MICROCAPITAL.ORG STORY: BRAC, Soros Economic Development Fund (SEDF), Open Society Initiative for West Africa (OSIWA), Omidyar Network and Humanity United Form $15m Microfinance Partnership in Sierra Leone and Liberia

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The Bangladesh Rural Advancement Committee (BRAC), an international non-government organization (NGO), will lead a partnership worth USD 15 million in Sierra Leone and Liberia to provide microfinance, healthcare and agricultural support [1, 2]. The Soros Economic Development Fund (SEDF), Open Society Initiative for West Africa (OSIWA), Omidyar Network and Humanity United are funding this project through a combination of grants and equity [1, 3, 4, 5, 6]. BRAC has opened 20 new microfinance branches since March 2009 in Sierra Leone and Liberia, with the first loan being issued in June, and aims to open 20 more by the end of the year [1]. During the two year pilot program it aims to provide loans to tens of thousands of women in these two West Africa countries [1]. Furthermore the project will provide agricultural supplies, training to farmers and 400 community based health volunteers [1].  

Fazle Hasan Abed, founder and chairperson of BRAC said “despite the many challenges these countries face, Liberia and Sierra Leone are uniquely positioned to become models for successful development in West Africa. We are committed to providing training and resources so that the poor, especially women, can unleash their capabilities as entrepreneurs and improve their livelihoods.” [1]

According to a 2004 United Nations Capital Development Fund (UNCDF) report on microfinance development in Liberia, the demand for credit from micro and small enterprises ranges from 62,000 to 82,000 customers with a combined loan volume of between USD 14 million to USD 19 million [12]. The number of customers reached at this time was 8,200 with a combined loan portfolio of less than USD 250,000 [12]. In January 2009 MicroCapital reported on the first commercial microfinance bank in Liberia to be granted a formal license, Access Bank Liberia (ABL) [11]. ABL aims to have an active client base of 27,000 and Total Assets of USD 38 million by 2013 and to mobilize funding through client savings [11].

Sierra Leone’s microfinance sector is growing, according to MITAF (Microfinance Investment and Technical Assistance Facility), an internationally-backed Sierra Leonean organization that supports the sector’s development. In 2003 it was estimated that of the 90,000 to 160,000 potential microfinance clients in Sierra Leone, fewer than 15,000 had access to financial services [13]. Today, over 40,000 people have access to financial services [13]. This increase can partly be attributed to Sierra Leone’s National Microfinance Policy unveiled in 2003.

BRAC started as a social relief project for victims of the 1970 cyclone and the 1972 Liberation War [2]. It shifted focus to long-term community development and today its largest program is its microfinance operations. It also has a variety of other development programs such as health centers that provide basic health services. At the end of 2008 BRAC had a microfinance loan portfolio of USD 649.4 million and over 6.3 million active borrowers, of which 95 percent are women [8]. This information was made available on the MIX Market, the microfinance information clearinghouse. The latest information available for Total Assets is at the end of 2007 where Total Assets were USD 619.4 million and Return on Assets was 1.46 percent with a Return on Equity of 6.07 percent [8].  For further information on BRAC, the book “Freedom from Want” by Ian Smillie, recently reviewed by MicroCapital, discusses its work in Afghanistan, Pakistan, Sri Lanka, Tanzania, Uganda, the Sudan, Sierra Leone, and Liberia [7].

New York based SEDF is a nonprofit private foundation established in 1997 that works with banks, MFIs, cooperative networks and social enterprise projects to extend financial services to low-income entrepreneurs [3]. Created by George Soros, it is part of a network of charitable foundations. With a traditional focus on Eastern and Central Europe, SEDF has extended its operations to 50 countries throughout Europe, Africa, Asia and Latin America. According to the latest information available, the 2006 Annual Report, SEDF has Total Assets of USD 139.6 million [9]. OSIWA is also part of the Soros Foundation and was established in 2000.  It works in 15 West African nations and supports civil society communities and advocates to governments on issues including governance, law, justice, human rights, public health and media [4]. According to its website, each year OSIWA disburses over USD 10 million in grants and advocacy support, with a particular focus on women and children in marginalized communities.

The Omidyar Network is a philanthropic investment firm established in 2004 by Pierre Omidyar, the founder of eBay, and his wife Pam [5]. It supports nonprofit and for profit projects, including microfinance initiatives, starting with an initial investment of at least USD 1 million. As at 31 December 2007 the Omidyar Network had USD 343 million in Total Assets [5].

Founded in 2005 by Pam Omidyar, Humanity United is an independent grant-making organization, committed to building a world where mass atrocities and modern-day slavery are no longer possible [6]. Originally Humanity United was an independent initiative of Omidyar Network and in July 2008 it was incorporated as a separate legal entity. Humanity United invests in for-profit ventures, non-profit organizations, and public agencies that advance its mission. Financial information was not made available on its website.

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By Sally Levy, Research Assistant

Bibliography:

[1] Soros Economic Development Fund, Press Release, 22 July 2009 “New Partnership Jumpstarts Development in Sierra Leone and Liberia”, http://news.prnewswire.com/DisplayReleaseContent.aspx?ACCT=104&STORY=/www/story/07-22-2009/0005064334&EDATE=

[2] Bangladesh Rural Advancement Committee (BRAC): www.bracusa.org

[3] Soros Economic Development Fund (SEDF): www.sedfny.org

[4] The Open Society Initiative for West Africa (OSIWA): www.osiwa.org

[5] Omidyar Network: www.omidyar.com

[6] Humanity United: www.humanityunited.org

[7] MicroCapital Story, 15 April 2009, “Book Release: “Freedom From Want” by Ian Smillie Pays Homage to the Bangladesh Rural Advancement Committee (BRAC)”, https://www.microcapital.org/microcapital-story-book-release-“freedom-from-want”-by-ian-smillie-pays-homage-to-the-bangladesh-rural-advancement-committee-brac/

[8] MIX Market BRAC: http://www.mixmarket.org/mfi/brac/data

[9] SEDF 2006 Annual Report: http://www.sedfny.org/report/sedf_2006_report.pdf

[10] MIX Market Sierra Leone: http://www.mixmarket.org/mfi/indicators?country[0]=Sierra%20Leone

[11] MicroCapital Story, 27 January 2009, “Central Bank of Liberia (CBL) Grants Formal Banking License to Liberia’s First Commercial Microfinance Institution, Access Bank Liberia (ABL); ABL Starts Issuing Loans to the Public”, https://www.microcapital.org/microcapital-story-central-bank-of-liberia-cbl-grants-formal-banking-license-to-liberias-first-commercial-microfinance-institution-access-bank-liberia-abl-abl-starts-issuing-loans-to-the-publ/

[12] United Nations Capital Development Fund, 31 March 2004, “Microfinance Development in Liberia – an initial assessment  http://www.uncdf.org/english/microfinance/uploads/sector_assessments/UNCDF_liberiaAssessment.pdf

[13] Microfinance Investment and Technical Assistance Facility (MITAF) http://mitaf.esglobal.com/current/sierra_leone.htm

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