The first microfinance conference in Iraq, the Iraq National Microfinance Summit, recently took place in the northern Iraqi city of Arbil. The conference was organized by the IZDIHAR project. Over 100 participants, including local practitioners and government officials, gathered to discuss the current state of the industry. According to Greg Howell, Global Development Alliance Advisor for the U.S. Agency for International Development (USAID) in Iraq, the discussions centered around how donors can contribute to expanding microfinance operations in the country.

Continue reading “Iraq Holds First National Microfinance Summit”

Josée Verner, the Canadian Minister of International Co-operation, recently promised $5 million in startup funds for a microfinance project named “Integrating Women into Markets”. In it, members will form local credit co-operatives that allow them to grow and sell garden produce to repay microloans. According to one news release, the four-year initiative will reach approximately 1,500 women. A non-profit group called Mennonite Economic Development Associates (MEDA) was appointed to manage the project.

Continue reading “Canada’s Minister of International Co-operation Announces $5 Million for Afghanistan Microfinance Project”

Since the Baath Party government fell in 2003, Iraq’s economy has been in turmoil. One of the key problems that has plagued the country in recent years is unemployment resulting from the change in government as well as the near-civil war conditions raging on the ground.

One of the ways in which outsiders, including international NGOs and the US government, have tried to help the recovery and fix the problem of high unemployment is by assisting in the creation of local microfinance institutions. Prior to the US invasion, no microfinance activity existed in Iraq, outside of local moneylenders and rotating credit organizations. The large state-owned banks required collateral for loans, thereby excluding 95% of Iraqis from the financial system. In 2003, the Coalition Provisional Authority (CPA) provided a $10 million grant to the development of microfinance programs. This money was managed by ACDI/VOCA, a Washington-based NGO which provides technical assistance to microfinance institutions (MFIs). According to the United Nations Capital development Fund (UNCDF), the majority of the funds were used up by March 2004. By May, the CPA allocated another $10 million to developing microfinance and in the south of the country. There is very little public information as to how this money was disbursed.

Continue reading “Iraq’s Microfinance Sector: A Survey”

The CGAP/MIX Microfinance Capital Markets Update (MCM) reported that the Afghani operation of Bangladesh Rural Advancement Committee (BRAC), a microfinance institution (MFI), has recently received an influx of capital through the sale of USD 2 million in equity. ShoreCap International and the Triodos-Doen each invested USD 1 million in the institution.

Continue reading “ShoreCap International and Triodos-Doen Invest USD2 Million in Microfinance Institution BRAC Afghanistan”

Bangladesh Rural Advancement Committee (BRAC), one of the large Bangladeshi microfinance institutions (MFIs), recently revealed that it will soon pursue operations in Pakistan. The announcement came after the Prime Minister of Pakistan, Shaukat Aziz, said that the government would like to encourage the expansion of microfinance services to 10% of the country’s population. The MFI recently applied for a license in the country and is expecting to hear back soon. Last year, Pakistan’s Finance Advisor, Dr. Salman Shah, visited BRAC operations in Bangladesh with a party of other high ranking Pakistani officials to learn more about the field.

Continue reading “Bangladesh’s BRAC to Extend Operations into Pakistan”

The Microfund for Women received a $500,000 loan from the Triodos-Doen Foundation. The Microfund for Women began as a pilot lending program initiated through Save the Children in 1994. It is now a leading microfinance institution in Jordan, with a gross loan portfolio of over $5 million serving over 17,000 active borrowers. At year end 2005, total assets totaled $7 million, with a return of 10.37%. Total equity was $5.3 million, with a debt to equity ratio of 31.41%.

Continue reading “Triodos-Doen Foundation Provides $500,000 in Microfinance Investment to Jordan’s Microfund for Women”

The U.S. Agency for International Development (USAID) has granted $250,000 in start-up capital for a microfinance institution (MFI) established by IZDIHAR, a three-year, USAID-funded private sector development project in Iraq. This initial capital base will be used to disburse loans of up to $5,000 to Iraqis in communities suffering high unemployment after the dismantling of the former Iraqi army as well as women and other underprivileged groups. Civilian Military Operations officers from the Multi-National Force åö Iraq will also provide support and training for the new MFI. MicroCapital recently reported on USAID’s embrace of microfinance in Iraq to rebuild the nation’s economy.

Continue reading “U.S. Agency for International Development’s IZDIHAR Project Grants $250,000 for a New Microfinance Institution in Iraq”

The European Investment Bank (EIB) will provide a long-term loan of 1,250,000 Tunisian dinars (close to USD $950,000) to Enda Inter-Arabe, a Tunisian-based microfinance institution (MFI). The loan falls under EIB’s Facility for Euro-Mediterranean Investment and Partnership (FEMIP), an umbrella for EIB’s operations in the Mediterranean region since 2002, and may be accompanied by technical assistance.

Continue reading “European Investment Bank Expands Microfinance Investment in Tunisia with $950,000 Loan to Enda Inter-Arabe”

BankMuscat SAOG of Oman will receive an International Finance Corporation (IFC) long-term subordinated loan of $100 million, the largest investment by the IFC in the Middle East and North Africa region. The loan will bolster BankMuscat’s long-term mortgage financing as well as its small- and medium- enterprise (SME) portfolio.

Continue reading “International Finance Corporation Makes Its Largest Ever Investment in the Middle East and North Africa with $100 Million Loan to BankMuscat of Oman”

In the wake of the regime change in Iraq, USAID has taken the initiative in establishing microcredit programs through Iraqi banks and lenders to bolster the infant economy. Banking reforms on the whole have been successful in Iraq thus far, and microfinance schemes are seen as a necessary component to support the small businesses that will emerge to shrink the country’s unemployment problem.
Continue reading “Microfinance Investments Seen as a Cornerstone in the Rebuilding of Iraq- USAID Laying the Foundations for Growth”

Impulse Microfinance Fund, a US$15,413,875 microfinance investment fund managed by Incofin was founded in 2004 by Incofin and four Belgian institutional investors. The fund strives to strengthen financial markets in developing countries and achieve a “double bottom line” of financial and social returns on its investments. The fund recently extended five new loans to microfinance institutions around the world.
Continue reading “Impulse Microfinance Fund Makes New Loans to Microfinance Bank of Azerbaijan, FAMA Nicaragua, CRECER Bolivia, PADME Benin, and PRASAC Cambodia”

Kfw, a German development bank established in 1948 to support small and medium-sized enterprises (SMEs) and start-ups is providing a $5 million loan to the Microfinance Bank of Azerbaijan (MFBA). Kfw, one of the ten largest banks in Germany and a historically strong partner to the microfinance industry, had å¥341 billion in total assets at the close of 2005. Recently, the group participated in a å¥30 million equity financing with the World Bank that established the Southeast Europe Microfinance Fund. See the January 10, 2006 blog for more information on this deal.

MFBA was established in 2002 by four shareholders: European Bank for Reconstruction and Development (EBRD), International Finance Corporation (IFC), Black Sea Trade and Development Bank (BSTDB) and LFS Financial Systems GmbH (LFS). In December of 2004, KfW became the fifth shareholder. Based upon information released earlier this month, MFBA enjoyed a strong financial performance in 2005. Since inception, the organization has disbursed 18,825 loans, with 9,608 loans disbursed in 2005 alone. Also, MFBA’s credit portfolio nearly tripled in 2005 and reached $17.5 million, 169% greater than portfolio indicators for January 01, 2005. The Bank’s assets grew substantially in 2005, reaching $22.4 million – up from $9.3 million in 2004.

Continue reading “German Development Bank KFW makes $5 Million Microfinance Investment in Microfinance Bank of Azerbaijan”

Established in 2002 by the European Bank for Reconstruction and Development (EBRD), International Finance Corporation (IFC), Black Sea Trade and Development Bank, and German LFS Financial Systems GmbH, AMFB provides financial services to micro and small business within the country. The bank’s typical microloans are between $400 and $10,000 for a maximum of 9 months. In June 2005, the Azerbaijan Microfinance Association reported that AMFB had a total loan portfolio of more than $11.4 million. It is the only one of the 45 commercial banks in Azerbaijan that focuses on microfinance services. AMFB does not report to the MIX Market, the World Bank’s microfinance information clearinghouse. Further information about their performance is not publicly available.

Established in 1992, Incofin invests in MFIs in 14 countries, and in mid-2005 had total assets of $5.6 million. The duration of Incofin’s loans, which are between $120,000 and $600,000, is five years, and the terms offered are “LIBOR plus full cost plus full risk”. At the end of 2004, Incofin, along with KBC, Boerenbond, VDK Spaarbank, Volksvermogen (Belgian institutional investors) set up the Impulse Microfinance Investment Fund, which had initial capital of å¥5 million. By mid-2005, the fund’s assets were worth $15,413,875. The fund invests between $300,000 and $1.5 million in MFIs, and offers the same terms as Incofin.

MIX Market has released a report highlighting 2004 benchmarks on the performance of retail microfinance providers. The study evaluates over 300 institutions from around the world. Some key highlights from this robust data set include:

- MFI growth is significant: Globally, growth in borrowers increased by 30% in 2004. In South Asia and the Middle East åö growth in borrowers was even stronger, topping off at 50%.

- Profitable institutions reach more people. Overall profitable MFIs add 25% more borrowers than their unprofitable counterparts. Profitable MFIs cover much more ground åö “the 70% of MFIs earning 2004 profits reach well over 90% of total borrowers.”

- Scale and employee productivity help MFIs cut transaction costs and increase profitability. For example, as MFIs grow from 10,000 to 30,000 clients, cost per borrower plummets from 130 to 65 USD per borrower.

“These benchmarks draw on the largest benchmarking data set ever compiled by the MIX, with 302 institutions covering the diversity of institutional types within the sector and their various stages of development.”

For the full report, head to www.mixmarket.org and scroll to the bottom of the page to access data files.

Source

“MIX Market 2004 Benchmarks,” www.mixmarket.org, February 3, 2006

Swiss-based ResponsAbility Global Microfinance Fund was founded in 2003 by Swiss financial institutions Credit Suisse, which is also the fund manager, Raiffeisen Banking Group, Baumann & Cie Banquiers, and the Andromeda Fund. Investment advisory services to the ResponsAbility Fund are provided by: Alterfin, BlueOrchard Finance, IPC/ProCredit Holding, FINCA International, Symbiotics, Opportunity International, and PlaNet Finance. ResponsAbility loans between $50,000 and $1.5 million to MFIs for a maximum of 5 years at a rate equal to “LIBOR plus full cost plus full risk.” The Fund’s total assets amounted to just over $40 million as of November 30th 2005 with close to $37 million allocated to microfinance investments. For further information on some of ResponsAbility’s past investments please refer to our November 1^st blog.
ResponsAbility made a å¥1.4 million equity investment into German-based international development holding company ProCredit Holding. Established in 1998 as the leader and main shareholder of the ProCredit Group, which consists of 19 microbanks with microcredit programs in different countries, ProCredit Holding controls its subsidiaries closely, their website stressing investment in training and professional development. The ProCredit group had approximately å¥1.9 billion in total assets and a total loan portfolio of å¥1.3 billion as of October 2005. To date, the 19 microbanks have made about 526,000 loans to microentrepreneurs and small businesses, approximately 90% of which are under å¥10,000 and about 50% of which are below å¥1,000. ProCredit Holding reports its Return on Average Assets as of December 2004 2.4% and its Return on Average Equity as 19.5 %.
ResponsAbility also made the following debt investments in microfinance institutions (MFIs):
Continue reading “ResponsAbility Global Microfinance Fund Investing More than $7m in 11 Microfinance Institutions in Jordan, Benin, Ecuador, Nicaragua, Bosnia and Herzegovina, and Peru”

The Swaziland Development Finance Corporation (FINCORP), formerly known as the Enterprise Trust Fund, received a $3 million loan from the Organization of Petroleum Exporting Countries (OPEC) Fund in September. Microfinance institution (MFI) FINCORP, which was founded by the government in 1995, provides “individual loans along with wholesale lending.” In April 2004, FINCORP had a gross loan portfolio of approximately $15.17 million and total assets of about $15.62 million.

FINCORP’s recent investor, the OPEC Fund, is an “intergovernmental development finance institution” headquartered in Vienna, Austria. In 2004, the OPEC Fund had $528.624 million in committed investment and $287.722 million in disbursed investments to the private and public sectors. Typically, these monies are directed to public and private sector project and program financing, technical assistance, and research—among other areas. Since the fund’s inception in 1976 by OPEC’s member states, the OPEC Fund’s cumulative total committed investments stand at $7.474 billion and total disbursed investments stand at $4.925 billion, as of the end of 2004.

Additional Resources
1) Consultative Group to Assist the Poor (CGAP): “Microfinance Capital Markets Update” is the best source for monthly updates on debt and equity deals in microfinance.
2) “Investment: Swaziland Development Finance Corporation.”
3) MIX Market: “FINCORP: Financial Data.”
4) “OPEC Fund for International Development.”
5) “OPEC Fund Headquarters.”
6) “The OPEC Fund for International Development: Annual Report 2004.”
7) “OPEC Fund at a Glance.”