MICROCAPITAL STORY: 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

Access Bank Liberia (ABL), the first commercial microfinance institution of Liberia, has become operational and started issuing loans to the public, according to an announcement by the International Finance Corporation (IFC), a member of the World Bank group. ABL, which received a preliminary banking license in July 2008, started operations after it was granted a formal banking license by the Central Bank of Liberia (CBL) on January 21, 2009. According to the announcement by IFC, since receiving the preliminary license, ABL had hired and trained loan officers, tailored all its savings and credit products to cater to the demands of the Liberian market and ensured compliance of all its banking systems with the Liberian law. ABL will focus on microfinance lending in Liberia in addition to providing short and medium-term lending to small and medium enterprises (SMEs) in Liberia. So far, no information on the interest rates to be charged is available yet.

MicroCapital had previously reported on the preliminary banking license granted by the Central Bank of Liberia in July 2008. According to the story, ABL would open with an initial paid-in capital of USD 6 million – the minimum capital required by the CBL of banks operating in Liberia – with plans to expand to 12 branches with a total of 400 employees within the next five years. ABL’s two primary sponsors include: Access Holding AG (AH), a Berlin-based commercial microfinance holding company, which would provide most of the seed capital and LFS Financial Systems GmBH (LFS), its associated consulting company, which would provide technical assistance to ABL as the project manager. Access Microfinance Holding (AG) holds 52 percent stake in ABL. Other shareholders of ABL include the IFC with 18 percent stake, European Investment Bank (EIB), the long-term lending bank of the European Union, with 15 percent and the African Development Bank (AfDB) with 15 percent stake. According to Tim Turner, Private Sector Department Director of the African Development Bank, ABL aims to have an active client base of 27,000 and total assets of USD 38 million by 2013. ABL plans to mobilize resources through client savings to be used as their major source of funding.

AccessHolding, the primary shareholder of ABL, was established in August 2006 in Berlin with the purpose of investing in microfinance institutions (MFIs) and to develop these investments through a combination of equity finance, holding services, and management services rendered by its technical partner, LFS Financial Systems GmbH (LFS). LFS is a Berlin-based management and consultancy firm specializing in financial sector projects in developing and transition countries. In addition to AccessBank Liberia, Access Holding has invested in four other microfinance banks; the AccessBanque Madagascar, Access Bank Azerbaijan, AB Microfinance Bank Nigeria and AccessBank Tanzania. Access Holding has committed capital of approx. EUR 21.5 million.

The Central Bank of Liberia was established in 1999. At the end of December 2007, the bank’s total assets amounted to USD 1.4 billion and total liabilities amounted to USD 1.2 billion, while owner’s equity totaled USD 222 million.

The West African nation of Liberia has 63.8 percent (p 2) of its population below the poverty line, according to the Poverty Reduction Strategy published by the Ministry of Finance of the Republic of Liberia. 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 between 62,000 and 82,000 customers with a combined loan volume ranging from USD 14 to 19 million. The supply reaches less than 8,200 customers with a combined loan portfolio of less than USD 250,000. The 2008 Human Development survey of the United Nations ranks Liberia among the poorest 4 out of 179 countries, measured on the basis of standard of living, life expectancy and literacy. So far, in terms of meeting the first of its Millennium Development Goals by 2015 (i.e. reduce, by half, the proportion of population living on less than one dollar a day), the United Nations says that Liberia is ‘Off-track‘ in terms its progress towards poverty reduction.

By Bharathi Ram, Research Assistant

Additional Resources:

International Finance Corporation: Press Release

Central Bank of Liberia

Microcapital.org:

June 10, 2008: CBL grants license to Access Bank

Ministry of Finance of the Republic of Liberia

United Nations: Millennium Development Goals, Liberia – MDG Monitor