Source: Inter-American Development Bank.
Original press release available online.
AREQUIPA, Peru, September 30 – The Inter-American Development Bank’s Multilateral Investment Fund (MIF), the U.S. government’s Overseas Private Investment Corporation (OPIC), the Inter-American Investment Corporation (IIC), the Corporación Andina de Fomento (CAF), the Swiss microfinance investment management company BlueOrchard Finance S.A., and international investors today signed an agreement to establish the Microenterprise Growth Facility, a new source of lending intended to provide up to $250 million in financing to microfinance institutions in Latin America and the Caribbean.
The Microenterprise Growth Facility (MIGROF) seeks to rebuild the lending capacity of microfinance institutions in the region, responding to the contraction in sources of funding caused by the global financial crisis.
U.S. President Barack Obama announced the initiative last April, at the Fifth Summit of the Americas in Port of Spain, Trinidad, saying that OPIC and the IDB would partner to launch a new source of funding for microfinance institutions in response to the reduction in their lending capacity due to the global credit crisis.
Following the memorandum of understanding signed today at the Microenterprise Forum, and pending approval by its Board of Directors, OPIC will provide a loan of up to $125 million to the new facility. Proceeds of the OPIC loan, along with equity contributions from the other partners, will be used to make loans to microfinance institutions in Latin America, and they, in turn, will be able to expand their lending activity to thousands of microenterprises throughout the region.
MIGROF intends to offer medium- and long-term financing both in local currency and in U.S. dollars, targeting 35 percent of the total financing to be provided in local currencies. It is expected to begin its lending activity in early 2010.
The IDB, through the MIF, took a leading role in structuring the new facility, committing a $10 million equity investment. The MIF and the IIC also worked on defining the lending strategy and conducted the competitive process by which Blue Orchard, the world’s largest fund manager specializing in microfinance, was selected to manage the new facility. The IIC may also participate in MIGROF.
IDB President Luis Alberto Moreno signed the agreement on behalf of MIF and the IIC. Alexis Ludwig, political counselor of the U.S. Embassy in Lima, signed on behalf of OPIC. Other signing partners include ACCION International, Corporación Andina de Fomento (CAF), FONIDI S.E.C/Gestion Fonidi inc. (of Canada’s Developpement International Desjardins), Norwegian Microfinance Initiative Global Fund KS, and the Dutch development agency FMO (Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V.).
“Microfinance in Latin America and the Caribbean has achieved a great deal, especially over the last decade”, said Moreno. “However, we need to remember that approximately 60 million microentrepreneurs in this region remain without access to finance. This new facility will allow microfinance institutions to recapture their capacity to lend, and provide an engine of growth for the region as they reach out to this unserved population”.
“Microfinance’s rapid growth has been interrupted by the global financial crisis, slowing lending activity and putting portfolios at risk,” said OPIC Acting President Dr. Lawrence Spinelli. “As economic recovery takes hold, MFIs’ portfolio growth is expected to resume – and this new source of finance will support that growth throughout Latin America. OPIC is extremely pleased to partner with the IDB and the fund’s co-sponsors to support President Obama’s announcement.”
“Strong microfinance institutions play a critical role in helping attack poverty and inequality while boosting job creation,” said U.S. Secretary of the Treasury Timothy Geithner. “I commend the work of OPIC and the IDB in establishing the Microfinance Growth Facility that President Obama announced at the Summit of the Americas in April. As economic recovery takes hold, this source of financing will help empower small entrepreneurs across the region.”
Similar Posts:
- MICROCAPITAL BRIEF: OPEC Fund Donating $1m to UNCDF to Boost Energy Access, Reduce Emissions, Starting in Madagascar, Tanzania
- MICROCAPITAL BRIEF: Access Bank Botswana Borrows $20m from OPEC Fund for MSMEs, 30% Earmarked for Women
- MICROFINANCE PAPER WRAP-UP: “Sustainable Finance in the MENA Region;” by Natalia Realpe Carrillo, Alexander Reviakin; Published by Sanad Fund for MSME Technical Assistance Facility, HEDERA Sustainable Solutions
- MICROCAPITAL BRIEF: MSMEs in Amazon to Access $900m Loan Pool from IDB, BNDES of Brazil
- MICROCAPITAL BRIEF: OPEC Fund Lending $22m to Raiffeisen Bank for SMEs in Albania
