MICROCAPITAL STORY: Oxfam Novib Lends to ACME, FDL in Early 2008

This story comes courtesy of the Consultative Group to the Poor CGAP), as reported in the January 2008 Microfinance Capital Markets Update, Issue No. 23. Oxfam Novib has made deals to lend USD 440,000 to Association Pour la Cooperation avec la Micro Enterprise (ACME) and USD 1.5 million to Fondo de Desarrollo Local(FDL), two microfinance institutions (MFIs) serving the Latin American and Caribbean (LAC) region. Oxfam Novib is a Dutch philanthropic organization founded in 1956, and is one of twelve members of Oxfam International. As of 2004, Oxfam Novib has dedicated USD 7.8 millionof its total portfolio, USD 28 million, to MFI projects in the LAC region. The fund is managed by Triple Jump Advisory Services.

Founded in 1997, ACME serves low- to middle-income clients in Haiti, and operates on USD 9 million total assets. Oxfam Novib’s mid-sized commitment should provide a <six-percent boost to ACME’s loan portfolio of USD 7 million, which represents 79.06-percent of its total assets. In June 2006 report to the MIX, a microfinance information clearinghouse, ACME demonstrated an 8.15-percent return on assets and a 16.77-percent return on equity. Figures for 2007 show a debt-to-equity ratio of 161.03-percent (The MIX Market, financial data). The organization received a grade A- in rating report (p. 42) completed by the rating agency, MicroFinanza in April 2007. The organization has more than tripled its clientele since 2004 from 6,435 to 16,659 active borrowers in 2007, but the Mix Market reports that ACME has remained consistent in its ability to provide small loans of USD 423 on average.

The USD 1.5 million loan to FDL further confirms Oxfam Novib’s commitment to development in the LAC region. Founded in 1992, FDL is a Nicaraguan microbank that provides small- and medium-sized loans to rural and urban entrepreneurs; according to their MIX Market profile, FDL’s primary concernsare “(i) rural and urban small entrepreneurs from commerce, services and small industry, (ii) small agricultural producers, and (iii) rural and urban legally employed workers.” FDL operates on USD 66.3 million total assets, of which USD 53.3 million, or 80.31-percent, are dedicated to loans to its 71,992 active borrowers. In 2006, FDL reported to The MIX a 4.43-percent return on assets and 24.79-percent return on equity, and a debt-to-equity ratio of 443.83-percent in 2007 (The MIX Market, financial data). The organization received a grade AA- in a rating report(p. 1) completed by the rating agency, MicroFinanzia in April 2006. The Oxfam Novib commitment will promote FDL’s loan portfolio by three-percent. Like ACME, FDL’s base of borrowers has grown rapidly, more than doubling since 2004. Its average loan amount has also increased since that year (though less dramatically) from USD 666 to USD 740 in 2007.

By Priya Rajdev

Additional Resources:

MicroFinanza: =http://www.microfinanzarating.com/

Oxfam Novib: About Oxfam Novib

Triple Jump Advisory Services: About TJAS

MIX profile: ACME

MIX profile: FDL