Grameen-Jameel Initiative Engineers $2.5 Million Investment in DBACD
Egypt , September, 27 2006 -
The Grameen-Jameel Initiative, an innovative collaboration between Grameen Foundation and the Abdul Latif Jameel Group to fight poverty in the Arab World through microfinance, today announced it has brokered the first investment by the country office of international commercial bank in Egypt's microfinance industry. The $2 million guarantee to Dakahlya Businessmen Association for Community Development (DBACD), a leading microfinance institution (MFI), secures a local currency loan of $2.5 million from BNP Paribas, one of the largest international banking networks. With this new funding, DBACD can provide much-needed loans to 16,000 poor Egyptians just in time for the start of Ramadan.
This is the largest deal negotiated by the staff and advisors to the Grameen-Jameel Initiative, and utilizes a $1 million guarantee from Grameen Foundation?s Growth Guarantee Program. The other $1 million guarantee comes from the Mohammad Jameel Guarantee Fund, established in favor of the Grameen-Jameel Pan Arab Initiative. Both the Grameen Foundation Growth Guarantees Program and the Jameel Fund provide guarantees for MFIs to receive local currency financing from local commercial banks. The guarantees of $1 million each were issued by Citibank and Banque Saudi Fransi.
This landmark transaction opens a new era in microfinance in Egypt, with commercial banks playing an increasingly important role in bridging the vast gap between supply and demand for microfinance in Egypt, said Alex Counts, President of Grameen Foundation. We hope the 16,000 families who receive these loans are the tip of the iceberg, with this deal encouraging other Egyptian banks to get involved. We salute the leadership of our partner Mohammad Jameel in bringing microfinance to one million new families by 2011, and this transaction will move us towards reaching that goal.
In another first, this transaction is the only one to date where an Egyptian MFI has received leveraged funding from a commercial bank. Historically, banks in Egypt have required a 100 percent guarantee.
Microfinance has just begun to realize its potential to promote entrepreneurship, the empowerment of women, and poverty reduction in the Arab World, said Mohammed Jameel, President of Abdul Latif Jameel Ltd. This transaction represents a big step towards fulfilling that potential. Providing credit enhancements to banks so that they can become active players in this sector will continue to be a key element of our strategy and our alliance with Grameen Foundation, as we work to touch one million families with microfinance in the next few years."
With the Grameen-Jameel partial guarantee, we were able to interest international banks in lending to us for the first time, said Hassan Faried, DBACD's executive director. The financing generated through this transaction will allow us to meet the growing demand for our services and expand lending to large numbers of poor clients.About the Grameen- Jameel Initiative
The Grameen- Jameel Initiative, a partnership between Grameen Foundation and the Abdul Latif Jameel Group, focuses on strengthening the microfinance industry in the Middle East and North Africa. Launched in 2003, it seeks to support individual MFIs and the Arab microfinance sector through providing direct financing, technical assistance, training, translation and support of the Arab Microfinance Gateway.
Based in Washington, D.C., Grameen Foundation is a global non-profit organization that combines microfinance, technology, and innovation to empower the world's poorest people to escape poverty. It has established a global network of 52 partners in 22 countries that has impacted an estimated 11 million lives in Asia, Africa, the Americas, and the Middle East. The Foundation was created in 1997, inspired by the work of the Grameen Bank of Bangladesh. Its Growth Guarantee Program, initially capitalized at $31 million when it was launched in late 2005, is a collaboration with Citigroup that projects leveraging more than $180 million in local currency financing for MFIs globally over the next five years.
The Abdul Latif Jameel (ALJ) Group, based in Jeddah, Saudi Arabia, is one of the Arab World?s most successful and respected business groups. The ALJ business was founded by the late Sheikh Abdul Latif Jameel in 1945. In 1955, he was granted the sole distributorship for Toyota vehicles in Saudi Arabia which the ALJ Group has maintained ever since. It has an active community services program, which has emphasis on education, training, and development to assist the younger generations to achieve independence and self sustainability. Mohammad Jameel, the son of the founder, is the President of the Group.
Founded in 1995, DBACD operates in the Mansoura region of the Nile Delta, one of the poorest areas of Egypt. It provides both individual and group loans with a special emphasis on very poor women. At July 31, 2006, DBACD had 63,288 active clients with a gross loan portfolio of $9.7 million, and by 2008, plans to increase to over 100,000 active clients. In addition to its financial services, DBACD also provides language, technology and business training for area residents at its technology center which was opened in 2001; the center is also used a business center for the local community. As a testament to transparency of its operations, DBACD was one of the first MFIs in the MENA region to receive the highest rating (5-diamond score) on The Mix, an international rating agency for microfinance institutions.