Press Releases

IFC Backs New Microfinance Fund for Africa

L. Joseph
Phone:  (202) 473-7700

Fax:  (202) 974-4384



Rob Wright

Phone:  (202) 473-7997

Fax:  (202) 522-3742


Washington D.C., October 5, 2001—The International Finance Corporation today became a founding participant in the AfriCap Microfinance Fund, a US$15 million fund that will invest in microfinance institutions (MFIs) across the African continent.

Microfinance, the provision of essential financial services to low-income entrepreneurs, makes a critical contribution in the fight against poverty by giving borrowers access to the small-scale financing they need to start and maintain income-generating businesses.  Although often begun on a nonprofit basis, the impact and staying power of MFIs can increase significantly when managed in a sound commercial manner.  IFC has been actively supporting this trend since 1996, having now invested in for-profit microfinance institutions with more than 600,000 borrowers worldwide.

In Africa, the microfinance industry is still in its infancy but growing rapidly with a number of well-performing institutions in Benin, Kenya, Uganda, and other countries.  AfriCap, which will include a for-profit investment facility and a parallel grant-funded technical services facility, will play an important role by investing in and providing technical assistance to leading African MFIs.  This will help build some model institutions, providing an important demonstration effect which will attract additional sustainable private capital into the sector.  IFC has committed up to $2 million to the 10-year for-profit investment vehicle, joining a group of investors in the $10 million first closing which includes:  Acción International (USA), Argidius Foundation (Switzerland), Calmeadow (Canada), Calvert Social Investment Foundation (USA), Cordaid (Netherlands), DOEN Foundation (Netherlands), European Investment Bank, Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. – FMO (Netherlands), Stichting Hivos – Triodos Fund (Netherlands), IFC and AfriCap Sweden AB (Sweden).  The technical services facility has a budget of $3 million for the first five years of operation and initial contributors include the U.K. Department for International Development and the United States Agency for International Development.

“Microfinance and Africa are both high priorities for us,” said IFC Executive Vice President Peter Woicke.  “We are glad to be part of this initiative which brings the two together.”

Over the next five years the fund hopes to make about 10 investments in leading African MFIs, then bolster them with active governance and institutional development support, partly funded by the technical services facility.  It will be incorporated in Mauritius and managed on a commercial basis by AfriCap MicroVentures, a wholly-owned subsidiary of the Canadian nonprofit organization Calmeadow that will be based in Dakar, Senegal.  Calmeadow and ACCION International, a leading microfinance organization based in USA, are the two cosponsors of AfriCap.  They were also involved along with IFC and others in ProFund, a similar $22.6 million fund for MFIs in Latin America and the Caribbean that has now invested in 11 institutions in that region with approximately 300,000 borrowers.  AfriCap has been designed to draw on some of the lessons of ProFund.

AfriCap is one of the early outcomes of the partnership agreement IFC signed earlier this year with ACCION, whose efforts until recently were concentrated in Latin America and the Caribbean.  It is now expanding into Africa for the first time, working directly with MFIs in Mozambique and South Africa with support from IFC’s SME Capacity Building Facility.  Co-sponsorship of AfriCap is part of ACCION’s growing commitment to working in Africa.

“AfriCap will provide development agencies and investors with an effective investment and management vehicle to support MFIs that have high potential for impact,” said María Otero, president and CEO of ACCION International and AfriCap’s Chair.  “This fund will be key to providing financing and governance support to successful MFIs, enabling them to reach the vast number of hard-working microentrepreneurs throughout Africa.”

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, IFC has 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.