Johannesburg, South Africa, May 5, 2010
—IFC, a member of the World Bank Group, announced today that it will invest in the first fund focused exclusively on lending to microfinance institutions in Africa, strengthening the region’s financial architecture and improving access to finance for smaller businesses.
IFC will invest $8 million in the Regional Micro, Small, and Medium Enterprise Investment Fund for Sub-Saharan Africa and provide a further $5 million to help the fund hedge its foreign currency risks. REGMIFA is expected to mobilize approximately $150 million from international agencies and development finance institutions.
The fund will provide local currency loans to smaller banks, non-bank financial institutions, and commercially oriented non-government organizations that serve micro and small businesses, many of which of which struggle to fund themselves in their own domestic currencies. It will also provide advisory services to help investees mitigate risks and expand their products and services.
REGMIFA is being led by KfW Development Bank on behalf of the German federal government, supported by substantial technical input from IFC.
Gudrun Kopp, Parliamentary Secretary of State at Germany’s Federal Ministry for Economic Cooperation and Development (BMZ), said: "This innovative fund for the first time provides microfinance institutions across sub-Saharan Africa with a broad range of financial instruments. It will enable microfinance institutions to finance about 300,000 companies over the next five years and to create and secure 500,000 jobs, a significant contribution to both poverty reduction that will help alleviate the effects of the economic crisis in Africa."
Other potential investors in the fund include Austrian Development Bank, Belgian Investment Company for Developing Countries, the European Investment Bank, French Development Agency, Netherlands Development Finance Company, Norwegian Microfinance Initiative, and the Spanish Development Cooperation Agency. Over time, it also aims to attract private investors.
Difficulty accessing finance is a key constraint to Africa’s private sector. By improving the ability of low-income populations to access funds to start or expand businesses, REGMIFA will help create employment and reduce poverty in some of Africa’s least developed regions.
Jean Philippe Prosper, IFC Director for Eastern and Southern Africa, said, "Supporting the growth of micro and small enterprises is a strategic priority for IFC in Africa. By providing local currency financing and advisory services to microfinance institutions, REGMIFA will significantly improve access to finance for entrepreneurs across Africa, helping to create employment and reduce poverty across the region."
REGMIFA will be managed by Symbiotics SA Information, Consulting, and Services, a Geneva-based investment manager and advisor specialized in Microfinance. It will initially focus on more developed microfinance markets, including Ghana, Kenya, Nigeria, Tanzania, and Uganda, expanding into Central, West, and Southern Africa after its first year.
IFC, a member of the World Bank Group, creates opportunity for people to escape poverty and improve their lives. We foster sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments. Our new investments totaled $14.4 billion in fiscal 2009, helping channel capital into developing countries during the financial crisis. For more information, visit