IDB joins with DID to set up four new CFE financial centres for entrepreneurs

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Apr 2008
Levis, Canada, April, 15 2008 - On Sunday, April 6, during the 2008 Annual Meeting of the Inter-American Development Bank (IDB), senior executives from Développement international Desjardins (DID) and IDB met in Miami, Florida, to sign a far-reaching agreement aimed at deploying four CFE financial centres for entrepreneurs in four IDB member countries in Latin America and the Caribbean.

The agreement was signed by the President of the IDB, Luis Alberto Moreno, the Chairman of the Board of Directors of DID, Marcel Lauzon, and the Director of Management Contracts at DID, Claude Royer.  This deployment will take place over the next seven years. On completion, the project will provide access for some 430,000 micro and small entrepreneurs to quality financial services that are adapted to their needs.

The IDB, through its Multilateral Investment Fund (MIF), will invest in the CFEs that will be set up and finance the technical assistance that will be entrusted to DID. Technical assistance will include the introduction of suitable methodologies and governance in the new financial institutions. Local investors will also become partners, guaranteeing the community-based nature of the CFEs. "By signing this document DID and MIF/IDB are formalizing a successful partnership that has already been very productive for several years. Going forward, we expect to strengthen our relationship by establishing new financial centres for entrepreneurs that will reach thousands of micro and small enterprises throughout Latin America and the Caribbean," says Donald Terry, Manager of the MIF.

DID will take an operator-investor approach in setting up the CFEs. This approach, created by DID several years ago, enables the organization to support rapid startup of local financial institutions dedicated to developing the private sector. It means that in addition to taking an equity position in each CFE established, DID will also manage the institutions until they achieve financial self-sufficiency or until management can be smoothly transferred to a local team. The investments made by DID will come from the Partnership Fund set up by the organization in 1999 in order to encourage the emergence and growth of community finance institutions in countries that are in development or transition.

CFEs: a powerful tool for developing the private sector

Around the world, small and micro enterprises play a crucial role in the economic and social development of communities. They create jobs, generate economic activity, contribute to developing local skills and thereby participate in empowerment for community development and reducing poverty. "However, we must remember that growth of the private sector cannot be achieved unless entrepreneurs have proper access to financing," notes Anne Gaboury, President and CEO of DID.

The CFE financial centres for entrepreneurs are specifically intended to provide entrepreneurs with access to specialized financial services that are adapted to their needs. Since 2003, DID has set up four CFEs, in Burkina Faso, Mali, Senegal and Rwanda. They have made some 6150 loans since they were set up, for a cumulative portfolio of over US $80 million.

DID and IDB: a decade of collaboration

The close collaboration between DID and IDB goes back ten years and has enabled the two organizations to join forces and make a major contribution to improving and strengthening the institutional capacity of financial intermediaries who wish to reach micro and small entrepreneurs. "We are extremely pleased by this announcement, and by the engagement of IDB in promoting the integration of microfinance into the financial sector," said Marcel Lauzon, Chair of the DID Board of Directors, during the signing of the agreement last Sunday. "For us, it is a concern that must be shared by the greatest possible number of stakeholders."

IDB's investment strategy for the microfinance sector is based on four main principles, sustainability, partnership, innovation and achieving tangible results. All of these principles are at the core of DID concerns.

 



Source : CNW Group
 

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