The Multilateral Investment Fund (MIF), a member of the US-based Inter-American Development Bank (IDB) Group, recently announced it will lend USD 4.9 million to US-based Root Capital, provides capital, financial education and market connections to small and growing businesses in Latin America and Africa [1]. As of March 31, 2011, Root Capital reported total assets of USD 63 million, a gross loan portfolio of USD 47.5 million that has been disbursed to 105,000 small agricultural enterprises.
MIF will also lend a total of USD 2 million through IDB’s Social Entrepreneurship Program to two microfinance institutions (MFIs): USD 1 million to Fundación Integral para el Desarrollo del Pacífico Central (FIDERPAC) of Costa Rica and USD 1 million to Asociación de Desarrollo Integral Rural in Guatemala (ASDIR in Spanish). FIDERPAC provides loans, training and technical assistance to rural families. As of 2010, it reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 4.2 million, a gross loan portfolio of USD 3.8 million, approximately 3,500 borrowers, return on assets (ROA) of 4.12 percent and return on equity (ROE) of 9.99 percent. ASDIR aims to facilitate access to financial products and business development services in rural communities in Guatemala’s western region. As of 2010, it reported to MIX total assets of USD 6.1 million, a gross loan portfolio of USD 5.2 million, approximately 5,900 borrowers, ROA of 1.44 percent and ROE of 7.52 percent.
MIF also announced an equity investment of USD 7 million in CoreCo Central America I Fund, which provides financing to small and medium-sized enterprises (SMEs) in Central America with the goal of stimulating the growth of venture capital industry and the regional private sector in general.
With the aim to improve access to credit for SMEs in Latin America and the Caribbean, MIF also signed a contract to introduce a new tool of financial risk assessment to four unnamed financial institutions in the region. The tool, known as psychometric testing, evaluates an entrepreneur’s personal qualities such as honesty and intelligence to gauge ability and willingness to service debt. MicroCapital anticipates that use of this testing will cause some observers to cry foul.
By Nisha Koul, Research Associate
About Inter-American Development Bank (IDB): The Inter-American Development Bank (IDB) is a US-based multilateral finance institution that was established in 1959 and operates in Latin America and the Caribbean. IDB works with governments, companies and nongovernmental organizations (NGOs) to provide both loans and grants to support small and medium-sized enterprises (SMEs), health, education and other sectors. IDB also provides technical assistance and research in these areas. Its Board of Executives is elected by 48 member countries, 26 of which are located in Latin America and the Caribbean. As of 2010, IDB reported total assets of USD 87 billion. The IDB is headquartered in Washington, DC with offices in all 26 member countries, Japan and France.
About Multilateral Investment Fund (MIF): Multilateral Investment Fund (MIF) is an autonomous fund that was founded in 1993 by the Inter-American Development Bank (IDB). Now a member of the IDB Group, MIF has 38 donating member countries from Latin America, the Caribbean, North America, Europe and Asia. As of 2010, MIF reported having approved approximately 1000 projects in approximately 26 developing member countries and together with its partners has financed approximately USD 2.5 billion in project funding.
About Root Capital: Root Capital is a US-based nonprofit social investment fund that was founded in 1999. It provides capital, financial education, and market connections to small and growing businesses in the developing world. Root Capital has provided services across 26 countries in Latin America and Africa. As of March 31, 2011, Root Capital reported total assets of USD 63 million, gross loan portfolio of USD 47.5 million and 105,000 small agricultural enterprises reached. Root Capital does not report financial data to the US-based nonprofit Microfinance Information Exchange (MIX).
About Fundación Integral para el Desarrollo del Pacífico Central (FIDERPAC): FIDERPAC provides loans, training and technical assistance to rural families in Costa Rica. As of September 2011, FIDERPAC was working through 51 communal credit groups in 175 towns. As of 2010, it reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 4.2 million, a gross loan portfolio of USD 3.8 million, approximately 3,500 borrowers, return on assets (ROA) of 4.12 percent and return on equity (ROE) of 9.99 percent.
About Asociación de Desarrollo Integral Rural (ASDIR): ASDIR, established in 1999, aims to facilitate access to financial products and business development services in rural communities in Guatemala’s western region. As of 2010, it reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 6.1 million, a gross loan portfolio of USD 5.2 million, approximately 5,900 borrowers, return on assets (ROA) of 1.44 percent and return on equity (ROE) of 7.52 percent.
Sources and Additional Resources:
[1] IDB News Release, “IDB’s Moreno signs projects to increase microfinance services in rural areas in Central America,” http://www.iadb.org/en/news/news-releases/2011-10-10/rural-microfinance-in-latin-america,9587.html
MicroCapital.org story, September 9, 2011, “MICROCAPITAL BRIEF: Inter-American Development Bank (IDB) Syndicates $19m Loan for Municipal Marketplaces in El Salvador with Participation from Oikocredit, VDK Spaarbank, Bank Im Bistum,” https://www.microcapital.org/microcapital-brief-inter-american-development-bank-idb-syndicates-19m-loan-for-municipal-marketplaces-in-el-salvador-with-participation-from-oikocredit-vdk-spaarbank-bank-im-bistum/
MicroCapital.org story, August 8, 2011, “MICROCAPITAL BRIEF: Inter-American Development Bank (IDB) Group’s Multilateral Investment Fund (MIF) Approves $4.9m Package for Root Capital to Support Sustainable Agriculture in Honduras, Guatemala, Nicaragua,” https://www.microcapital.org/microcapital-brief-inter-american-development-bank-idb-group%e2%80%99s-multilateral-investment-fund-mif-approves-4-9m-package-for-root-capital-to-support-sustainable-agriculture-in-honduras-gua/
MicroCapital Universe Profile: Inter-American Development Bank, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Inter-American+Development+Bank+%28IDB%29
MicroCapital Universe Profile: Multilateral Investment Fund (MIF), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Multilateral+Investment+Fund+%28MIF%29
MicroCapital Universe Profile: Root Capital, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Root+Capital
MicroCapital Universe Profile: Fundación Integral para el Desarrollo del Pacífico Central (FIDERPAC), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Fundaci%C3%B3n+Integral+para+el+Desarrollo+del+Pac%C3%ADfico+Central
MicroCapital Universe Profile: Asociación de Desarrollo Integral Rural (ASDIR), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Asociaci%C3%B3n+de+Desarrollo+Integral+Rural+%28ASDIR%29
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
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