MICROCAPITAL BRIEF: BIO, Cordaid, Incofin, KfW Commit $25m to Launch Wholesale Fund for DRC Under Nonprofit Fonds pour l’inclusion financière en République Démocratique Congo (FPM)

The Belgian Investment Company for Developing Countries (BIO), which is owned by the government of Belgium and seeks to support the sustainable development of the private sector; the Catholic Organisation for Relief and Development Aid (Cordaid), a Netherlands-based NGO; Incofin Investment Management (Incofin), a private Belgian company that manages funds investing in microfinance institutions (MFIs) in developing countries; and Kreditanstalt für Wiederaufbau Entwicklungsbank (KfW), a state-owned development bank in Germany, jointly have offered a “capital contribution” of USD 25.1 million for Fonds pour l’inclusion financière en République Démocratique Congo (FPM), a nonprofit in the Democratic Republic of the Congo (DRC). The funding is to be used by FPM to establish a wholesale investment vehicle to promote financial inclusion within DRC via other MFIs, cooperatives and commercial banks serving micro-, small- and medium-sized enterprises (MSMEs). BIO’s share of the commitment is USD 8 million, Cordaid’s share is USD 4 million and KfW offered USD 13 million. The Belgian microfinance fund Incofin cvso, advised by Incofin, contributed USD 100,000. Incofin also will support the new fund in the capacity of fund advisor.

It is anticipated that the fund will provide “medium-term credit lines” for a duration of “over 5 years” to local financial institutions in amounts totaling USD 60 million. The aim is to contribute to “poverty reduction, job creation and sustainable economic development”[1] in the country. The new fund will also benefit from FPM’s pre-existing technical assistance program for Congolese financial institutions.

Ms Doris Köhn, a member of the Management Committee of KfW Development Bank, said that “by supporting FPM we contribute to the strengthening of access to finance in DRC where only about 5 percent of the population has access to financial services, and in particular, MSMEs will benefit. They are an important driver of the local economy and create jobs. This way, broad levels of the population will experience an increase of income”[1]. Ms Laure Wessemius Chibrac, director of investments for Cordaid, added that the “lack of economic opportunities and high unemployment rates are the most critical determinants triggering civil conflict. When entrepreneurs try to expand and grow their businesses, they often lack professional business skills, access to markets, networks, technology and not the least, access to finance. Our purpose is to promote greater resilience and peaceful development in fragile contexts through the stimulation of MSMEs”[1].

As of 2012, FPM reported total assets of USD 6 million and a gross loan portfolio of USD 6 million disbursed to 3,600 MSMEs. As of 2013, BIO reported a portfolio value of EUR 373.9 million (USD 474.3 million) and total new commitments of EUR 124.5 million (USD 158 million). As of 2013, Cordaid’s portfolio was valued at EUR 44 million (USD 56 million). KfW reported total assets of EUR 476 billion (USD 651 billion) as of October 2013. Incofin manages eight facilities with total outstanding investments of EUR 350 million (USD 479 million) as of 2014.

By Alíz Crowley, Research Associate

About Fonds pour l’inclusion financière en République Démocratique Congo (FPM)

Fonds pour l’inclusion financière en République Démocratique Congo is a nonprofit that was established in the Democratic Republic of Congo (DRC) in 2007 and is also known by its English name “Fund for Financial Inclusion in the Democratic Republic of the Congo.” It aims to reduce poverty in DRC by increasing access to financial and technical assistance services for micro-, small and medium-sized enterprises (MSMEs) as well as low-income households. It is funded by German development bank Kreditanstalt für Wiederaufbau (KfW), the United Nations Development Programme (UNDP), the United Nations Capital Development Fund (UNCDF) and the US-based World Bank. As of 2012, FPM reported total assets of USD 6 million and a gross loan portfolio of USD 6 million. In 2012, 76,000 new savers opened accounts with FPM, with 38-percent of those new clients being women. As of 2012, it had funded 3,600 MSMEs. FPM also provided technical assistance to approximately 50 financial institutions in the DRC between 2007 and 2014. Further financial information on FPM is available on the organization’s website in French.

About Belgian Investment Company for Developing Countries (BIO)

The Belgian Investment Company for Developing Countries, also known its Dutch acronym BIO, was established in 2001 by the Belgian government in an effort to promote the creation of a strong private sector in developing countries to enable them to achieve prosperity through sustainable development. As of 2013, BIO’s portfolio included 132 projects. As of 2013, BIO reported a portfolio value of EUR 373.9 million (USD 474.3 million) and total new commitments of EUR 124.5 million (USD 158 million) during 2013.

About Catholic Organisation for Relief and Development Aid (Cordaid)

The Catholic Organization for Relief and Development (Cordaid), is a Netherlands-based nonprofit development organization. Cordaid works in 38 countries in Africa, Asia, and Latin America. As of 2013, Cordaid’s portfolio value was EUR 44 million (USD 56 million).

About Incofin Investment Management

Incofin Investment Management is a private Belgian company that develops and manages funds investing in microfinance institutions (MFIs) in developing countries. It manages eight facilities with total outstanding investments of EUR 350 million (USD 479 million) in approximately 39 countries as of 2014.

About Kreditanstalt für Wiederaufbau Entwicklungsbank (KfW)

Headquartered in Frankfurt am Main, Kreditanstalt für Wiederaufbau Entwicklungsbank (KfW) is a state-owned development bank in Germany. KfW has three goals: to reduce poverty, to make globalization “fair” and to conserve natural resources. KfW collaborates with local financial institutions in approximately 60 countries, including microbanks, commercial banks, village savings banks, non-governmental organizations and regional microfinance funds. KfW made new financing commitments of EUR 1.7 billion (USD 2.3 billion) through the first three fiscal quarters of 2013 and reported total assets of EUR 476 billion (USD 651 billion) as of October 2013.

Sources and Additional Resources

[1] Press Release sent to MicroCapital by Incofin Investment Management

[2] Kreditanstalt für Wiederaufbau Entwicklungsbank (KfW), News, KfW partiticipates in microfinance fund for SME in the Demokratic Republic Kongo

MicroCapital, September 5, 2014, Incofin, Triodos Invest in Microfinance Institution (MFI) Arvand of Tajikistan

MicroCapital, April 8, 2014, KfW, Belgian Investment Company for Developing Countries (BIO), Developpement International Desjardins, Lundin Foundation Commit $41m to AfricInvest Financial Sector Fund

MicroCapital, April 1, 2014, Grameen Credit Agricole Microfinance Foundation (GCAMF) Lends $220k to PAIDEK of the Democratic Republic of Congo, $210k to COOPEC SIFA of Togo

MicroCapital, February 24, 2014, MFX Solutions, Fonds pour l’Inclusion Financière en République Démocratique Congo to Provide Technical Assistance to Banks, Microfinance Institutions (MFIs)

MicroCapital, October 31, 2013, Triple Jump Innovation Fund Attracts $22m to Promote Financial Access in Emerging Markets

MicroCapital Universe Profile: Fonds pour l’inclusion financière en République Démocratique Congo (FPM)

MicroCapital Universe Profile: Belgian Investment Company for Developing Countries (BIO)

MicroCapital Universe Profile: Dutch Catholic Organisation for Relief and Development Aid (Cordaid)

MicroCapital Universe Profile: Incofin Investment Management

MicroCapital Universe Profile: Kreditanstalt für Wiederaufbau Entwicklungsbank (KfW)

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