Blue Financial Services Limited, a South African microfinance institution (MFI) that lost its operating license in Rwanda recently, has announced that it may take legal action against Rwandan borrowers who do not pay back outstanding loans.
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MICROCAPITAL BRIEF: National Bank of Rwanda (NBR) Revokes Blue Financial Services’ Operating License
The National Bank of Rwanda (NBR), the central bank of Rwanda, recently reported that Blue Financial Services, a South African microfinance institution (MFI) with reported assets of ZAR 1.5 billion (equivalent to USD 200 million), has lost its operating license in Rwanda after operating in the country for three years, because of “fiscal fraud.”
MICROCAPITAL BRIEF: Mayibuye Group Reveals Turnaround Strategy for Blue Financial Services, a South African Microfinance Institution with Presence in 14 Countries
Blue Financial Services, a South African microfinance institution, has entered into an agreement with Mayibuye Group (Pty) Ltd, a South African investment company, to provide ZAR 450 million (USD 58.6 million) in equity and debt financing.
MICROCAPITAL BRIEF: South African Microfinance Institution Blue Financial Services Reports Significant Year-End Loss and Recapitalization, Loses Operating License in Rwanda
Blue Financial Services, a South African microfinance institution reporting total reviewed assets equivalent to USD 343 million, has lost its operating license in Rwanda and expects to announce a year-end loss of up to USD 194 million for its fiscal period ended February 28, 2010. Blue attributes the negative results mainly to goodwill and deferred tax asset valuation impairments, an increase in loan loss reserves, reduced funding, early rapid expansion of the business and the weakening of African currencies. The company has entered into an agreement with Mayibuye (Pty) Ltd to provide equity and debt financing. As a result of the recapitalization, Mayibuye will become the majority shareholder.
MICROCAPITAL STORY: Blue Financial Services in South Africa to Continue Microfinance Growth in Africa But Lessens Pace
Blue Financial Services, the South Africa based microfinance institution (MFI) will remain focused on expansion in Africa and will begin operations in more African countries this year, according to a press release on AllAfrica.com. In this regard, the release quotes Blue’s CEO Dave van Niekerk as saying that Blue’s plans in Africa come despite a slowdown in the ‘pace of its expansion due to the global financial crisis.’ [1]. Per information currently available, Blue’s immediate plans also include the setting up of a branch in Ghana over the next 2 months [2]. (AllAfrica.com is a news and information portal owned by AllAfrica Global Media, a multi-media content service provider, systems technology developer and distributor of African news and information worldwide.)
MICROCAPITAL.ORG STORY: South Africa’s Blue Financial Services Obtains USAID $10 Million Loan Portfolio Guarantee And Expands Microfinance Services In Africa
It was recently reported that Blue Financial Services (Blue) [1], an MFI headquartered in South Africa and established in 2001, received a loan portfolio guarantee of up to USD 10 million from USAID [2] for their small business lending operations. The facility will cover 50 percent of any loss experienced by Blue on small, medium and micro enterprise or SMME loans within the USAID-backed loan portfolio. The guarantee is valid for the next 10 years.
MICROCAPITAL STORY: Malawian Microfinance Institutions Accused of Profiteering – Blue Financial Services and Izwe Lose Government Backing
The Malawian Civil Servants Trade Union (CSTU) has asked the government to rethink its recent decision to cease guaranteeing loans obtained from microfinance institutions (MFIs) or to increase loan facilities to its employers. The government made the decision in December 2008, stating that MFIs were charging “exorbitant” interest rates increasing poverty among civil servants in the country. Blue Financial Services and Izwe were specifically referenced under this accusation. Finance Minisister Goodall Gondwe made the announcement and is reportedly adamant that the government would no longer guarantee or act as a collections agent for loans obtained from microfinance institutions. It is unclear from the various reports whether this will pertain to all MFIs or just to those deemed to be unfairly exploiting civil servants.
MICROCAPITAL STORY: Blue Financial Services, International Bank Plc, and AIG Investments Found Nigerian Blue Intercontinental Micro Finance Bank
Blue International Micro Finance Bank Limited (BIMFB), a newly created Nigerian micro finance bank, has begun operations in Nigeria, which will be using its capital base of N3 billion (USD 25 million) to provide micro loans to Nigerians. Blue Intercontinental Micro Finance Bank Limited is a partnership between International Bank Plc and Blue Financial Services of South Africa. This N3 billion (USD 25 million) is N2 billion (USD 17 million) over what is required by the Central Bank of Nigeria for starting up a microfinance bank in the country, and is reportedly the first to begin operations throughout different states in Nigeria, according to Business Day.
MICROCAPITAL STORY: Pan-African Microfinance Institution Blue Financial Services (BFS) to Acquire South African Microlender Credit U Holdings for $36m
African commercial microlender Blue Financial Services (BFS) has announced plans to purchase the entire issued share capital of South African microlender Credit U Holdings for the price of RND 278 million (USD 36 million). The purchase will consist of a 50 percent cash and 50 percent share offer to all Credit U shareholders, at a ratio of one BFS share for every 2.25 Credit U shares. Both companies’ shares are traded on the Johannesburg Securities Exchange.
MICROCAPITAL STORY: South African Microfinance Institution Blue Financial Services (BFS) Begins Operations in Swaziland
Blue Financial Services (BFS), a South African microfinance institution (MFI), has opened its first branch office in Mbabane, Swaziland as part of a plan to expand across the African continent. According to CEO Dave van Niekerk, the for-profit corporation “is committed to servicing the unbanked and underserved employed citizens of the kingdom who presently do not qualify for financial offerings from the traditional banks” (press release 15.07.2008)
MICROCAPITAL STORY: Private Equity Group Emerging Capital Partners (ECP) Invests $15m in Microfinance Institution (MFI) Blue Financial Services (BFS)
Washington D.C.-based private equity group, Emerging Capital Partners (ECP), recently made an investment of USD 15 million to South African microfinance institution (MFI) Blue Financial Services Ltd. (BFS). Through shares and convertible bonds, ECP will finance the investment through its Africa Fund II to help BFS expand as well as assist BFS in generating working capital.
MICROCAPITAL STORY: South African Microfinance Institution (MFI) Blue Financial Services and Nigeria’s Intercontinental Bank to Launch $25.9m Microfinance Bank
Blue Financial Services (BFS), a South African microfinance institution (MFI), and Intercontinental Bank Plc, Nigeria’s largest commercial and retail bank by assets, are collaborating to launch a Nigerian microfinance bank capitalized at NGN 3 billion (USD 25.9 million), the largest such institution in the country.
NEWS WIRE: Nigeria: AIG, Blue Financial Services, Intercontinental Bank (ICB) to Invest $20m in New Microfinance Institution
Souce: Business Day.
MICROCAPITAL STORY: International Finance Corporation (IFC) and Blue Financial Services Group to Integrate HIV/AIDS Prevention with Microfinance
The International Finance Corporation (IFC), a member of the World Bank Group, announced plans to work with Blue Financial Services Group, a publicly traded African financial services company with over 100 branches in seven countries, on a pilot HIV/AIDS awareness and prevention program in Botswana, South Africa, and Zambia. A statement released by the IFC explained that the program will target small companies and local communities, seeking to preserve jobs and businesses by integrating traditional financial services with HIV/AIDS prevention. According to the press release, the IFC will help develop financial products, while Blue Financial Services will use its broad branch network in the three countries to deliver information and prevention services to staff, clients and communities.
The IFC, established in 1956, is now made up of 179 member countries which provide its capital, determine its policies, and approve its investments. In 2006, the IFC received a rating of Aaa, which suggests the highest quality investment grade, with minimal credit risk, from Moody’s Investor Services, a private company that performs financial research on commercial and government institutions. That year, according to Moody’s, the IFC’s assets totaled USD 28.49 billion, its return on assets (ROA) was 4.33 percent, and its return on equity (ROE) was 11.23 percent. As of February 2007, Blue Financial Services Group reported USD 573 million in total assets and USD 140 million in total liabilities.
By Elizabeth Nelson, Research Assistant
Additional Resources:
International Finance Corporation (IFC) Press Release: “IFC and Blue Financial Services Help Small Businesses and Local Communities in Botswana, South Africa, and Zambia Fight HIV/AIDS”
Microfinance Gateway: “African Consumer Finance Firm To Combine Access to Finance With HIV/AIDS Prevention”
International Finance Corporation (IFC) General Inquiries
IFC Corporate Relations
Tel: 
202.473.3800
Moody’s Investor Services Contact Info
Moody’s Investors Services: “Credit Opinion, International Finance Corporation” (pg 1)
Blue Financial Services: “Annual Financial Statements” (pg 86- ‘Balance Sheet’)
will use its broad branch network in the three countries to deliver information and prevention services to staff, clients, and communities.
NEWS WIRE: World Bank Arm Invests USD 20 Million in Blue Financial Services
MICROCAPITAL BRIEF: National Bank of Rwanda (BNR) Maintains Repurchase (Repo) Rate at 7%
The National Bank of Rwanda, which is known by its French acronym BNR, has announced that it will maintain the key repurchase (repo) rate, the rate at which commercial banks borrow from the central bank, at 7 percent.
MICROCAPITAL BRIEF: Swaziland’s Ministry of Finance Prepares Bill to Regulate Microfinance, Launches Rural Finance and Enterprise Development Program
Swaziland’s Ministry of Finance reportedly will present a National Credit Bill to “promote fair and non-discriminatory access to consumer credit and improve the standards of consumer information” and “curb unfair lending practices.”
MICROCAPITAL BRIEF: Merar Offers $3m Investment in Microfinance Project in Swaziland
Merar, an emerging markets investment network, has listed the opportunity to invest up to USD 3 million in an unspecified start-up microfinance project in Swaziland.