Original article available here.

The International Finance Corporation (IFC), a member of the World Bank Group, has signed an agreement with Jordan to support the Middle Eastern country’s efforts to establish a legal framework for credit bureaus, institutions that will help individuals and smaller businesses access finance, boosting the overall economy.

IFC will work with Jordan’s Ministry of Industry and Trade to help the country draft and adopt new legislation that will regulate the sharing of credit information. IFC will also help raise awareness among the private and public sectors about the economic benefits of credit reporting.

IFC Financial Markets Program Manager for the Middle East and North Africa, Thomas Jacobs, said: “The existence of accurate information helps banks and other lenders assess the creditworthiness of individuals and small businesses and their ability to pay back a loan. This minimizes the risk of nonperforming loans and prevents customers from being overly in debt.”

Credit bureaus are vital to helping increase access to finance for individuals and businesses and play an important role in emerging economies. They give banks and other financial institutions confidence to expand their lending and to make faster loan decisions by providing transparent and detailed customer credit information.

To help raise awareness of the benefits of credit bureaus, IFC, with Jordan’s government, today spoke with senior managers of commercial banks and government officials who will be instrumental in developing a private sector credit bureau industry.

Participants discussed the role of credit reporting in modern risk management and in increasing access to finance. They analyzed the components of an enabling regulatory environment and the challenges of establishing private credit bureaus.

The long-term goals of Jordan’s credit bureau program are to increase the efficiency of financial institutions, to support the growth of smaller businesses, and to mitigate lending risks.
IFC’s work in Jordan is focused on supporting improvements to the country’s overall business environment, which includes helping the government improve leasing regulations, corporate governance for banks, and SME management training.

IFC, a member of the World Bank Group, creates opportunity for people to escape poverty and improve their lives. They foster sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments. Their new investments totaled $16.2 billion in fiscal 2008, a 34 percent increase over the previous year.

Original Press Release available here.

MAPUTO — The Bank of Mozambique on Tuesday formally launched in Maputo the “Access Finance Challenge Fund” (AFCF), which is an initiative to co-finance efforts to expand financial services in the rural areas.

The fund results from a contract signed between the Mozambican and German governments in December 2007, under which Germany would provide a million euros (about 1.3 million US dollars) to co-finance this expansion.

Under the AFCF, the German development bank KfW will disburse 850,000 euros. Micro-finance institutions, commercial banks and other Mozambican financial companies may have access to this money to fund rural operations. KfW and the Bank of Mozambique will both sit on an assessment committee that will make decisions on the use of the fund.

According to Joana David, of the Bank of Mozambique’s Board of Directors, the purpose of the AFCF is to implement international financial reporting standards (IFRS), to integrate micro-finance institutions into the national payments system, and to introduce innovative financial products (by both micro-finance agencies and the commercial banks) into the Mozambican countryside to serve those sectors of the population currently excluded from the banking system.

“The fundamental goal”, said David, “is to support micro-finance, that is, rural finance, since we all know that the remote areas of the country are still not covered by banking services”.

The AFCF, she added, “is of particular importance because the micro-finance institutions do not possess the same infrastructure or financial resources as the traditional banks. It is thus important to endow them with financial resources that will allow them to possess those infrastructures and bring them into line with the legal requirements of international financial reporting standards”.

The AFCF would help integrate micro-finance into the national financial system by offering to cover 50 per cent of the costs for eligible areas.

Ehlert Christiansen, project consultant for German development cooperation, told the launch ceremony that currently only 10 per cent of Mozambicans have access to the banking system. He thought it key to improve the performance of micro-finance institutions, so that they would work efficiently and in line with international standards.

“The sustainability of the proposed projects is a criterion for access to the fund”, he said, “because we don’t want to give support without achieving results. Projects should be sustainable so that the beneficiary financial institutions will be independent of external support in the future”.

Proposals for use of the fund will be received up until 12 February, and then the assessment committee will decide which of the proposals should be supported.

Original editorial available here.

MICROLOANS were invented to help the poorest of the poor help themselves. Now major banks and pension funds are getting into the business, as they discover that the interest paid by the poor can produce high returns. Is it aid or exploitation?

Muhammad Yunus is the banker of the poor. He took a risk and transformed a bank, the most important tool of capitalists, into an instrument to fight poverty. And he turned the loan, for centuries a privilege of the affluent to increase their wealth, into a human right.

Muhammad Yunus is on a par with Nelson Mandela, Martin Luther King and Mother Teresa. Like them, he won the Nobel peace prize and, like them, Yunus believes in man’s inherent ability to be reformed.

Like Yunus, Shafiqul Haque Choudhury is also involved in the business of eliminating poverty.

Both manage banks. Yunus is permitted to use the word Bank to refer to his organization, Grameen Bank. But for legal reasons Choudhury’s organization, ASA, cannot call itself a bank. It is formally a non-governmental organization (NGO).

Yunus’ most famous client
Yunus changed the lives of millions of people, like Laily Begum. In their former life, her husband Atiqullah was a day labourer and Laily was a housewife. They lived in a mud hut, which they shared with their children, and their livestock. They lived on the food they grew in their garden and from their earnings as manual labourers. On many an evening, they had to decide who should be allowed to eat his fill — the children or the husband.

Today they face different decisions. Should the eldest study abroad after finishing high school? Should they buy a new television set? Are three mobile phones enough for a family of six?

The source of their affluence is a row of five shops on the main road, each of them around half the size of a garage, protected against burglars with metal shutters. The shops belong to Laily Begum. She had them built, then rented them out. Begum also owns a small apartment building next to the row of shops. There are nine apartments, and she rents them unfurnished. Behind her house is a stable with cows in it. The milk and the rent for the apartments and shops provide Laily Begum, her husband and their three children with a daily income of about $23, or $698 a month.

The Begum family has Yunus to thank for its success. More than 30 years ago, he recognized that an important cause of poverty was the fact that the poor are excluded from the services that financial sector offers. Banks don’t lend money to poor people, because they can provide no collateral. In the average banker’s opinion, lending them money is tantamount to “gradual suicide.”

Yunus, a professor of economics at the University of Chittagong at the time, disagreed. He issued his first loan to 42 female basket weavers. The total loan amounted to $51. All of the women repaid their shares of the loan in full.

Women handle money more responsibly
That was the beginning of Grameen Bank. To this day it issues small loans to the poor, and to this day its repayment rates remain phenomenal, above 98 percent, according to the bank. Although Grameen Bank’s loans are disbursed to individuals, a group of borrowers — of which each customer must be a member — is liable for repayment. If one borrower doesn’t pay up, the members of the group are responsible for his or her payment. This method has been profitable for Grameen Bank, which has reported an average annual earnings of $7.3 million in the last 10 years. The bank reinvests its profits in new branches.

Grameen Bank charges 20 percent interest. “That’s extortion,” says Yunus’ critics. His response is that they understand nothing about his business. His employees travel out into the villages and collect the loan payments during the borrower groups’ monthly meetings. This personal form of collection costs money.

Laily Begum felt that the terms were acceptable, and she received her first loan in 1997. She used the money to buy a mobile phone. Anyone who wanted to call friends or relatives paid 7 taka a minute. Begum kept 4.4 taka, and the rest went to the telephone company. It was a good business — and a brilliant idea. Both Begum and the villagers benefited from her new business.

Grameen Bank currently has microloans issued to more than 7.5 million women in Bangladesh. This is an astonishing success, but not all women are capable of handling their new power and opportunities. Some entered the village phone business too late in the game, others unwittingly bought sick or old cows and yet others had to look on as their husbands drank away the money. According to estimates, roughly one in two borrowers has been able to pull her family out of poverty with the help of microloans.

‘The problem with charity is that you get lazy’
An estimated 10,000 microlending organisations operate in 93 countries worldwide, issuing loans to 60 million poor people. Some organisations, like Grameen Bank, were founded by dedicated individuals, while others are the continuation of former aid projects. For a long time, many founders adhered to Yunus’ principles and rules, but now a new class of poverty eliminator is entering the picture. It includes people like Choudhury who, unlike Yunus, are no longer interested in reforming capitalism, but instead intend to fight poverty and make a good living at the same time.

“The problem with charity is that you get lazy and begin to lose transparency. You spend money instead of saving it,” says Choudhury.

“People accuse me of turning my employees into robots. They’re right. For the work I do, I don’t need a bunch of creative people. What I need is reliability and predictability. I’m creative enough myself.” He takes out a pad of paper and draws two rectangles that form a T, then a circle. “This is what it looks like in my branches,” says Choudhury, tapping dots onto the paper with the tip of his pen. “Two tables with employees sitting at them. One fan. No extras, no guards at night. Two employees who are required to sleep in the office at night. That’s how you save money and that’s how you remain effective.”

Perfecting the system — or destroying it?
Choudhury is the man who is perfecting Yunus’ system — or destroying it, depending on one’s perspective.

He is famous in the microcredit industry for the manner in which he transformed the ASA business model from one day to the next. In the 1980s, ASA was an aid organisation that issued microloans as a secondary activity.

Choudhury is in the same business as Yunus, but he doesn’t conduct it like a missionary who is familiar with human weaknesses. Instead, Choudhury conducts his business like a staff sergeant.

He prides himself on running the world’s most effective micro lending organisation. The business magazine Forbes supports his claim. In a comparative study conducted last year, ASA was ranked first among more than 600 microlending organisations.

Like many others, Choudhury copied the principles of Yunus’ bank, but he also made some important changes. It was these changes that led Ratna Akhtar to take out her loan with ASA.

Akhtar lives in the countryside, in Bhaturia. Akhtar owns a few cows and some fields, which she and her husband bought using loans. They sell the milk and the vegetables they grow to a wholesaler at a nearby market. Their business has been sufficiently profitable for a two-room house, a television set, a mobile phone and a savings account with a balance of $ 93.

Akhtar and about 20 other women meet in a courtyard once a week. They squat on the ground, holding money and their account books in their hands. An ASA employee sits in front of them on a chair, collecting the money and recording the amounts into the account books.

There are groups, as with Grameen, but there is no group liability. ASA employees apply pressure to delinquent customers. They are instructed to camp out in front of the respective borrower’s door until the borrower pays up. Choudhury also boasts a 95-percent repayment rate. He charges 23 percent interest.

Enlisting the help of egoists
The biggest difference between the two men is that Yunus wants to convert people, while Choudhury does not. Choudhury wants to fight poverty by enlisting the help of egoists. In the last two-and-a-half years, he has traveled around the world, visiting investment bankers and pension fund managers, hoping to convince them to invest in ASA.

A few listened to him as he explained the system and told them about his repayment rates, and they asked him for more information. Then they offered Choudhury money, sums like $100,000 or $ 200,000. Choudhury was outraged. “What do you want me to do with that?” He would ask. “I want to establish a fund that’s worth $125 million. With that much financial backing, I will set up ASA branches in China, Pakistan, India, Nepal and Sri Lanka. I can promise a 10-percent annual yield over 10 years.”

Choudhury got his money. His investors now include major pension funds, like ABP in the Netherlands and the American TIAA-CREF mutual funds, together worth $775 billion. But they are not the only ones that consider an investment in the poor to be worthwhile.

In the last four years, the amount of foreign investment in microlending organizations has tripled. From more than $1 billion to $4 billion. New entrants to the business include Credit Suisse, Morgan Stanley, the French insurance group AXA, the Blackstone and the Carlyle Group. All are attracted to the idea of helping the poor while turning a profit.

Exploitation behind a humanitarian façade
Many of these companies use the combination of capitalism and altruism for promotional purposes. But in some cases it is difficult to detect any altruism at all. Compartamos is a case in point. For Yunus, this Mexican microlending bank is the epitome of modern exploitation hidden behind a humanitarian façade.

Today Compartamos is Mexico’s most profitable bank, and it still specializes in issuing microloans to the poor. But Compartamos charges annual interest rates of close to 90 percent. About 850,000 Mexican women are paying off the loans they received from Com-partamos. The bank, a darling of investors, boasts returns of 55 percent.

Usurers disguised as do-gooders
Muhammad Yunus is unhappy about the development. He fears that the microlending industry will pay more attention in the future to investors’ returns than to fighting poverty. “Our goal was to force out the usurers,” says Yunus. “Now they’re coming back, disguised as do-gooders.”

Nowadays, everything revolves around more, not less: more for the poor, and more for the investors.

Read the Original Article here.

Citigroup Inc, the largest US bank, said yesterday that China’s banking watchdog has approved its plan to open two microcredit firms in Hubei province, tapping the nation’s vast rural market.

Citigroup, the first overseas lender allowed to establish such institutions in the country, plans to set up the two firms in Gong’an county and the city of Chibi, which are scheduled to open in the next few months.

The move comes as major rivals including HSBC and Standard Chartered are opening rural outlets in order to expand in the nation’s underdeveloped regions and the government is relaxing controls on private financing to support thousands of small and cash-strapped manufacturers.

Citigroup, which has eight branches and 20 sub-branches on the mainland, was one of the first locally incorporated foreign banks in China. The financial giant, which has a stake in Shanghai Pudong Development Bank as well as de facto management control of Guangdong Development Bank, said Gong’an and Chibi have tremendous lending needs due to their rapidly developing agriculture and robust economies.

“We feel very excited and proud of being allowed to set up the microcredit firms,” said Citi China CEO and Chairman Andrew Au. “It’s a very important new element in the process of Citi’s operation and investment in China. We deeply understand the urgency to expand finance services in China’s rural areas, a goal we believe could be achieved by the mode of setting up microcredit companies.”

Original Post available here.

Event site available here.

Beijing, China,  October 19, 2008  –  This conference shall bring together Chinese MFI and international investors, as well as other stakeholders.
The microfinance landscape in China is developing rapidly and various types of new institutions have entered the market in the past few years. As new institutions are being set up and older ones continue to grow, there is an increasing demand for outside funding.

Organized by the joint People’s Bank of China (PBC)-GTZ project on Microfinance and Rural Financial Sector Reform, this conference shall bring together Chinese MFI (mainly commercially oriented types such as Micro-Credit Companies and Village Banks), international investors, and other stakeholders.

The conference will provide an overview over the Chinese microfinance landscape. As speakers, co-sponsors can further make themselves visible to a wide range of MFI and government decision makers.

All participants have a unique chance to get to know each other and build their networks in our “Market Place”: International Investors will be given space to set up information booths and present themselves to the participating MFI.

Please visit the following homepage www.gtz-china.org/finance/pbc-gtz-2008. Details on registration will be available very soon.

Read more about the project on Microfinance and Rural Financial Sector Reform here.

Original article available here.

ISLAMABAD, October 17 – State Bank of Pakistan expects to receive first tranche of the approved assistance of 50 million pounds (USD 87 million) from UK-based Department for International Development (DFID) in the ongoing month, aimed at expanding the outreach of microfinance to five million borrowers by 2012, The News has learnt.

The cash-strapped central bank is waiting for dollar or any other foreign currency in a bid to build up its rapidly depleting foreign currency reserves.

The SBP and DFID have already signed a Memorandum of Understanding (MoU) for Financial Inclusion Programme (FIP) and both sides are now working out details for the release of amount out of the total 50 million pounds. “It is expected that DFID will release its first tranche in the ongoing month or by early next month,” a source in the donor agency told The News here on Thursday. The programme, under which money will be disbursed to FIP through SBP, will focus on mobilising much-needed market-based resources for the microfinance sector. The DFID will provide first loss guarantee of up to 10 million pounds from its grant financing. The programme will heavily invest in innovative technology-based products for the poor and will also support liquidity in the microfinance sector under the prevailing cash crunch situation in the financial market. The outcome will directly contribute to the Millennium Development Goal 1, which is “reduce income poverty by half by 2015”. When Dr Saeed, in charge of FIP in State Bank, was contacted over phone at his office in Karachi, he said they were working out details of the programme, but did not exactly know when DFID would release its first tranche. “It is better you ask this question to DFID people,” he said. Sources said more than 17 per cent of Pakistan’s population (27 million) lives on less than $1 a day and 73 per cent (116m) lives on less than $2 a day. Impressive economic growth of the past four years and successful financial sector reforms have not really addressed persisting inequalities among regions, classes and between genders. The outreach of microfinance and other financial services to the poor and marginalised groups in Pakistan remains very low as compared to other Asian countries. Penetration rate of microfinance borrowers is 2pc in Pakistan against 35pc in Bangladesh, 11pc in Indonesia, 29pc in Sri Lanka and 25pc in Vietnam. The FIP aims to transform the financial market with a clear objective to provide equitable and efficient financial services to the otherwise excluded poor and marginalised population. At present, there are only one million microfinance borrowers in the country. Under the FIP, Pakistan has set a target of reaching out to three million microfinance borrowers by 2010 and five million by 2012. In addition to the microfinance sector, the FIP will focus on developing financial inclusion policies and interventions for small and medium enterprises, rural population and low-income housing sector. The FIP will not only provide better livelihood opportunities for the poor and marginalised groups but it will also offer insurance against shocks, improved skills and higher investment in health and education at the household level.

Original article available here.

Gurgaon, India, October 12, 2008 – Big financial institutions of all sorts are in dire straits across the globe. But one category remains unaffected – micro-finance. Even as the global financial system freezes and giants like Lehman Brothers collapse, micro-finance institutions (MFIs) are expanding unfazed. Famous financiers face defaults big enough to wipe them out, but MFIs report virtually zero default.

This is extraordinary. Big financiers lend against collateral, a back-up if their borrower defaults. But MFIs lend with no collateral at all. Big financiers lend to the most creditworthy corporations. MFIs lend to poor women whom nobody in history considered creditworthy before. Yet, the secured loans to big corporations are bombing, while unsecured loans to poor women are being repaid in full.

How so? What lessons does micro-finance have for Wall Street? I distilled some answers from feedback from promoters of three MFIs that i myself have a stake in: Shubhankar Sengupta of Arohan, Kolkata; Rakesh Dubey of Sonata Finance, Allahabad; and Manab Chakraborty of Mimo Finance, Dehra Dun.

The big lesson for Wall Street is that lending against collateral, supposedly prudent, can blind you to the need for checking the repayment capacity of borrowers. US banks happily gave mortgages of 100% of the value of houses during the housing bubble, and suffered when house prices fell. So did august institutions buying mortgage derivatives. Some, like Lehman Brothers, borrowed massively to invest in AAA mortgage-backed securities, and went bust when value of these securities plummeted. A trillion-dollar house of cards was built on collateral. When the collateral value fell, the house of cards collapsed.

Lesson: don’t just depend on collateral, assess the cash flow of borrowers, and leave a cushion to ensure repayment. The housing bubble induced banks to give NINJA (no verification of income, job or assets) loans, secured just by house value. As house prices rose, their value exceeded the repayment capacity of borrowers. The rest is history.

Microfinance, by contrast, has no collateral at all. MFIs deliberately keep loans small, well within repayment capacity. Some MFIs give first loans of just Rs 5,000 a year. Those who repay qualify for a higher second loan, maybe Rs 7,000, and the third loan can be still higher. But MFIs set an absolute loan limit, ranging from Rs 12,000 to Rs 25,000, depending on local economic opportunities, to guard against over-borrowing. Wall Street needs similar safeguards.

US housing brokers get commissions from banks based on the size and interest rate of loans. This gives them incentives to fiddle documents and data to lend excessive sums at excessive rates of interest, increasing default risk. But MFIs have a fixed interest rate, and fixed ceilings on the first, second and subsequent loans. MFI field agents are trained to ensure that loans do not exceed repayment capacity. Mimo Finance, for instance, gauges the cash flow of borrowers by taking a quick look at the quality of their houses. Wall Street needs similar safeguards.

MFIs lend to groups of poor women. If any borrower defaults, the whole group is barred from credit, so other members put social pressure on the defaulter to repay. This is remarkably effective.
By contrast, defaulting home-owners in the US are treated as victims, offered subsidies and write-offs by politicians. Some home-borrowers may have been duped by brokers, but many others over-borrowed on the assumption of ever-rising house prices. Many bought houses to re-sell at a profit. Some can afford to repay but have decided not to, since default attracts no social opprobrium.

High inflation in India has not caused MFI defaults. MFIs report that worker-borrowers have demanded and got a 20% increase in wage rates, while small-businesses’ borrowers running tea shops have raised their prices from Rs 2 per cup to Rs 3. By contrast, home borrowers (or even giant corporations) in the US are unable to increase their incomes in line with borrowing costs. So, the MFI model is small but sound. But don’t lavish excessive praise on it. Western banks lend far too much. But Indian lenders – including MFIs -lend far too little. Rural studies suggest that poor rural households need Rs 25,000 of credit per year. MFIs provide far less. The balance is made up by borrowing from relatives and moneylenders. The system cries out for more formal credit.

The aim must be to enable capable but capital-starved entrepreneurs to move beyond ownership of buffaloes and tea-shops. At an MFI meeting in rural Dehra Dun, i saw an enterprising village woman pleading for a loan of Rs 50,000, saying (rightly) that this was the minimum needed for a decent shop. But the MFI regretted that this was beyond its lending limit.

So, don’t get too excited by the fact that we’ve avoided the excessive lending of Wall Street. Bemoan the fact that our stunted financial system fails to reach hundreds of millions. Microfinance has its merits, but is not enough. The big challenge is to move from micro-loans to mini-loans of Rs 50,000 to Rs 2 lakh. These alone can transform poor borrowers from objects of pity to objects of envy.

Original release available here.

This report is part of USAID’s Accelerated Microenterprise Advancement Program (AMAP) Transitions to Private Capital research. It explores the relationship between microfinance and the double bottom line with the objective of understanding how to maximize poverty alleviation as the sector evolves. Chapter One employs a sector development lifecycle model to demonstrate that microfinance is approaching a “convergence point” where commercialization and private capital, invested in existing MFIs and in new market entrants, will influence the adoption of more conventional business management practices and correspondent impacts on poverty alleviation goals. Chapter Two briefly examines three business models that will likely characterize the sector as it evolves: the traditional social enterprise MFI; the “corporate social responsibility” model; and laissez faire, “base of the pyramid” (BoP) businesses. Each model is presented in turn, focusing on their evolution in developed and developing countries as well as in the financial and microfinance sectors. The objective is to understand trends, issues, and challenges each model faces as they could affect microfinance.

The assessment concludes that the predominate social enterprise (SE) MFI will remain significant but will give way to profit-maximizing corporate social responsibility (CSR) and BoP models; models which may have equal if not greater social impacts than the SE model. A survey of MFI poverty reduction objectives supports these observations at the conclusion of Chapter Two. Chapter Three examines important ethical considerations and approaches to poverty alleviation in the context of the approaching “convergence point”. It explores the social impact implications of credit prices, and profits and stake-holder viewpoints. Chapter Four summarizes findings, arguing that donors and sector stakeholders have a critical role in shaping the structure of the sector. A range of actions is called for to support two broad objectives: support the development of market based social performance standards and benchmark expectations; and developing sustainable supporting financial sector infrastructures that encourage better social impacts.

The document is available here.

MIX has released the annual Latin America Microfinance Institution
Championship League, an analysis of the top 100 MFIs by number of active
loans in the Latin America region.

To review the report, click the links below:

Championship League 2008 English

Championship League 2008 Spanish

Championship League 2008 Portuguese

The report, initially published in MicroEnterprise Americas, also ranks
MFIs based on growth, penetration, asset quality, efficiency and
profitability to provide a comprehensive snapshot of MFIs in Latin
America.

This report, and all MIX reports, can be found at www.themix.org

Read the original Press Release here.

HYDERABAD and GENEVA, October 13, 2008 – On 30 September 2008, BlueOrchard Private Equity closed its first equity investment in an Indian microfinance institution (MFI), by investing Rs. 25.00 crore (USD 5.3 million) and taking a minority stake in the fourth largest non-banking financial company of India, Asmitha Microfin Limited. BlueOrchard is thus strengthening its position in the Indian microfinance market.

Asmitha has continuously demonstrated strong high quality growth, while serving the lower income rural population. BlueOrchard’s investment will strengthen Asmitha’s capital base and enhance its borrowing capacity for a continued expansion of its microfinance lending.

Dr. Vidya Sravanthi, Chairperson and Managing Director of Asmitha, said, “it is a great moment for Asmitha, and we are pleased to partner with BlueOrchard, an institution that understands the vision and commitment of our company. We look forward to a challenging future of impacting the microfinance sector in India. While taking initiatives for future growth, Asmitha will continue in the pursuit of achieving highest standards both in operations and systems.”

BlueOrchard, who specializes in commercial asset management in microfinance, chose to partner with Asmitha Microfin Limited in order to support its development in the coming years. BlueOrchard is the first external strategic partner invited by the founders of Asmitha Microfin. The company is presently serving 850,000 clients in thirteen Indian states and has ambitious expansion strategies.

BlueOrchard Private Equity’s Indian strategy is aligned with the fund’s overall objectives: to support MFIs’ leaders in their plans for expansion at national and regional levels through organic growth and acquisition strategies. Consequently, BlueOrchard will invest in promising emerging companies complementing other portfolio investments through additional geographic coverage or different client segments. An additional fund of funds approach further consolidates local presence, market understanding, local co-investment and partnership opportunities.

“We are very proud to have been invited by Asmitha Microfin Ltd. promoters as their first key external stakeholder. We intend to support Asmitha’s growth ambitions both financially and strategically, always keeping in mind the necessary dual returns – social and financial – intrinsic to the very success of microfinance” said Jean-Philippe de Schrevel, CEO of the Private Equity arm of BlueOrchard.

BlueOrchard launched a private equity fund at the end of 2007. With the aim of forging long-term partnerships with MFIs world-wide, the Swiss-based advisory company acquires minority stakes in the MFIs’ capital. It assumes an active governance role within the MFIs by sharing international experience, information, networks, knowledge and by actively participating in the decision-process at board level. Through this approach, BlueOrchard strives to achieve strong tangible social returns along with market economic returns.