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Expanding Access and Creating Markets: IFC Enhances Its Support to Myanmar’s Microfinance Sector

Yangon, Myanmar, June 21, 2017 —IFC, a member of the World Bank Group, has committed a financing package of $13.5 million to local microfinance institutions to help meet Myanmar’s critical credit needs and unlock the country’s economic potential.
In taking a $1.5 million stake in Maha Agriculture Public Company (Maha MFI) and extending $6 million in loans each to Fullerton Finance (Myanmar) Company Limited (Fullerton Myanmar) and Early Dawn Microfinance Company Limited (DAWN) upon legal approvals, IFC is positioning the underfunded microfinance sector to better engage the largely untapped rural, low-income market segment. The demand for microcredit, a vital source of finance for small enterprises and poor households underserved by mainstream banks’ collateral requirements, is estimated to exceed supply by three-fold.
“Improving access to microfinance will help unlock the great potential of the rural sector and small enterprises by providing much needed financing to increase productivity and create jobs, incomes and prosperity for a significant number of workers in this country,” said Vikram Kumar, IFC Country Manager for Myanmar.
In particular, IFC’s investment will allow Maha MFI, a subsidiary of leading local agricultural inputs producer Myanma Awba Group Company Ltd., to penetrate the rural market and take aim at the underserved agricultural sector through tailored-made products spearheaded by digital technology.
“With this valued IFC support, we will address the critical need for agri-lending products crafted to accommodate important agriculture-specific aspects, such as crops and seasons, for the sector to reach its full potential,” said Rajesh Malhotra, Awba Group Chief Financial Officer.
In the cases of DAWN and Fullerton Myanmar, with IFC already holding a 15 percent equity stake in the latter, the financing will support lending growth and financial inclusion for those marginalized.
"These funds from IFC will help DAWN to serve more urban and rural clients in more regions and we expect to continue working closely with IFC to develop financial inclusion and small businesses in Myanmar," said Gonzalo González A, DAWN Chief Executive Officer.
“Increased collaboration with IFC, already an equity partner, will enable us to expand in Myanmar to enrich lives and the communities we serve,” said Leslie Lee, Fullerton Myanmar General Manager.
Overall, these deals fit with a strategic IFC focus in Myanmar to develop a sustainable and responsible commercial microfinance sector to serve urban and rural poor. To achieve this, IFC works at sector level to transfer global good practices and at institution level via development of promising microfinance institutions. IFC’s investments and advisory work since 2014 have already resulted in more than one million microfinance institution clients served.
Amid the sector’s rapid growth, IFC is mitigating lending risks through development of a central credit bureau, expected to be launched later this year following the issuance of a landmark IFC-supported credit reporting regulation in March. Going forward, IFC will introduce responsible business practices to microfinance institutions and promote financial-consumer protection through knowledge transfer activities with regulators and industry players.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working with more than 2,000 businesses worldwide, we use our capital, expertise, and influence to create markets and opportunities in the toughest areas of the world. In FY16, we delivered a record $19 billion in long-term financing for developing countries, leveraging the power of the private sector to help end poverty and boost shared prosperity. For more information, visit www.ifc.org
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