MICROCAPITAL STORY: Oikocredit Loans $2.3m to Microfinance Institutions Kitunda SACCO, Intellekt, FMFB Tajikistan, and PMRCA Perelik

For the month of April, the Netherlands-based Oikocredit Ecumenical Development Cooperative Society, a microfinance funding source, reported four loans to the CGAP Microfinance Dealbook, a monthly report on microfinance capital market transactions. Oikocredit granted a one-year USD 75,000 loan to the Kitunda SACCO in Tanzania, a four-year loan of USD 91,000 to Intellekt of Russia, a three-year loan of USD 2 million to the First Microfinance Bank of Tajikistan (FMFB), and a three-year USD 132,000 loan to PMRCA Perelik in Bulgaria. Oikocredit provides loans to about 500 microfinance institutions in 70 countries around the world. Between January and March 2009, Oikocredit provided USD 19.2 million in new loans in 69 countries. The organization currently funds 758 projects of which 501 are microfinance projects, the rest involving other types of social service. Through microfinance alone, Oikocredit claims to reach 16.8 million people. Oikocredit distributes its funding as follows: 40 percent in Latin America, 14 percent in Africa, 27 percent in Asia, 18 percent in Central and Eastern Europe, and 1 percent elsewhere. In November, MicroCapital reported that USAID and Oikocredit would partner together to contribute USD 36.2 million to microfinance institutions (MFIs) over the next ten years.

Kitunda SACCO is part of Tanzania’s network of Savings and Credit Cooperative Societies (SACCOs) (p16). The Kitunda district in the city of Dar Es Salaam has a population of 23,428, including 5,039 households averaging 4.6 members. As of 2006, there were 1700 SACCOs in Tanzania serving 260,000 people, or about 1 percent of the total population (p16). The national goverment’s ten-year Cooperative Reform and Modernisation Program has been underway since August 2005 to identify weaknesses in Tanzanian cooperatives and assist in strategic planning (p33). More information on this program can be found here. The Kitunda SACCO does not report to the MIX, the information clearinghouse on microfinance institutions.

Intellekt is a credit cooperative based in Volgograd, Russia. According to the MIX, it held a gross loan portfolio of USD 1,789,983 at the end of 2007. Intellekt reported a 0.08 percent return on assets and 20.59 percent return on equity. Total assets stood at USD 1,746,404 at the time of reporting.

The First MicrofinanceBank of Tajikistan (FMFB) is a member of the Aga Khan Agency for Microfinance (AKAM), which is itself a member of the Aga Khan Development Network (AKDN). In a recent feature on the European Bank for Reconstruction and Development (EBRD), MicroCapital reported that EBRD loaned USD 4 million to FMFB Tajikistan in March 2007. In 2008, it was listed 92nd in the MIX’s list of top 100 microfinance institutions. FMFB Tajikistan’s sister institution FMFB Pakistan placed 7th. According to 2008 data at the MIX, FMFB Tajikistan holds a gross loan portfolio of USD 32.5 million and serves 13,153 borrowers. FMFB Tajikistan reports a debt to equity ratio of 592.73 percent in addition to -1.33% return on assets and -7.93% return on equity. Total assets were USD 43,508,717. AKAM also supports FMFB Pakistan and FMFB Afghanistan.

The Private Mutual Rural Credit Association in Perelik (PMRCA Perelik) is a credit cooperative in Bulgaria that is part of a federation of cooperatives. The federation primarily serves farmers and reported a net profit of USD 44,500 in 2005. PMRCA Perelik does not report to the MIX.

In a 2008 annual report, Oikocredit reported a total income of USD 44.4 million. Of the USD 15.1 million net profit, USD 8.75 million was used to pay dividends. During 2008, Oikocredit approved USD 241.4 million in new loans, an increase of 13 percent from 2007, and disbursed USD 236.1 million in loans, an increase of 32 percent from 2007. At the end of the year, outstanding loans stood at USD 484.1 million, having increased 33 percent from the previous year. Field investments grew 32 percent to USD 484.1 million. However, the inflow of new capital dropped 28 percent from 2007 and stood at USD 45.1 million by the end of 2008. Total assets stood at USD 595.6 million, an increase of 15 percent.

Oikocredit, founded in 1975, is headquartered in Amersfoort, Netherlands and is classified as a cooperative society with corporate status subject to Dutch law.There are national support offices in the USA, UK, Germany, Sweden and France in addition to 11 regional offices and 24 country offices. The administration of Oikocredit consists of an 11-member Board of Directors headed by Dr. Shobha Arole. In addition, Oikocredit is supported by 190 full time employees and local support organizations with a cumulative membership of 30,000 volunteers. Partners of Oikocredit include the interchurch organization ICCO, the ecumenical organization for microfinance ECLOF, and the Church of Sweden. Along with ICCO and the Rabobank Foundation, Oikocredit has also founded Terrafina Microfinance, an organization that focuses on microfinance in Africa. Oikocredit is funded by private individuals as well as 500 churches. According to the MIX, Oikocredit offers loans ranging from a minimum of USD 50,000 to USD 5,000,000 for a maximum of 10 years. Oikocredit offers investors an annual dividend of 2 percent.

MicroCapital has often reported on Oikocredit’s deals and investments, including two June 2008 investments of USD 1.3 million in Moldovian MFI Microinvest and USD 2.3 million in Cambodian MFIs AMRET and Hatha Kasekar Ltd. Further articles on Oikocredit can be found here.

Additional Resources:

Oikocredit
Oikocredit Annual Report 2008, Published by Oikocredit
MIX Market: Oikocredit
MIX Market: Intellekt
MIX Market: First MicrofinanceBank of Tajikistan
PMRCA Perelik
“Tanzania Cooperatives Look to the Future”, by Andrew Bibby, Published January 2006, 36 pages
Aga Khan Agency for Microfinance

By Goda Thangada, Research Assistant