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IFC Helps Create a Commercially-Based Microfinance Institution in Brazil


Adriana Gomez
Phone:  (202) 458-5204

Fax:  (202) 974-4384

E-mail:  
agomez@ifc.org


IFC’s first investment in a Brazilian microfinance institution




Washington D.C., May 9 , 2002
—The International Finance Corporation (IFC), the private sector developmentarm of the World Bank Group, has approved a US$1.25 million investment to help establish and develop Microinvest, a regulated, commercially-based microfinance institution in Brazil that will provide credit to local microenterprises.  


IFC’s investment will help expand access to financing for low-income entrepreneurs, helping them build their businesses and raise their standards of living.  It will also assist in institution building of one of the very few commercially oriented, self sustainable microfinance institutions in Brazil.  Microinvest represents IFC’s first investment in a Brazilian microfinance institution.  


IFC’s transaction comprises a 25 percent share purchase of Microinvest, while the remaining share capital will be owned by the Bank’s sponsor, Fininvest S.A.—one of the largest finance companies in the low-income consumer and retail credit segment in Brazil.  Fininvest is a wholly-owned subsidiary of União de Bancos Brasileiros S.A. (Unibanco).


Bernard Pasquier, IFC’s Director of the Latin America and Caribbean Department, said, “This investment supports IFC’s commitment to strengthening Brazil’s financial sector to enable it to provide much-needed financing to promote the development and growth of Brazil’s incipient microfinance market and microentrepreneurs.  It also braces IFC’s efforts to help reduce poverty by reaching out to low-income segments with formal financial products.”


This operation reflects an important aspect of IFC’s global microfinance strategy, focused in supporting the commercial viability of microfinance activities in developing countries.  IFC believes that well-managed microfinance institutions can - and should - be commercially viable so that financial services can be provided to the underserved over the long term, resulting in a substantial and sustainable increase in the volume and range of financial services for microenterprises.


Mr. Alvaro Lopes, Director of Microinvest, added, “A large number of indicators and statistics point to the fact that the microcredit segment in Brazil is growing and attracting investments from the financial sector and from several development and training institutions.  Opportunities are being constantly offered, and certainly the IFC’s partnership will contribute to an improvement of the micro-finance market in our country, in which process Microinvest intends to make an important contribution.”


Microentrepeneurs are an important engine of economic growth and social development in most emerging markets including Brazil.  There are an estimated 9.5 million micro and small enterprises in Brazil.  They account for over 90 percent of all firms in the country, and provide over 35 percent of total employment in services, commerce, and industry.


IFC’s mission (www.ifc.org) 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.