IFC To Start $100M Microfinance Debt Fund
Friday, March 9, 2012
International Finance Corporation (IFC), the private sector investment arm of the World Bank Group, along with two other investors, will set up a $100 million debt fund called Micro Finance Initiative for Asia (MIFA), to address the funding needs of microfinance institutions in developing and underdeveloped economies. Final decision will be taken at the fund’s next board meeting to be held on April 9.
According to IFC, the MIFA Fund will be funded through 3 classes of shares. “Initially, the investors are expected to be IFC, KfW, and Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (German Federal Ministry for Economic Cooperation and Development,” an IFC release stated.
The fund has a target size of $100 million, including up to $25 million in donor-funded concessional funding. IFC’s investment in the fund is proposed to be up to $20 million in mezzanine shares.
The Luxembourg-based fund will set up special purpose vehicles in Mauritius and India. The fund will make its debt investments across Asia, including East, South and Central Asia.
“The project is in line with the IFC microfinance strategy for increased outreach in South, East and Central Asia, especially in large countries like India and China, home to 40 per cent of the world’s population. Microfinance penetration rates in this region remain among the lowest, globally,” the release said.
By supporting the expansion and sustainability of well-performing MFIs, the project will improve access to finance for thousands of micro and small borrowers. This, in turn, will stimulate growth, employment generation and poverty alleviation in the region.