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
“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.