Sub-Saharan Africa: KfW Entwicklungsbank Promotes Private Initiative of Microent...

Nov 2010
Frankfurt am Main, Germany, November, 25 2010 - REGMIFA has disbursed the first loans totalling USD 13.75 million to microfinance institutions in Ghana, Kenya, Senegal and Tanzania.

Structured by KfW Entwicklungsbank, the Regional Micro, Small and Medium Enterprises Investment Fund for Subsaharan Africa (REGMIFA), the first of its kind, invests in microfinance institutions that grant loans to microentrepreneurs.

The first loan in Ghanaian cedi was granted to the Sinapi Aba Trust (SAT). The microfinance institution gives loans to microenterprises mainly located in rural areas, primarily through a group lending methodology. The second loan went to First Allied Savings and Loans (FASL), which offers mainly individual loans but also group loans to micro and small entrepreneurs. The third loan went to the Kenya Women Finance Trust (KWFT) for onlending in Kenya shillings to low-income women borrowers. Further loans went to Faulu Kenya, PAMECAS in Senegal and FINCA in Tanzania.

“The disbursement of these loans is an important milestone for REGMIFA, a fund designed to support employment and entrepreneurship of small businesses in Sub-Saharan African countries. It will help to deepen Africa's economic growth and to improve the economic opportunities of small enterprises and poor population groups. REGMIFA will support particularly those institutions that act responsibly towards their customers and keep a watchful eye on their debt situation. Thus the Fund sets important standards", said Dr Norbert Kloppenburg, member of the Executive Board of KfW Bankengruppe.

The Fund was officially launched on 5 May 2010, with over a dozen public investors committing over USD 150 million. The Federal Ministry for Economic Cooperation and Development and KfW Entwicklungsbank will contribute some EUR 30 million to the Fund. The Fund is expected to develop a credit portfolio of some USD 200 million by 2014. It is the first fund to offer microfinance institutions in Sub-Saharan Africa a range of financing instruments such as long-term debt capital and quasi-equity financings such as subordinate loans in local currency.

"The Fund has achieved a great deal in its first six months, it has acted quickly and effectively. Its portfolio will further expand with the scheduled disbursement of loans to microfinance institutions in Nigeria and Cameroon", said Dr Kloppenburg.

REGMIFA will make funds available to numerous MSME lending intermediaries which will grant local currency loans to some 300,000 micro and small enterprises. The advantage is that the intermediaries will incur no currency risk and, hence, their debt burden will be lower.

KfW Entwicklungsbank is the world's largest financier of microfinance in developing and transition countries. In 2009 alone, almost one third of its commitments (EUR 1.1 billion) went to the financial sector.

Source : The Financial

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