MICROCAPITAL BRIEF: International Finance Corporation (IFC) Signs Deals with AB Bank Rwanda, IHS Holding of Nigeria, Urwego Opportunity Bank of Rwanda to Expand Microfinance, Telecommunications

The International Finance Corporation (IFC), the private-investment arm of the World Bank Group, reportedly has signed deals with AB Bank Rwanda (ABR), a microfinance bank (MFB) affiliated with Access Microfinance Holding of Germany; IHS Holding Limited, a mobile services infrastructure company based in Nigeria that operates in five African countries; and Urwego Opportunity Bank (UOB), a foreign-owned Rwandan MFB, in an effort to increase access to telecommunications and financial opportunities in Rwanda.

In exchange for an undisclosed equity stake in ABR, IFC has invested RWF 1.7 billion (USD 2.5 million), which the bank intends to use to reach its goal of serving 25,000 clients from micro-, small and medium-sized enterprises (MSMEs) by 2019. This deal between IFC and ABR is separate from the deal between the two companies that MicroCapital reported on in April 2014, in which IFC committed USD 300,000 to support ABR. ABR was founded in 2013.

In a separate deal, IFC invested RWF 1.6 billion (USD 2.4 million) in UOB in exchange for an undisclosed amount of equity. The MFB is expected to use the funds to expand financing options for farmers, female entrepreneurs and start-up businesses in Rwanda. IFC also finalized a USD 25 million loan to IHS to expand its telecommunications infrastructure in Rwanda.

As of the end of its 2013 fiscal year, IFC reported total assets of USD 77.5 billion. As of 2014, ABR reported total assets of EUR 3.5 million (USD 4.8 million), a gross loan portfolio of EUR 694,000 (USD 946,000), 680 active borrowers and EUR 75,000 (USD 102,000) in 2,100 deposit accounts. As of the same year, UOB reported total assets of USD 22 million, a gross loan portfolio of USD 14.1 million and 39,300 active borrowers. As of 2012, IHS reported total assets of NGN 42.6 billion (USD 262 million) [2].

By Benjamin Krupp, Research Associate

About International Finance Corporation (IFC)

The International Finance Corporation (IFC), a US-based multilateral development bank and member of the World Bank Group, 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. The IFC has 184 member countries and reported total assets of USD 77.5 billion as of fiscal year-end 2013.

About AB Bank Rwanda

AB Bank Rwanda was established in July 2013 by AccessBank Microfinance Holding (AccessHolding), a German company that invests in microfinance institutions; the International Finance Corporation (IFC), the private investment arm of the World Bank Group; Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden NV (FMO), a Dutch development bank that aims to promote growth in the economies of developing countries; and Kreditanstalt für Wiederaufbau Entwicklungsbank (KfW), a state-owned German development bank. IFC, FMO and KfW each own 16.5 percent of the bank’s shares, and AccessHolding owns the remaining 50.5 percent. In December 2013, the National Bank of Rwanda granted the bank license to operate as a microfinance bank (MFB). As of 2014, AB Bank Rwanda reported total assets of EUR 3.5 million (USD 4.8 million), a gross loan portfolio of EUR 694,000 (USD 946,000), 680 active borrowers and deposits of EUR 75,000 (102,000 USD) in 2,100 accounts.

About Urwego Opportunity Bank

The Urwego Opportunity Bank is a microfinance institution that was created as a result of a merger between Urwego Community Banking and Opportunity International Bank of Rwanda. Its services include loan and savings products, business training and insurance coverage. OUB’s shareholders include NGO World Relief Canada and the following three US-based NGOs: Hope International, Opportunity International and World Relief. As of March 2014, UOB reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 22 million, a gross loan portfolio of USD 14.1 million, 39,300 active borrowers, deposits of USD 12.8 million, 258,000 depositors, return on assets (ROA) of -4.50 percent and return on equity (ROE) of -17.58 percent.

About Access Microfinance Holding AG (AccessHolding)

Access Microfinance Holding AG (AccessHolding) is a commercial microfinance holding company that was established in 2006 in Germany by LFS Financial Systems GmbH (LFS). It invests in microfinance institutions (MFIs) and as of December 2012, Access owns a controlling share in six financial institutions. AccessHolding aims to develop its investments through equity finance, holding services, and management services rendered by LFS, which acts as its technical partner. AccessHolding establishes new MFIs together with external partners and transforms existing non-bank microlending institutions into microfinance banks that offer a wider range of services such as deposits. AccessHolding is a joint-stock company with committed capital of EUR 26.4 million (USD 37 million). As of December 2012, AccessHolding has investments in AccesBanque Madagascar (55.2-percent share); AccessBank Azerbaijan (16.5-percent share); AccessBank Tanzania (52.7-percent share); AB Microfinance Bank Nigeria Limited (50.1-percent share); AccessBank Liberia (55.6-percent share); and AccessBank Tajikistan (52-percent share). As of 2014, AccessHolding Group assets were reported at EUR 984 million (USD 1.33 billion).

Sources and Additional Resources

[1] International Finance Corporation: IFC expands support to capital markets, access to finance and telecommunications in Rwanda

[2] IHS Holding Limited: Annual Report 2012

MicroCapital, April 16, 2014: International Finance Corporation (IFC) Commits Support Worth $300k to Back Newly Licensed AB Bank Rwanda, 8th Member of Access Microfinance Holding

MicroCapital, December 18, 2013: Urwego Opportunity Bank of Rwanda Receives $514k from Development Bank of Austria, “Partnership for Financial Inclusion” of International Finance Corporation (IFC), MasterCard Foundation

MicroCapital, May 9, 2011: responsAbility Social Investments of Switzerland Loans $2m to Middle East Micro Credit Company (MEMCC) of Jordan, Urwego Opportunity Bank (UOB) of Rwanda

MicroCapital Universe Profile: International Finance Corporation (IFC)

MicroCapital Universe Profile: AB Bank Rwanda

MicroCapital Universe Profile: Urwego Opportunity Bank

MicroCapital Universe Profile: Access Microfinance Holding AG (AccessHolding)

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