USAID and Oikocredit Announce $36.2 Million Guarantee for Microenterprise Activi...

Nov 2008
Washington D.C., United States, November, 06 2008 - The U.S. Agency for International Development (USAID), and Oikocredit, a socially responsible cooperative, announced a 10-year partial credit guarantee that will leverage $36.2 million in private financing to support microfinance activities in underserved areas and populations in sub-Saharan Africa and other developing regions.

Through this public-private partnership, loans made by Oikocredit will be backed by a 50 percent guarantee from the U.S. government, enabling microfinance providers to link to global sources of capital, often for the first time. The guarantee is intended to increase private-sector financing to microenterprises and small-scale farmers in order to enable them to invest in new equipment or higher-grade inputs to increase their productivity and incomes.

USAID has been a leader in the microfinance industry since the launch of its Microenterprise Initiative in 1994. Since that time, the microfinance industry has become more commercially viable and as a result has attracted a growing number of investors. Yet in certain geographic areas, microfinance providers are few, and local populations continue to be underserved. In order to address this market failure, USAID is partnering with Oikocredit to help increase the availability of financial services in developing countries. USAID uses the Development Credit Authority to mitigate the perceived risks of lending to understand clients. Since 1999, USAID has mobilized approximately $1.6 billion in private financing around the world.

Oikocredit, which started as a pioneer in the field of development financing, is today one of the largest, private microfinance funds worldwide. The cooperative is notable for its socially and ethically responsible investment vehicles which finance projects in the developing world that benefit economically disadvantaged people while providing investors with modest returns. Oikocredit obtained their first guarantee from USAID in 2003, and since then has gone on to issue subsequent USAID-guaranteed loans around the world, specifically in Georgia, Azerbaijan, Armenia, Kyrgyzstan, Russia, and Kenya. The guarantee announced today is the largest that USAID has ever done with Oikocredit, and is notable for its intent to increase financial access in difficult to reach markets.

Source : Market Watch

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