MICROCAPITAL BRIEF: International Finance Corporation (IFC) Capitalization Fund, Africa Capitalization Fund (ACF) to Invest $10m in NBS Bank of Malawi for Lending to Small and Medium-Sized Enterprises (SMEs)

The International Finance Corporation (IFC), the private-investment arm of the World Bank Group, has announced that two of the funds it manages, the IFC Capitalization Fund and the Africa Capitalization Fund, will invest a total of USD 10 million in equity in Malawian commercial bank NBS Bank (formerly the New Building Society).

NBS Bank, which is  listed on the Malawi Stock Exchange, plans to deploy the funding to expand its capital base and enter new agricultural markets. According to Felix Mlusu, chairman of NBS Bank, the funding will be used to “develop innovative products for agribusiness and small and medium size portfolio borrowers.”

NBS Bank is a public company that is listed on the Malawi Stock Exchange. As of December 31, 2010, NBS Bank reported total assets worth the equivalent of USD 245 million.

The IFC Capitalization Fund was established in 2009 with funding from IFC and the Japanese government. With USD 3 billion of contributed capital, the Fund is intended to support banks in developing countries, with an emphasis on those institutions that have been significantly affected by the financial downturn that began in 2007. The Africa Capitalization Fund is a USD 600 million investment fund that was established by five institutional donors in 2010 to support and strengthen the banking sectors of African countries. Both funds are managed by the IFC Asset Management Company, which is a wholly-owned subsidiary of IFC.

By Rohan Trivedi, Research Associate

About NBS Bank:
NBS Bank is a commercial bank in Malawi that was formerly known as the New Building Society. NBS Bank offers deposit products, credit facilities, trade finance and other services through 31 branches and agencies across the country. NBS Bank is listed on the Malawi Stock Exchange. As of December 31, 2010, NBS Bank reported total assets worth the equivalent of USD 245 million.

About the International Finance Corporation (IFC):
A member of the World Bank Group, the International Finance Corporation (IFC) offers loans, equity investments, advisory services and technical assistance to private companies with the intent of alleviating poverty and promoting open and competitive markets in developing countries. As of 2011, IFC has 182 member countries that drive its policies and approve disbursements. As of June 30, 2010, IFC reports net income of USD 1.75 billion, total assets of USD 61 billion, return on assets of 3.1 percent and total investment mobilization of USD 18.4 billion to 528 projects.

About the International Finance Corporation (IFC) Capitalization Fund:
Founded in February 2009, the USD 3 billion IFC Capitalization Fund is a global equity and subordinated debt fund that aims to speed up economic recovery and boost job creation while reducing the impact of the financial downturn that began in 2007, by supporting banks considered vital to the financial markets of individual developing countries. IFC has contributed USD 1 billion for the IFC Capitalization Fund, while the Japanese government has invested USD 2 billion. IFC estimates that the fund will have a total leveraged impact of around USD 75 billion as others co-invest with the fund. The fund is managed by the IFC Asset Management Company, which is a wholly-owned subsidiary of the IFC.

About the Africa Capitalization Fund (ACF):
The Africa Capitalization Fund (ACF) is a USD 600 million fund that was established in 2010 to support and strengthen the banking sectors of African countries. ACF was launched and capitalized by five institutions: the African Development Bank (AfDB); the European Investment Bank (EIB); the International Finance Corporation (IFC); the OPEC Investment and Development Fund; and the Abu Dhabi Development Fund (ADDF). The fund is managed by the IFC Asset Management Company, which is a wholly-owned subsidiary of the IFC.

Sources and Additional Resources:

[1] IFC Press Release: “IFC Capitalization Fund and Africa Capitalization Fund Invest in NBS Bank to Support Malawi’s SME, Agriculture Sectors”, http://www.ifc.org/ifcext/media.nsf/content/SelectedPressRelease?OpenDocument&UNID=75BB778344966EC0852578E700510D06

MicroCapital.org story, March 13, 2011: “MICROCAPITAL BRIEF: International Finance Corporation (IFC) Reports Village Phone Program Has Provided Credit to 6,000 Women, Trained 10,000 in Madagascar, Malawi, Nigeria”, https://www.microcapital.org/microcapital-brief-international-finance-corporation-ifc-reports-village-phone-program-has-provided-credit-to-6000-women-trained-10000-in-madagascar-malawi-and-nigeria/

MicroCapital.org story, June 30, 2010: “MICROCAPITAL BRIEF: International Finance Corporation (IFC) and IFC Capitalization Fund Agree to Invest $140m in Bank South Pacific (BSP) of Papua New Guinea to Extend Financial Services in Pacific Islands”, https://www.microcapital.org/microcapital-brief-international-finance-corporation-ifc-and-ifc-capitalization-fund-agree-to-invest-140m-in-bank-south-pacific-bsp-of-papua-new-guinea-to-extend-financial-services-in-pacific-is/

MicroCapital.org story, June 19, 2010: “MICROCAPITAL BRIEF: African Development Bank, Four Other International Finance Institutions Launch $600m African Capitalization Fund”, https://www.microcapital.org/microcapital-brief-african-development-bank-four-other-international-finance-institutions-launch-600m-african-capitalization-fund/

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

MicroCapital Universe Profile: International Finance Corporation (IFC), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=International+Finance+Corporation+%28IFC%29

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

MicroCapital Universe Profile: Africa Capitalization Fund (ACF), https://www.microcapital.org/microfinanceunivese/tiki-index.php?page=Africa+Capitalization+Fund+%28ACF%29

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

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