Washington, D.C. July 29, 2002—Continuing
in its commitment to expanding commercial microfinance in the world’s
poorest countries, IFC has signed a new partnership agreement with FINCA
International, a leading U.S.-based microfinance nongovernmental organization
whose small loans help raise incomes of more than 215,000 people in 20
The new agreement was signed following a meeting between World Bank Group
President James D. Wolfensohn and FINCA Executive Director Rupert Scofield.
It significantly expands IFC’s relationship with FINCA, which began
in 2001 with the provision of US$200,000 in technical assistance funding
(*) and $1 million in combined equity/quasi-equity investment to support
FINCA Kyrgyzstan during its transformation to a commercial, regulated microfinance
Founded in 1984, FINCA is a respected leader in an industry whose promotion
of self-reliance and grassroots empowerment is an essential force in the
fight against poverty. Research shows that only four percent of the potential
global market for microfinance is currently being reached, often by institutions
that are not financially sustainable. The World Bank estimates that
there are more than 500 million microentrepreneurs around the globe, almost
all of them with no access to funding from traditional financial institutions.
“Far too few people benefit from microfinance today. This is why
leading global technical assistance networks such as FINCA—that can transfer
good practices in microfinance from one country to another—are critical,”
said IFC Executive Vice President Peter Woicke. “Their work helps
more potential borrowers access the capital they need to start income-generating
businesses. We are glad to team with these leading organizations
in finding new ways to bring the proven success of microfinance to a much
FINCA is one of three such organizations to become an IFC partner in this
work, part of a group that also includes International Projekt Consult
of Germany and ACCION International of the U.S. The various local
microfinance institutions these groups support collectively serve more
than 900,000 borrowers worldwide, and are growing rapidly with the resources
IFC is helping them mobilize.
Under the partnership structure, outside organizations receive initial
technical assistance grant funding from IFC’s SME Capacity Building Facility
(CBF), then work with IFC to consider larger potential investment projects
based on the new models developed jointly.
“This grant signifies a new level in the partnership between FINCA and
IFC”, stated Rupert Scofield, FINCA International’s executive director.
“By strengthening FINCA’s regional hub structure, this project
it supports gives FINCA’s affiliates the ability to reach self-sufficiency
more rapidly. It may also pave the way for a future global facility
that could involve IFC and other investors, providing access to the volumes
of loan capital necessary for FINCA’s affiliates to reach many more low
income entrepreneurs by acting as commercially viable, regulated institutions.”
Each year, FINCA makes more than 600,000 loans, lending more than $100
million with a 97 percent repayment rate. One of its biggest constraints
is accessing enough loan capital to meet demand—a problem that can be
solved in part by transforming its country affiliates into commercial institutions
that operate profitably while maintaining their strong social mission.
In moving in this direction, FINCA will use its $500,000 grant from IFC
to strengthen its regional hubs in Guatemala City, Kampala, and
Moscow, that support country affiliates. This funding is considered the
first step in an eventual multi-donor funding package allowing FINCA
to strengthen its infrastructure to help affiliates move towards self-sustainability.
One key goal of the initiative is to help FINCA reach more than 300,000
IFC’s mission 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, and provides technical
assistance and advice to governments and businesses. Since its founding
in 1956 through the close of the last fiscal year on June 30, 2001, IFC
committed more than $31 billion of its own funds and arranged $20 billion
in syndications for 2,636 companies in 140 developing countries. IFC’s
committed portfolio at the end of FY01 was $14.3 billion.
* Including $100,000 from IFC’s Technical Assistance Trust Funds (TATF)
program for market analysis as part of a feasibility study on converting
the nonprofit microfinance institution FINCA Kyrgyzstan into a full-fledged