Press Releases


Saud Siddique
(202) 473-6925
Rob Wright
(202) 473-7997

WASHINGTON, D.C., March 13 -- The International Finance Corporation (IFC) has approved an equity participation of up to US$3 million for 15 percent of the equity in Profund Internacional, S.A., the first private investment fund targeting financial institutions that lend to micro- and small-scale business in Latin America and the Caribbean. Through this operation IFC will help finance expansion of institutions with a proven track record in microfinance, a critical catalyst of job creation and private sector development among the region's low-income groups. Profund is a 12-year closed-end fund that will seek long-term capital appreciation. It will be incorporated in Panama with authorized share capital of US$25 million. Its founders are leading private non-profit organizations long active in microfinance such as ACCION International of the U.S., the Calmeadow Foundation of Canada, Fundes of Switzerland, and Societe d'Investissment et de Developpement International of France.

Other investors expected to participate include the Corporacion Andina de Fomento (CAF) of Venezuela; the Multilateral Investment Fund (MIF), an independent entity related to the Inter-American Development Bank in Washington, DC; the Calvert Group of the US; and the Swiss Government.

Microenterprises employ at least 150 million people in the region overall, including more than half of the population of some major cities. The microlending institutions that finance them provide a sustainable route out of poverty, giving low-income entrepreneurs their first small loans that support self-employment in various activities ranging from sewing, shoe repair and jewelry making to taxi cabs, auto repair shops, fruit and vegetable stands, and other kinds of businesses. "We are pleased to take this step to support the growth of microenterprise.

This is a new and important area for IFC because of its demonstrated effectiveness in reducing poverty in developing countries, especially among women," said IFC Executive Vice President Jannik Lindbaek. "We expect Profund to play a vital development role by providing credibility and management as well as financial support to financial institutions providing microlending services. This should in turn strengthen the emerging for-profit microlending industry and help it attract additional private capital for further expansion."

For more than 20 years microfinance in Latin America and the Caribbean has primarily worked on a non-profit basis with the backing of aid donor funds. But as these official resources have become increasingly scarce, it has become clear that microlenders must evolve into viable, commercial for-profit institutions if they are to meet the growing demand for credit in the informal sector. In order to help catalyze this process, Profund will invest in microfinance institutions with sound management and market-based business plans as well as a demonstrated capability of reaching clients in the informal sector.

The fund's portfolio currently consists of investments in BancoSol, S.A. in Bolivia and FinanSol, S.A. in Colombia, and a solid pipeline of investments in other microlending projects around the region has already been established. The IFC investment in Profund will complement another recent World Bank initiative for micro- and small-scale enterprise, the Consultative Group to Assist the Poorest (CGAP), a multidonor effort launched in June, 1995 whose activities include funding microfinance institutions, sharing knowledge worldwide, and coordinating policy.

IFC is a member of the World Bank Group and is the largest source of equity and loan financing for private sector projects in developing countries.