Four Groups Syndicate a $35 million Fund for African Microfinance Investment

Four organizations have joined forces to create a $35 million syndicate fund for microfinance investment in Africa. The fund will loan money to African microfinance institutions (MFIs), and by coordinating lending, seek to lend more efficiently.

The contributors are no strangers to microfinance investment. Most significantly, the Dutch social investment society OikoCredit is one of the world leaders in microfinance investment with a loan portfolio of E60 million. Also on board is Stromme Microfinance, a Norwegian Christian charity that has funded NGOs and churches since 1976. Less information is available on the other two contributors. Jitegemee Trust, which was created as a joint venture between the Kenyan and Dutch governments, is dedicated to providing aid to arid regions. The European Union and Kenyan government fund the Micro Enterprise Support Programme Trust (MESP). The MESP provides monetary and institutional support for MFIs. But it appears to be typical of quasi-governmental agencies that try to do everything from making loans to developing products to providing technical assistance to public policy.

The syndicate will be based in Kenya, which is home to 56 MFIs in addition to the four commercial banks involved in microfinance. The United Nations Capital Development Fund estimates that 1.1 million Kenyans depend on informal organizations for financial services, while another 3.8 million are served by MFIs, banks, and NGOs. Kenya’s largest MFIs are Equity Bank with a loan portfolio over $40 million and K-Rep Bank with a portfolio of $27 million.

In addition, the syndicate will consider loan applications from MFIs throughout Africa. Africa is home to untold thousands of MFIs—only nine have loan portfolios of $30 million or more—but the need is still immense. According to a Microfinance Information Exchange report on African microfinance, only 1.5% of Africa’s population has access to financial services.

1) Consultative Group to Assist the Poor (CGAP): “Microfinance Capital Markets Update” is the best source for monthly updates on debt and equity deals in microfinance.
2) “Group Raises Sh2.6bn to Fund Small Business”
3) “Overview of the Outreach and Financial Performance of Microfinance Institutions in Africa”
4) Microfinance Information Exchange

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