IADB Loan Boosts Micro-Credit for Women in Peru

Aug 2010
Lima, Peru, August, 06 2010 - The Washington-based Inter-American Development Bank (IADB) has raised money in a novel way for a micro-credit scheme in Peru aiming to provide small loans to women entrepreneurs who would normally not qualify for business loans.

Working for the first time with string of socially minded private lenders from around the globe, the Washington-based institution said Friday it had mobilized $36 million for Mibanco, Peru's largest micro lender.

The loan is the first local currency-syndicated loan approved by a large development institution for Peru, the IADB said in a statement.

Because of its international status as a preferential lender, the IADB can offer investors currency protection in case a country imposes damaging exchange controls.

With its existing reach among Peru's poor, the IADB said Mibanco plans to offer micro-loans of a few hundred dollars up to $3,000 to small businesses owned by women.

"The program ... goes a step beyond providing access to finance for low-income people by offering business training specially designed so that women who own microenterprise and small businesses can succeed in their ventures," said project team leader Susan Olsen of the IADB's "Opportunities for the Majority" initiative.

Bangladeshi economist Muhammad Yunus, who won the Nobel Prize in 2006 for inspiring a global microfinance movement, showed how tiny loans of a few dollars to the poor could help them escape abject poverty by generating extra income.

Olsen said IADB was attracted by the prospect of reaching 80,000 women through Mibanco's scheme. With an additional $3 million grant from a separate IADB fund, Mibanco will also train about 100,000 businesswomen in Peru.

Ben Simmes, director of social performance and financial analysis for Netherlands-based Oikocredit, told Reuters the for-profit group had long operated in Latin America but was attracted by the opportunity to not only finance small businesses operated by women but also train them.

"For many, microfinance is an opportunity to survive to the next day but this loan is aiming to foster the economic developments and assist women to growth their business," he said.

Source : Fox Business

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