Lagos, Nigeria, November 20, 2003 —
The International Finance Corporation today signed a Memorandum of Understanding (MOU) with a number of Nigerian financial institutions, ACCION International and ACCION Investments (AIM, an affiliate of ACCION International). IFC is the private sector arm of the World Bank Group.
The MOU relates to the establishment of a micro finance institution (MFI) that is expected to have a significant impact on the Nigerian economy by developing the important micro, small and medium-sized enterprises (MSME) sector and assisting in direct poverty alleviation. The MOU MFI will, for the first time, bring large-scale formalized professional finance services to Nigeria’s MSMEs.
Mr. Peter Woicke, Executive Vice President of IFC said, “MSMEs are a vital part of the Nigerian economy. More than 75 percent of Nigerians are economically active in MSMEs. This MFI is an example of IFC’s new pro-active approach to project development. We were invited by the banking sector to bring our best practice in MSMEs to Nigeria. The MOU brings a number of financial institutions together in a collective effort to invest in the promotion efforts of Nigerian entrepreneurs.”
The MOU was signed in Lagos today by Mr. Woicke, Mr. Alfred Nicayenzi, representative of ACCION International and AIM, and senior executives of six participating Nigerian institutions: Mr. Peter Harris, Deputy MD of Nigeria International Bank (subsidiary part of Citigroup), MrsMrs. Funke Osibodu, MD of Ecobank, Mr. Roy Crothers, Executive Director of Fountain Trust Bank, Mr. John Odeyemi, Director of Lead Bank, Mr. Jim Ovia, MD of Zenith International Bank, and Mr. Dick Kramer of SME Partnership Managers. Also present were representatives of the Ministry of Finance and Central Bank of Nigeria, both of which strongly support this initiative.
The initiative by these institutions to establish an MFI in Nigeria arose from the 2001 Small and Medium Industries Equity Investment Scheme (SMIEIS) whereby Nigerian banks agreed to set aside 10 percent of pre-tax profit for equity investment in MSMEs. The IFC undertook and funded a market feasibility study and business development exercise around the proposed MFI, identified six Nigerian financial institutions as private sector partners, and secured the management and technical expertise of ACCION International for the venture.
The MFI will operate in a commercially sustainable manner. It will commence with initial capital of $5 million of which the IFC will invest about $630,000 and the participating Nigerian financial institutionsbanks and ACCION Investments contributing the balance. Over the first five years of operation, the MFI is expected to lend funds equal to many times its capital base and reach tens of thousands of clients.
The mission of IFC (
www.ifc.org
) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY03, IFC has committed more than $37 billion of its own funds and arranged $22 billion in syndications for 2,990 companies in 140 developing countries. IFC's worldwide committed portfolio as of FY03 was $16.8 billion for its own account and $6.6 billion held for participants in loan syndications.
