Washington, DC, June 29, 2006 —
The International Finance Corporation, the private sector arm of the World Bank, has granted a five-year loan of 13.8 billion Colombian pesos (equivalent to US$5.4 million) to Fundación Mundo Mujer, a leading Latin America microfinance institution headquartered in Popayán, Colombia.
This is the second time IFC has provided funds to a microfinance organization in Colombia. The transaction consists of a loan in local currency, or indexed to the Colombian peso, and will allow Fundación Mundo Mujer to offer 70,000 additional loans to low-income clients over the next five years. Backed by its strong AAA credit rating, IFC will set up long-term swaps with financial institutions in the Colombian market to help Fundación Mundo Mujer hedge its foreign exchange risks.
Atul Mehta, IFC’s Director for Latin America, stated, ”Fundación Mundo Mujer has a wealth of experience with low-income microbusinesses and is one of the most efficient and successful institutions of its kind in Latin America. This makes it an ideal candidate for IFC financing. The transaction marks the beginning of a strategic partnership that benefits both parties.”
Leonor Melo de Velasco, founder and chair of Fundación Mundo Mujer, highlighted the importance of this agreement: “To embark on a loan agreement with IFC is to build on our future by democratizing loans.”
Fundación Mundo Mujer of Popayán is a not-for-profit organization and an affiliate of the Women’s World Banking Network, a global group of 24 microfinance organizations in 19 countries.
In several years of sustained growth, Fundación Mundo Mujer has financed over 110,000 microbusinesses, 60 percent of them headed by women. Many of its beneficiaries live below the country’s poverty line and have been able to access loans for working capital and other essential financial services.
Average loans amount to 900,000 Colombian pesos (equivalent to $391) and usually represent the first time a microbusiness has dealt with a financial services provider. As of March 31, 2006, Mundo Mujer’s net loan portfolio was COP114 billion (equivalent to $50 million).
IFC in Colombia
IFC is increasing its stake in Colombia’s microfinance sector and is working to extend the financial services available to local companies. The financial sector continues to be a priority for IFC in Colombia, with a special focus on finance and microfinance for housing, as well as the strengthening of local capital markets and corporate governance. IFC’s strategy for Colombia also focuses on increasing support to sectors that are central to the country’s financial development within the framework of free trade agreements. This includes the financing of infrastructure projects involving public-private partnerships, such as the expansion of ports, roads, and airports, and support to logistics companies. IFC is also aiming to finance Colombian oil and gas companies, in particular those looking to expand within the region.
IFC’s total portfolio in Colombia as of May 2006 was $394 million. Since Colombia first became a member of the IFC in 1956, the Corporation has provided $1.1 billion to its private sector, including syndicated loans for a total of $500 million.
About IFC
The International Finance Corporation is the private sector arm of the World Bank Group and is headquartered in Washington, D.C. IFC coordinates its activities with the other institutions of the World Bank Group but is legally and financially independent. Its 178 member countries provide its share capital and collectively determine its policies.
The mission of IFC is to promote sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments, helps clients improve social and environmental sustainability and provides technical assistance and advice to governments and businesses. From its founding in 1956 through to financial year 2005, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of financial year 2005 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications. For further information, go to
www.ifc.org
.
