MICROCAPITAL BRIEF: Grameen Foundation, US Agency for International Development (USAID) to Provide $1.5m in Credit Guarantees to Back Local-Currency Loans From Peruvian Credit Union Abaco to Microfinance Institutions (MFIs) Pro Mujer, Asociación Arariwa of Peru

Grameen Foundation, a US-based nonprofit organization that supports microfinance institutions (MFIs), and the United States Agency for International Development (USAID), a government agency that provides international economic and humanitarian assistance, will respectively provide credit guarantees worth USD 300,000 and USD 1.2 million to Cooperative de Ahorro y Credito Abaco, a Peruvian credit union. On the basis of these guarantees, Abaco will provide local-currency loans to two microfinance institutions that operate in Peru: PEN 5.5 million (USD 2 million) for Pro Mujer and PEN 2.75 million (USD 1 million) for Asociación Arariwa.

Pro Mujer Peru is a subsidiary of Pro Mujer, a nonprofit organization administered in the US and Bolivia that provides services in Argentina, Bolivia, Mexico, Nicaragua and Peru. As of December 31, 2010, Pro Mujer Peru reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 18.9 million, a gross loan portfolio of USD 16.6 million, return on assets (ROA) of 4.58 percent, return on equity (ROE) of 7.93 percent and 50,600 active borrowers. Pro Mujer last reported data in 2009, at which time it had USD 70 million in total assets and a gross loan portfolio of approximately USD 50 million.

Asociación Arariwa was established in 1994 as a nongovernmental organization (NGO). As of December 31, 2010, Asociación Arariwa reported to MIX total assets of USD 10.4 million, a gross loan portfolio of USD 8 million, ROA of 2.43 percent, ROE of 6.86 percent and 14,500 active borrowers.

USAID has established the Development Credit Authority (DCA) as a means of using credit guarantees to cover up to 50 percent of loan losses made by financial institutions to poor borrowers. USAID offers a suite of resources aimed at improving the outcomes of microenterprise development research and practice at http://microlinks.kdid.org/.

By Rohan Trivedi, Research Associate

About Grameen Foundation:
The Grameen Foundation, a nonprofit organization based in Washington, DC, aims to help microfinance institutions (MFIs) around the world to replicate the joint liability model that was developed by the Grameen Bank, a Bangladeshi MFI. The Grameen Foundation provides financial, technological and managerial support to provide new business opportunities and telecommunication services for poor people in rural areas. As of March 31, 2011, Grameen Foundation reported total assets of USD 29.7 million.

About the United States Agency for International Development (USAID):
The United States Agency for International Development (USAID) is a government agency that provides international economic and humanitarian assistance. It focuses on areas such as economic growth, agriculture, trade, health, democracy, conflict prevention and humanitarian assistance. Under the Development Credit Authority (DCA), it provides credit guarantees that cover up to 50 percent of defaults on wholesale loans made by private financial institutions to institutions that lend on a retail basis to underserved borrowers. The proposed USAID budget for 2011 is USD 18.8 billion.

About Abaco Cooperativa de Ahorro y Credito:
Abaco Cooperativa de Ahorro y Credito is a nonprofit Peruvian credit union. Abaco offers products and services for personal, business, corporate and institutional clients. Abaco does not report to the US-based nonprofit Microfinance Information Exchange (MIX) and financial information is not available elsewhere.

About Pro Mujer Peru:
Pro Mujer Peru, which has operated in the southern districts of Peru since its establishment in 1999, is a subsidiary of Pro Mujer, a nonprofit organization administered in the US and Bolivia that provides financial and non-financial services in Argentina, Bolivia, Mexico, Nicaragua and Peru. As of December 31, 2010, Pro Mujer Peru reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 18.9 million, a gross loan portfolio of USD 16.6 million, return on assets (ROA) of 4.58 percent, return on equity (ROE) of 7.93 percent and 50,600 active borrowers.

About Pro Mujer:
Pro Mujer is a nonprofit organization that is administered in the US and Bolivia. Pro Mujer was established in 1990 and provides a combination of healthcare and training services in addition to financial services in Argentina, Bolivia, Mexico, Nicaragua and Peru. Both financial and non-financial services are delivered through communal banks, or peer groups, of 20 to 30 women who support each other and guarantee each other’s loans. Pro Mujer last reported data in 2009, at which time it had USD 70 million in total assets and a gross loan portfolio of approximately USD 50 million.

About Asociación Arariwa:
Asociación Arariwa is a Peruvian microfinance institution (MFI) that was established in 1994 as a nongovernmental organization (NGO). Asociación Arariwa offers credit and savings services, as well as business development training and educational programs. As of December 31, 2010, Asociación Arariwa reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 10.4 million, a gross loan portfolio of USD 8 million, return on assets (ROA) of 2.43 percent, return on equity (ROE) of 6.86 percent and 14,500 active borrowers.

Sources and Additional Resources:

[1] Grameen Foundation Press Release: “Grameen Foundation and USAID Providing $3 Million for Peruvian Microfinance Institutions”, http://grameenfoundation.com/press-releases/grameen-foundation-and-usaid-providing-3-million-peruvian-microfinance-institutions

MicroCapital.org story, June 10, 2011; “MICROCAPITAL BRIEF: Peru Passes Tax Exemptions for Credit Unions, Other Cooperatives”, https://www.microcapital.org/microcapital-brief-peru-passes-tax-exemption-for-credit-unions-other-cooperatives/

MicroCapital.org story, May 13, 2010: “MICROCAPITAL BRIEF: Pro Mujer Releases First Issue of Publication on Innovative Microfinance Services”, https://www.microcapital.org/microcapital-brief-pro-mujer-releases-first-issue-of-publication-on-innovative-microfinance-services/

MicroCapital.org story, October 26, 2009: “MICROCAPITAL.ORG STORY: USAID Launches Partnership With Grameen Foundation With $162.5m Credit Guarantee”, https://www.microcapital.org/microcapital-story-usaid-launches-partnership-with-grameen-foundation-with-usd-1625-million-credit-guarantee/

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

MicroCapital Universe Profile United States Agency for International Development (USAID), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=United+States+Agency+for+International+Development+%28USAID%29

MicroCapital Universe Profile: Cooperativa de Ahorro y Credito (ABACO), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Cooperativa+de+Ahorro+y+Credito+%28ABACO%29

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

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

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

Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/

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