The CDC Group, a development finance institution owned by the UK government’s Department for International Development, has announced that it has invested USD 10 million in the Progression Eastern African Microfinance Equity Fund (PEAMEF), which will support microfinance institutions in Kenya, Rwanda, Tanzania, Uganda and Zambia. PEAMEF may also invest up to a quarter of its capital in other businesses that promote financial inclusion, such as mobile banking, low-cost housing and other support services. The fund aims to reach 500,000 customers across East Africa [1].
Hywel Rees-Jones, the managing director of one of CDC’s investment teams, said, “A well-funded and supported private sector can make a huge difference to development in Africa. With over 80% of adults in sub-Saharan Africa lacking access to formal financial services, we’re confident that our investment can have both a substantial development impact and demonstrate to others investors that the sector has good commercial potential.” [1]
Incorporated in Mauritius, PEAMEF is a limited life investment fund that aims to promote financial inclusion and achieve the development of microfinance institutions and other microfinance intermediaries in East Africa through equity and equity-related investments. PEAMEF is targeting USD 40 million of committed capital. The fund had its first close on December 20, 2011. Other investors include the European Investment Bank (EIB), the Norwegian Microfinance Initiative and German development finance institution KfW Entwicklungsbank [2].
By Kristha Abores, Research Associate
About CDC:
CDC is a development finance institution owned by the UK government’s Department for International Development. Established in 1948 as the Colonial Development Corporation, it later was renamed the Commonwealth Development Corporation and eventually CDC Group. The organization’s public mission is to foster growth in sustainable businesses and to help raise living standards in developing countries. It invests in funds focused on the emerging markets of southern Asia and sub-Saharan Africa. At the end of 2010, CDC’s portfolio was worth GBP 1.93 billion (USD 3.02 billion). In 2010, CDC’s new investments in developing countries amounted to GBP 420 million (USD 656 million).
About Progression Eastern African Microfinance Equity Fund (PEAMEF):
The Progression Eastern African Microfinance Equity Fund (PEAMEF) is a limited life investment fund incorporated in Mauritius. It aims to promote financial inclusion and facilitate the development of microfinance institutions and other microfinance intermediaries in East Africa through equity and equity-related investments. PEAMEF is targeting USD 40 million of committed capital. The fund had its first closing on December 20, 2011. Core investors include the European Investment Bank (EIB), the Norwegian Microfinance Initiative and German development finance institution KfW Entwicklungsbank.
About European Investment Bank (EIB):
The European Investment Bank (EIB) was created in 1958 and now serves as the long-term lending bank of the European Union. In addition to supporting projects in EU member states, its main priorities include financing investments in likely future member states and EU partner countries, principally in the area of small and medium-sized enterprises. In 2010, the EIB approved projects with a total value of USD 110 billion. According to its website, “the EIB operates on a non-profit maximizing basis and lends at close to the cost of borrowing.”
About KfW Bankengruppe (KfW Bank Group):
The KfW Bankengruppe (KfW Bank Group) is a German development bank whose objective is to support economic, social and ecological development worldwide. Owned by the Federal Republic and the Länder (federal states), it offers financial support in the areas of small and medium-sized enterprise, entrepreneurship, environmental protection, housing, infrastructure, education, finance, and development cooperation. In 2010, KfW Bankengruppe invested approximately USD 7.4 billion in the promotion of developing and transition countries.
AboutNorwegian Microfinance Initiative (NMI):
The Norwegian Microfinance Initiative (NMI) is a partnership between the Norwegian public and private sectors that invests in and provides technical support for microfinance institutions (MFIs) in developing countries. The mission of NMI is “to contribute to the empowerment of poor people and to the creation of jobs, wealth, and economic and social sustainability in developing countries by investing in and supporting MFIs.” NMI makes its investments through two investment funds: NMI Global Fund, which supports the expansion of MFIs that already have large and sustainable operations, and NMI Frontier Fund, which supports emerging MFIs in Sub-Saharan Africa and South Asia. NMI’s website claims that its investors have committed NOK 600 million (equivalent to USD 100 million) to the NMI Global Fund and the NMI Frontier Fund as of December 2010.
Sources and Additional Resources:
[1] CDC Press Release: “CDC announces US$40m investment to strengthen African banks and microfinance,” http://www.cdcgroup.com/uploads/130212cdcpressreleaseus40minvestmenttost…
[2] “Progression Eastern African Microfinance Equity Fund,” http://www.nmimicro.no/investments/nmi-frontier-fund/progression-eastern-african-microfinance-equity-fund
MicroCapital.org article, October 28, 2010, “MICROCAPITAL BRIEF: United Kingdom’s CDC Group Invests $10m in Lok Capital II, Private Equity Fund Focused on Microfinance in India,” https://www.microcapital.org/microcapital-brief-united-kingdoms-cdc-group…
MicroCapital.org article, February 2, 2010, “MICROCAPITAL BRIEF: CDC Group Invests $10m in ShoreCap’s SCII Microfinance Fund for Africa and Asia,” https://www.microcapital.org/microcapital-brief-cdc-group-invests-10m-in-…
MicroCapital Universe Profile: CDC Group PLC, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=CDC…
MicroCapital Universe Profile: Progression Eastern African Microfinance Equity Fund (PEAMEF), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Progression+Eastern+African+Microfinance+Equity+Fund+%28PEAMEF%29
MicroCapital Universe Profile: European Investment Bank (EIB), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Eur…
MicroCapital Universe Profile: KfW Bankengruppe (KfW Bank Group), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=KfW…
MicroCapital Universe Profile: Norwegian Microfinance Initiative (NMI), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Norwegian+Microfinance+Initiative+%28NMI%29
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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