Blueorchard

MICROFINANCE GROWTH FACILITY (MiGroF)

Responding to President Obama’s announcement at the Summit of the Americas in April, the Inter-American Development Bank’s Multilateral Investment Fund (IDB/MIF) , the U.S. Government’s Overseas Private Investment Corporation (OPIC) , the Inter-American Investment Corporation (IIC ), the Swiss-based microfinance investment management company BlueOrchard Finance S.A. (BlueOrchard Finance), and other international investors signed a memorandum of understanding on 30 September 2009 to establish a microfinance facility that will provide up to USD 250 million to microfinance institutions (MFIs) in Latin America and the Caribbean. BlueOrchard Finance was selected to manage the facility.

 
The vision

The facility, known as Microfinance Growth Facility (MiGroF), supports the growth of MFIs that require financing in order to serve sections of the populations who have no access to main-stream financial services.

President Obama underscored the crucial importance of availability of finance for micro- and small businesses which provide a majority of the jobs in the Southern hemisphere. “The facility will provide stable medium- and longer-term sources of finance to microfinance institutions to help rebuild their capacity to lend during this difficult period and to increase the supply of finance for micro- and small businesses as recovery takes hold”, he declared at the Summit.

According to a recent report funded by the MIF, there are an estimated 636 MFIs currently financing about 9.5 million microenterprises in Latin America and the Caribbean, with an outstanding loan portfolio of USD 10.9 billion.

The partners

According to the MOU signed on 30 September at the Inter-American Forum on Microenterprise (FOROMIC) in Arequipa (Peru), proceeds of a OPIC loan, together with an equity contributions from IDB and other sponsors, will be used to make loans to MFIs in Latin America and the Caribbean, which in turn will expand their microfinance lending activity. BlueOrchard Finance will be responsible for managing the relationships with the MFIs.

The MIF and the IIC, MiGroF’s lead investors, will hold up to approximately 30% of the fund’s total equity capital. To date, six other investors have approved investments of up to US$20 million in MiGroF.

OPIC has approved a credit line of up to US$125 million to supply MiGroF with initial funding, thus bringing to US$156 million the funding that is expected to be made available to microfinance institutions in this initial phase. MiGroF is expected to reach US$250 million in resources during a second phase.

Other sponsors signing the MOU were the Andean Development Corporation , Norwegian Microfinance Initiative Global Fund KS , FMO (the Netherlands’ Development Finance Company ), FONIDI S.E.C./Gestion Fonidi Inc., a subsidiary of Développement International Desjardins of Canada and Acción International

BlueOrchard chosen as fund manager

“We are proud to have been entrusted with the management of this facility, it is a recognition of our deep commitment to microfinance and of our professional excellence,” said Jean-Philippe de Schrevel, CEO of BlueOrchard Finance. “BlueOrchard maintains solid relationships with over 80 microfinance institutions throughout Latin America and the Caribbean based on mutual trust and a track-record of successful cooperation. The healthy growth of their activities will increase employment and socio-economic progress for people who lack access to basic financial services.”

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