MICROCAPITAL STORY: International Finance Corporation (IFC), a Member of the World Bank Group, Extends $2.5m Loan to Zhong An Credit, a Chinese Microfinance Institution

In a press release, the IFC, a member of the World Bank Group, announced that they will supply Zhong An Credit, of Shenzhen, China with a USD 2.5 million convertible loan to “grow its business and extend loans to underserved segments of the market, including microentrepreneurs, small businesses, and other small cash-generation activities that find it difficult to obtain access to finance.”

This investment marks the IFC’s first attempt to build a presence in China’s microfinance sector. Microfinance has existed in China for over 10 years, but hasn’t fared well by most standards; at the end of 2006, there were about 300 Microfinance Institutions (MFIs) operating in China, but very few had developed to sustainable levels. The IFC hopes that by getting involved, they can instill a sense of confidence in investors and local banks which will make it easier for MFIs to obtain local funding.

The only information this newspaper could find on Zhong An Credit was supplied by the IFC. According to their website, Zhong An is a microfinance institution headquartered in Shenzhen with operations in Hebei and Sichuan province and is “led by an [unnamed] American investment banker with extensive knowledge of China.”

The IFC, a member of the World Bank Group, was founded with 31 members in 1956 as the first inter-governmental organization with the goal of promoting private enterprise. At of the end of 2005, it had a committed portfolio of 19.3 billion USD and 178 member countries. As reported by MicroCapital in 2007, the IFC recently backed the creation of Microcred Nanchong, a subsidiary of Microcred SA, in the Sichuan Province.

By Jake Keller

Additional Resources:

International Finance Corporation (IFC): Home, press release, Zhong An Credit, 19.3 billion

Inter Press Service: Home, 300

MicroCapital: Microcred Nanchong