by Uyen Tran - Deals -

MICROCAPITAL.ORG STORY: The International Finance Corporation (IFC) Invests $4m in Equity in Sogebank, a Haitian Bank, to Finance Micro, Small, and Medium Enterprises

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The International Finance Corporation (IFC), a member of the World Bank, is investing USD 4 million in equity in Sogebank S.A. of Haiti to finance micro, small, and medium enterprises (MSMEs) [1]. According to the IFC’s Summary of Proposed Investment, Sogebank is the largest commercial bank in Haiti with total assets of approximately USD 750 million [2]. It has a branch network of 42 branches [1]. Its activities comprise of retail and corporate banking, microfinance, remittance distribution, and factoring, which operate as independent businesses through subsidiaries [2]. Information on the percentage of its business delegated to microfinance at Sogebank is not publicly available.

As reported in a previous MicroCapital story, the IFC signed an agreement in April 2009 with Sogebank to support financing of microenterprises and small and medium enterprises [5]. This was aimed at providing access to financial services for 2,500 MSMEs over a five-year period. At the time, the role of the IFC was only advisory [5].

Robert Moscoso, Sogebank’s Chairman and Chief Executive Officer, stated, “This investment sends a strong signal about IFC’s commitment to support a key financial player in expanding access to finance to essential, productive sectors in Haiti, a country where only one percent of the population has access to formal financing” [1]. The IFC cites that micro, small, and medium enterprises employ about 80 percent of the local workers [1]. According to the World Bank, as of 2007, Haiti has a population of 6.6 million [8]. For further background information on Haiti’s microfinance environment, there is a MicroCapital story discussing the Economist’s 2008 microfinance report for Latin America and the Caribbean [6]. In this report, it explains that Haitian banks engage in microfinance either through a specific department or a separate entity constituted as a non-bank financial institution [6].

Created in 1956 and based in Washington, DC, the International Finance Corporation, a member of the World Bank Group, fosters sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments [3]. Its net worth at the end of 2008 was USD 18.3 billion [3, 4].

Sogebank S.A. was founded in 1986 by a group a Haitian businessmen who took over the operations of the former Royal Bank of Canada, which was present in Haiti since 1917 [2]. According to the IFC Summary of Proposed Investment, Sogebank has market shares of 28 percent and 34 percent in loans and deposits respectively [2]. The shareholding of Sogebank is fragmented among several Haitian families, with no single individual shareholder permitted to hold more than 15 percent [2]. The three largest individual shareholders that own more than five percent of the capital are Jean-Claude Nadal (9.2 percent), Pascale & Ralph Delain (6.4 percent), and Roger Jaar (5.2 percent) [2].

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By Uyen Tran, Research Assistant

Bibliography:

[1] International Finance Corporation, Press Release: http://www.ifc.org/ifcext/media.nsf/content/SelectedPressRelease?OpenDocument&UNID=1C17FAEF181B94AB852575FA004F8EF5

[2] International Finance Corporation, Summary of Proposed Investment: Sogebank: http://www.ifc.org/ifcext/spiwebsite1.nsf/1ca07340e47a35cd85256efb00700cee/01C8F676B11236AA852573E50080AD9E

[3] International Finance Corporation: http://www.ifc.org/

[4] International Finance Corporation, 2008 Annual Report: http://www.ifc.org/ifcext/media.nsf/Content/AR2008

[5] MicroCapital.Org article, 6 May 2009: “International Finance Corporation (IFC) Worldwide Microfinance Investment Deals March and April 2009 of $51m and EURO 7m” https://www.microcapital.org/microcapital-story-international-finance-corporation-ifc-worldwide-microfinance-investments-deals-march-and-april-2009-of-usd-51m-and-euro-7m/

[6] MicroCapital.Org article, 7 July 2009: “The Unaddressed Need for Microfinance Oversight and Customer Protection in Haiti” https://www.microcapital.org/microfinance-story-the-unaddressed-need-for-microfinance-oversight-and-customer-protection-in-haiti/

[7] Sogebank: http://www.sogebank.com/# (available in French)

[8] World Bank: Haiti Data Profile http://ddp-ext.worldbank.org/ext/ddpreports/ViewSharedReport?REPORT_ID=9147&REQUEST_TYPE=VIEWADVANCED

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