MICROCAPITAL STORY: Oikocredit of the Netherlands Invests $7.4m in Eastern Europe, Central Asia and Latin America in January 2008

The Microfinance Capital Markets Newsletter of the Consultative Group to Assist the Poor (CGAP) and the MIX, the microfinance information clearinghouse reported that Oikocredit, a co-operative financial development institution in the Netherlands, issued loans totaling USD 7.4 million in January 2008. Of this total, USD 3.95 million was invested in three microfinance institutions (MFIs) in Eastern and Central Asia: Opportunity Bank, Kompanion, and Microloan Fund (MLF) Microinvest. The remaining USD 3.45 million was invested in three MFIs in Latin America: Prestanic, FONDECO, and MiCrédito.

As reported by a previous MicroCapital story, Oikocredit is a Dutch cooperative investment fund comprised of church groups, social support groups, and individual investors. Established in 1975, it works in 58 countries worldwide, investing in mainly in cooperatives or small and medium-sized enterprises (SMEs) that are involved in agriculture, trade, services and manufacturing projects. According to MIX Market, the microfinance information clearinghouse, it had USD 455.8 million in total assets with 306 active investments, as of year-end 2006. Over 60 percent of Oikocredit’s loans are channeled through microfinance institution (MFI) intermediaries. Its investments have been largely successful, with loan loss of less than ten percent, throughout its 33 years of activity. Currently, the fund has USD 421.2 million available for investment.

Details of Oikocredits’ January investments are as follows:

Opportunity Bank, the leader in Montenegro’s microfinance sector and its only bank with 100 percent foreign capital, received a loan of USD 2.9 million. Established in April 2002 as Opportunity International’s first fully-licensed bank in the region, Opportunity Bank provides financial and advisory services for small and medium-sized enterprises (SMEs), agricultural producers and individual entrepreneurs. Aside from its majority shareholder Opportunity International, a nonprofit organization dedicated to microfinance, Opportunity Bank also has a number of minority private shareholders. According to its 2006 annual report, it had total assets of EUR 139 million (USD million), a loan portfolio of EUR 66.3 million (USD million), a shareholder’s equity of EUR 11.9 million (USD million), and total deposits of EUR 108.7 million (USD million), with a customer base of over 49,000. Opportunity Bank is headed by Chairman Keith Flintham and Chief Executive Officer (CEO) Mark Crawford.

Kompanion, a financial development institution in Kyrgyzstan, received a loan of USD 750,000. Established in 2004, Kompanion was formed from a merger of several micro-credit agencies. Its products include SME loans, women’s solidary group loans, and unsecured microloans. According to MIX Market, at the end of 2006, Kompanion reported total assets of USD 8.4 million, a gross loan portfolio of USD 7 million, debt-to-equity ratio of almost 1000%, return on assets (ROA) of 9.7 percent, and return on equity of 139.3 percent. It also reported a portfolio at risk (PAR) over 30 days of .35 percent with 21,801 active borrowers and 282 personnel. Kompanion is led by Chief Financial Officer Ulanbek Termechikov, and oes not currently report to a third-party performance evaluator.

Microloan Fund (MLF) Microinvest, a Tajikistan-based MFI established in 2002, received a loan of USD 300,000 from Oikocredit during its January round of investments. According to its 2006 year-end report with MIX Market, it had total assets of USD 2.6 million, gross loan portfolio of USD 2.2 million, a debt-to-equity ratio of 201.2 percent, ROA of 6.1 percent, and ROE of 14.2 percent. It also reported PAR over 30 days of .1 percent, with 5,854 active borrowers and 73 personnel. In February 2006, MLF Microinvest received a rating of BBB by Microfinanza Rating. The MFI is currently led by General Director Shoira Sadykova.

In Latin America, Prestanic, a non-governmental organization in Nicaragua, was the recipient of a USD 1 million investment from Oikocredit, who is its largest funder according to the MIX Market. Created in 1991 as an arm of CEPAD (Consejo de Iglesias Evangélicas Pro-Alianza Denominacional), it became independent in 1999 and now operates with 6 branches throughout Nicaragua. In December 2006, MIX Market reported that Prestanic had total assets of USD 13 million, a gross loan portfolio of USD 11 million, debt-to-equity ratio of 315.5 percent, ROA of 4.3 percent, and ROE of 13.3 percent. It also had PAR over 30 days of 2.8 percent, with 9,219 active borrowers and 103 personnel. In 2006, Prestanic received a rating of BBB+ by Microfinanza Rating. It is currently led by CEO Axel De Ville.

FONDECO (Fondo de Desarrollo Comunal), a non-bank MFI established in 1995 in Bolivia, received a loan of USD 1,000,000. FONDECO operates with nineteen branches throughout Bolivia, including a mobile one. Its products include individual and group microloans. According to MIX Market, the microfinance information clearinghouse, as of December 2006, FONDECO had total assets of USD 6.5 million, a gross loan portfolio of USD 5.1 million, debt-to equity ratio of 292.7 percent, ROA of 1.8 percent and ROE of 7 percent. Its PAR over 30 days was 11.4 percent with 6,894 active borrowers and 30 personnel. FONDECO is led by General Director Maria Eugenia Moscoso Moreno. There is no information available on FONDECO’s third-party performance evaluation.

Finally, MiCrédito, a Nicaraguan microbank founded by Mennonite Economic Development Associates (MEDA) in 2004 to target the underserved rural micro-lending market, received an Oikocredit investment of USD 500,000. It currently runs operations with 30 personnel serving 2,500 clients out of four offices throughout Nicaragua. Products include standard credits intended for micro and small commercial businesses, rural credits for farmers and rural businesses, temporary credits for existing clients with good credit standings, and salaried staff credits, offered in agreement with select companies. According to MEDA’s 2006 annual report, it had a total loan portfolio of USD 1.1 million. MiCrédito is led by Chairman Fred Wall and General Manager and CEO Octavo Cortés. It does not currently report to the MIX Market, nor to a third-party performance evaluator.

By Mary Fu

Additional Resources:

Consultative Group to Assist the Poor (CGAP): List of Recent Transactions – January 2008

Oikocredit: About Us

MicroCapital article, February 4, 2008: “Oikocredit of the Netherlands Invests $12.2m in Latin American Microfinance Institutions”

MIX Market: Profile for Oikocredit

Opportunity Bank: 2006 Annual Report

MIX Market: Profile for Kompanions

MIX Market: Profile for MLF Microinvest

MIX Market: Profile for Prestanic

MIX Market: Profile for FONDECO

MiCrédito: About