking to make a difference by investing in Oikocredit to support people with low incomes improve their living situation, you can find more information about Oikocredit here or sign up for our newsletter. 

By investing in Oikocredit, you can help create opportunities for people with low incomes in over 50 countries. That’s investing in people and generating real social impact. Because money has the power to transform the world.