MICROCAPITAL BRIEF: Overseas Private Investment Corporation (OPIC) Provides $25m Loan to ProCredit Holding to Lend to Micro, Small, and Medium Enterprises (MSMEs)

The Overseas Private Investment Corporation (OPIC), an “independent U.S. government agency” that provides services to facilitate foreign investment to “less developed countries,” has approved a loan of USD 25 million to ProCredit Holding, “a [German] parent company of 22 development-oriented banks” operating in Latin America, Eastern Europe and Africa with a gross loan portfolio of EUR 3.3 billion, the equivalent of over USD 4.9 billion, as of the end of 2008 [1,2,3]. This loan will be used by ProCredit to expand their loan provision to micro, small, and medium enterprises (MSMEs) [1]. MicroCapital reported on a 2005 loan from OPIC to ProCredit worth USD 30 million [4]. OPIC also made a USD 3 million loan to a ProCredit microfinance institution (MFI) in Moldova in 2005, and a USD 5 million loan to ProCredit Bank in Ukraine in the same year [5,6]. OPIC Acting President Dr. Lawrence Spinelli has commented on the importance of the latest loan in terms of allowing ProCredit to “diversify its capital base” [1].

By Christopher Maggio, Research Assistant

About:
Overseas Private Investment Corporation (OPIC)

Description:
OPIC is an “independent U.S. government agency” that supports companies that invest in “less developed countries.” It provides financing through direct loans as well as guarantees, political risk insurance, and investment funds. It currently works in over 150 countries.

OPIC does not report to the MIX Market, the microfinance information clearinghouse:
http://www.mixmarket.org/

Organization’s Website:
http://www.opic.gov/

Just the Facts:
-Country of Incorporation: United States
-Year Founded: 1971
-Legal Status: Independent U.S. Government Agency
-Total Assets: USD 6.2 billion (as of 30/September/08)
-Area of Operation: Global
-Participant(s)/Backer(s)/Investor(s): U.S. Government
-Provides: Direct Loans, Guarantees, Political Risk Insurance, Investment Funds
-Currency: USD
-Acting President: Dr. Lawrence Spinelli

Contact Information:
http://www.opic.gov/about/contact

Additional Resources:
OPIC Annual Report 2008: http://www.opic.gov/sites/default/files/docs/annualreport_2008.pdf

OPIC press release entitled ‘OPIC Board Approves $25 Million to Support Micro and SME Lending’
http://www.opic.gov/news/press-releases/2009/pr112409

Bibliography
[1] OPIC press release entitled ‘OPIC Board Approves $25 Million to Support Micro and SME Lending’:
http://www.opic.gov/news/press-releases/2009/pr112409
[2] OPIC: http://www.opic.gov/
[3] ProCredit Holding: http://www.procredit-holding.com/front_content.php
[4] U.S. Overseas Private Investment Corporation and Citigroup Making $30 Million Microfinance Investment into ProCredit Holding: https://www.microcapital.org/us-overseas-private-investment-corporation-and-citigroup-making-30-million-microfinance-investment-into-procredit-holding/
[5] U.S. State Department 2009 Investment Climate Statement- Moldova: http://www.state.gov/e/eeb/rls/othr/ics/2009/117254.htm
[6] Current OPIC Projects: http://www.opic.gov/projects/current-opic-projects?page=8

Source Article:
OPIC Board Approves $25 Million to Support Micro and SME Lending

WASHINGTON, D.C. – The Board of Directors of the Overseas Private Investment Corporation (OPIC) approved a $25 million loan to a parent company of 22 development-oriented banks. Proceeds of the loan will be used to expand lending to micro and small and medium-sized enterprises (SMEs) at a time when sources of financing have diminished due to the global financial crisis.

The OPIC loan will provide ProCredit Holding (PCH), one of the most successful organizations globally in creating financial institutions that provide finance for micro and small businesses in developing countries, with capital in order to expand their lending.

OPIC has partnered extensively with ProCredit institutions during the last several years, including loans to ProCredit institutions in Ukraine and Moldova. The ProCredit group has performed steadily throughout the global financial crisis.

“This project will provide ProCredit Holding – an important OPIC partner and premier development finance institution – with the ability to strengthen and diversify its capital base that it needs to expand at a time when other potential sources of financing have diminished,” OPIC Acting President Dr. Lawrence Spinelli said. “We are pleased to deepen our partnership with ProCredit Holding at time when capital for micro and SME lending is truly needed.”

PCH was founded in 1998 by Internationale Projekt Consult GmbH, a German consulting company, as an investment company for investing in the network of ProCredit banks. As of the end of 2008, the Group had 814 branches and over 21,000 employees worldwide.

U.S. sponsors of PCH are TIAA-CREF, a national financial services organization and the leading provider of retirement services in the academic, research, medical and cultural fields; and the Omidyar-Tufts Microfinance Fund, which invests in the financial services sector in emerging markets, seeking to demonstrate the viability of commercial investment in microfinance to institutional investors.

http://www.opic.gov/news/press-releases/2009/pr112409

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