MICROCAPITAL BRIEF: Multilateral Investment Fund (MIF) Donates $360k to Fundacion para el Desarrollo Socioeconomico Rural (FUNDESER) of Nicaragua to Support Transition to Regulated Status Under SIBOIF

The Multilateral Investment Fund (MIF), a member of the US-based IDB (Inter-American Development Bank) Group, recently disbursed a grant of USD 362,000 to Nicaraguan nonprofit microfinance organization Fundacion para el Desarrollo Socioeconomico Rural (FUNDESER) to support the microlender in the process of becoming regulated by the country’s Superintendency of Banks and Other Financial Institutions, which is known by the Spanish acronym SIBOIF. Rene Romero Arrechavala, the director of FUNDESER, told MicroCapital that becoming regulated by SIBOIF will allow FUNDESER to offer insurance and to apply to offer deposit services. Mr Romero further explained that the transition has been in process for five years and has also been supported by donations from Belgian microfinance investor Incofin and the International Finance Corporation of the World Bank Group.

The process is to entail investing USD 4 million in a for-profit entity that will takeover FUNDESER’s operations. The investors are to include FUNDESER, which will continue to exist as an NGO; the Rural Impulse Fund II, which is managed by Incofin; ASN-Novib Microcredit Fund, a retail fund investing in microfinance institutions that is managed by Triple Jump of the Netherlands; and KCD Mikrofinanzfonds, a microfinance investment vehicle promoted by Germany’s Bank im Bistum Essen.

Mr Romero added that the improved corporate governance structure associated with regulation by SIBOIF should be attractive international lenders. If successful in its application for regulated status, which is scheduled to be submitted in March 2013, FUNDESER would be able to leverage its equity ten times, potentially making USD 40 million available to the institution. Acceptance of the application is expected within four months of submission. Mr Romero anticipates that FUNDESER will seek to accept deposits beginning in 2015 or 2016.

As of 2011, FUNDESER reports to the US-based Microfinance Information Exchange (MIX) total assets of USD 16.9 million, 25,000 active borrowers, return on assets (ROA) of 0.39 percent and return on equity (ROE) of 6 percent.

By Charlotte Newman, Research Associate

About Fundacion para el Desarrollo Socioeconomico Rural (FUNDESER) Fundación para el Desarrollo Socioeconómico Rural (FUNDESER) is a nongovernmental organization (NGO) in Managua, Nicaragua. FUNDESER began as a credit and training program for small-scale farming producers before being established as an NGO in 2000. It mainly focuses on rural regions of Nicaragua, offering loans for working capital, home improvement and education through 18 branches. The agricultural sector receives 53 percent of loans disbursed by FUNDESER while 36 percent is directed to the trade sector. As of 2011, FUNDESER reports to the US-based Microfinance Information Exchange (MIX) total assets of USD 16.9 million, 25,000 active borrowers, return on assets (ROA) of 0.39 percent and return on equity (ROE) of 6 percent. FUNDESER is in the process of becoming a regulated financial institution as of 2013.

About the Multilateral Investment Fund (MIF)
Multilateral Investment Fund (MIF) is an autonomous fund that was founded in 1993 by the US-based Inter-American Development Bank (IDB). Now a member of the IDB Group, MIF has 39 donating member countries from the Americas, Europe and Asia. Since its inception, MIF reports having approved 1,600 projects in 19 countries, disbursing approximately USD 100 million per year in grants, equity and loans.

About the Inter-American Development Bank (IDB)
The Inter-American Development Bank (IDB) is a US-based multilateral finance institution that was established in 1959 and operates in Latin America and the Caribbean. IDB works with governments, companies and nongovernmental organizations (NGOs) to provide both loans and grants to support small and medium-sized enterprises (SMEs), health, education and other sectors. IDB also provides technical assistance and research in these areas. Its Board of Executives is elected by 48 member countries, 26 of which are located in Latin America and the Caribbean. As of 2011, IDB reported total assets of USD 89 billion. IDB is headquartered in Washington, DC, with offices also in Japan, France and all 26 member countries in Latin America and the Caribbean.

Sources and Additional Resources:

Information given to MicroCapital by FUNDESER.

Multilateral Investment Fund Press Release: “The MIF Contributes to the Expansion of Microfinance Services to Rural Areas in Nicaragua,” http://www5.iadb.org/mif/HOME/News/PressReleases/tabid/467/ArtMID/3819/ArticleID/63/language/en-US/Default.aspx

MicroCapital.org story, December 17, 2012, “MICROCAPITAL BRIEF: Incofin Lends $1m to Fundacion para el Desarrollo Socioeconomico Rural (FUNDESER) of Nicaragua,”
https://www.microcapital.org/microcapital-brief-incofin-lends-1m-to-fundacion-para-el-desarrollo-socioeconomico-rural-fundeser-of-nicaragua/

MicroCapital.org story, November 5, 2012, “MICROCAPITAL BRIEF: Habitat for Humanity, Citi Foundation, Multilateral Investment Fund (MIF) Unveil the Housing Microfinance: Product Development Toolkit,” https://www.microcapital.org/microcapital-brief-habitat-for-humanity-citi-foundation-multilateral-investment-fund-mif-unveil-the-housing-microfinance-product-development-toolkit/

MicroCapital.org story, May 25, 2011, “MICROCAPITAL BRIEF: ‘No Pago’ Movement in Nicaragua Propose to Pay Back Microfinance Debts Over 10 Years, Government Would Repay $25m Upfront,” https://www.microcapital.org/microcapital-brief-members-of-%E2%80%9Cno-pago%E2%80%9D-movement-in-nicaragua-propose-to-pay-back-microfinance-debts-over-10-years-government-would-repay-25m-upfront/

MicroCapital Universe Profile: Fundacion para el Desarrollo Socioeconomico Rural (FUNDESER)
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Fundaci%C3%B3n+para+el+Desarrollo+Socioecon%C3%B3mico+Rural+%28FUNDESER%29

MicroCapital Universe Profile: Multilateral Investment Fund
http://microcapital.org/microfinanceuniverse/tiki-index.php?page=Multilateral+Investment+Fund+%28MIF%29

MicroCapital Universe Profile: Inter-American Development Bank (IDB)
http://microcapital.org/microfinanceuniverse/tiki-index.php?page=Inter-American+Development+Bank+%28IDB%29

MicroCapital Universe Profile: Incofin Rural Impulse Funds (RIFs)
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Incofin+Rural+Impulse+Funds+%28RIFs%29

MicroCapital Universe Profile: Triple Jump
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Triple+Jump

MicroCapital Universe Profile: KCD Mikrofinanzfonds
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=KCD+Mikrofinanzfonds

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