World Bank President and German Development Minister Launch Facility to Support ...
Berlin, Germany, February, 05 2009 -
World Bank Group President Robert B. Zoellick and German Development Minister Heidemarie Wieczorek-Zeul today launched a $500 million facility that will support microfinance institutions facing difficulties refinancing as a result of the global financial crisis and ensure that low-income borrowers in developing countries continue to have access to finance.
The Microfinance Enhancement Facility, created by IFC, a member of the World Bank Group, and German development bank KfW is expected to provide refinancing to more than 100 microfinance institutions in up to 40 countries. It will support lending to as many as 60 million low-income borrowers in many of the world’s poorest countries.
“Microfinance plays a critical role in providing financial services to poor people and fighting poverty,” said Zoellick. “The Microfinance Enhancement Facility will provide vital funding and ensure that microfinance continues to stimulate growth, create jobs, and overcome poverty in emerging markets. I am most appreciative of the German Government’s support, through KfW, for this innovative facility at a time of economic danger for the developing world.”
Wieczorek-Zeul, said: “Micro loans are among the most effective instruments in development. Microfinance institutions are doing great work around the world. We cannot allow the global financial and economic crisis to threaten the work of these institutions. We have to ensure now that those that contributed least to the financial markets crisis do not suffer most from it. With the new facility, we are helping to ensure that people continue to escape the poverty trap through microfinance.”
Dr. Norbert Kloppenburg, COO KfW Bankengruppe, said, "Supporting micro enterprises is highly relevant for development policy reasons because in developing and transition countries, the smallest and small businesses act as a motor for growth and for jobs while also laying the groundwork for safeguarding existing employment. With this facility we can set a strong example and quickly counteract the current downward trend in lending to microfinance institutions”.
The Microfinance Enhancement Facility is a short-to-medium term facility of up to $500 million with initial contributions of $150 million from IFC and $130 million from KfW. The facility will be managed by BlueOrchard Finance, responsAbility Social Investments AG, and Cyrano Management, three of the industry’s leading fund managers. Credit Suisse has been appointed custodian and administrative agent.
The microfinance industry continues to perform well with microfinance institutions maintaining healthy portfolios. However, some microfinance institutions face problems refinancing debt as a result of the global financial crisis. The Microfinance Enhancement Facility, created by IFC and KfW, is expected to provide refinancing to strong microfinance institutions.