MICROCAPITAL BRIEF: Développement International Desjardins (DID) Invests in Microfinance Currency Hedging Company MFX Solutions

Développement International Desjardins (DID), a nonprofit organization based in Canada that provides technical support and investment for development finance in emerging economies, has invested an unspecified amount in US-based MFX Solutions, a company that provides currency hedging solutions for microfinance institutions (MFIs) and microfinance investment vehicles (MIVs) [1]. In the past, DID has engaged MFX Solutions to offer wholesale local-currency loans to DID’s “entrepreneur financial centres” (EFCs), financial institutions that provide services to small entrepreneurs, in Zambia and Tanzania. The arrangement allows DID to place investments denominated in a “hard” currency such as US dollars while the borrowing institutions repay a set amount of local-currency. MFX Solutions transfers the risk of changing currency exchange rates to outside parties. Following this investment in MFX Solutions, DID hopes to allow all future loans to be repaid in set amounts of local-currency.

As of 2013, MFX Solutions reports USD 460 million in hedged transactions with an active portfolio of USD 240 million in swaps and forwards. In addition to DID, MFX Solutions has 31 microfinance funds and foundations supporting its activities.

DID is a subsidiary of Canadian cooperative institution Desjardins Group. As of 2012, DID reports total assets of CAD 31.9 million (USD 30.7 million). As of December 2012, Desjardins Group reported total assets of CAD 197 billion (USD 189 billion).

By Nisha Koul, Research Associate

About MFX Solutions: MFX Solutions is a US-based microfinance currency risk management company that was started by Accion, the Calvert Foundation, MicroRate, Global Partnerships and Calmeadow Foundation in 2008. MFX provides hedging products and risk management education to entrepreneurs in low-income countries. As of 2013, MFX Solutions reports USD 460 million in hedged transactions with an active portfolio of USD 240 million in swaps and forwards. MFX Solutions has 32 microfinance funds and foundations supporting its activities.

About Développement International Desjardins (DID): A subsidiary of Canadian cooperative institution Desjardins Group, Développement International Desjardins (DID) is a nonprofit that provides technical support and investment for development finance in emerging economies. As of 2012, DID reports total assets of CAD 31.9 million (USD 30.7 million). DID coordinates Proxfin, the network constituted of its 29 community finance institutions which are located in 24 nations across four continents. Desjardins Group has assets of CAD 197 billion (USD 189 billion) as of December 2012.

Sources and Additional Resources:

[1] Information provided by Développement International Desjardins (DID) to MicroCapital.

MicroCapital Story, July 15, 2013, “MFX Solutions Launches “Risk Management Initiative in Microfinance (RIM)” for Microfinance Institutions,” https://www.microcapital.org/microcapital-brief-mfx-solutions-launches-risk-management-initiative-in-microfinance-rim-for-microfinance-institutions/

MicroCapital Story, March 21, 2013, “Developpement international Desjardins (DID) Loans $500k to Cambodia Community Savings Federation (CCSF) to Expand Financial Cooperative Sector,” https://www.microcapital.org/microcapital-brief-developpement-international-desjardins-did-loans-500k-to-cambodia-community-savings-federation-ccsf-to-expand-financial-cooperative-sector/

MicroCapital Story, March 1, 2013, “MFX Solutions Releases French Version of Comprehensive Asset/Liability Management (CALM) Tool for Microfinance Institutions,” https://www.microcapital.org/microcapital-brief-mfx-solutions-releases-french-version-of-comprehensive-assetliability-management-calm-tool-for-microfinance-institutions/

MicroCapital Story, September 21, 2012, “Developpement international Desjardins, Desjardins Fund for Inclusive Finance Loan $1.5m to Fundacion para el Desarollo Integral Espoir of Ecuador,” https://www.microcapital.org/microcapital-brief-developpement-international-desjardins-desjardins-fund-for-inclusive-finance-loan-1-5m-to-fundacion-para-el-desarollo-integral-espoir-of-ecuador-2/

MicroCapital Universe Profile, MFX Solutions, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=MFX+Solutions+LLC+%28MFX%29

MicroCapital Universe Profile, Développement International Desjardins (DID), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Developpement+International+Desjardins+%28DID%29

MicroCapital Universe Profile, Desjardins Group, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Desjardins+Group

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