MICROCAPITAL BRIEF: IFC Loans $1.2m to AFK of Kosovo for Microlending to Smallholder Farmers; Micro-, Small Enterprises (MSEs)

The International Finance Corporation (IFC), a unit of the World Bank Group, recently loaned EUR 1 million (USD 1.2 million) to the Agency for Finance in Kosovo (AFK), a microfinance institution that focuses on microenterprise lending in Kosovo. The proceeds are to be used to expand AFK’s lending to “micro and small businesses, and small farmers and agri-businesses in rural and semi-urban areas, in particular.”

AFK is a non-banking institution based in the city of Peja that aims to improve living standards in Kosovo by providing financial access to small businesses and microenterprises. The organization was founded in 1999 by Mercy Corps, a US-based humanitarian agency that controls two of AFK’s five board seats as of 2017. As of December 2016, the microlender reported total assets of USD 20 million and a gross loan portfolio of USD 18 million. As of 2018, AFK has approximately 14,000 customers, which it services via 20 branches. The organization does not accept deposits.

IFC offers loans, equity investments, advisory services and technical assistance to private companies with the intent of alleviating poverty and promoting open and competitive markets in developing countries. IFC has 184 member countries, and it reports total assets of USD 93 billion as of June 2017. During the year ending that month, it disbursed a total of USD 10 billion and earned return on assets (ROA) of 1.6 percent and return on equity of (ROE) of 5.9 percent.

The World Bank Group is a multilateral organization whose goal is “to end extreme poverty and promote shared prosperity in a sustainable way.” As of 2018, it has 189 member nations. The group encompasses (1) the International Bank for Reconstruction and Development and the International Development Association, which make up the World Bank; (2) IFC; (3) the Multilateral Investment Guarantee Agency; and (4) the International Centre for Settlement of Investment Disputes. During 2017, the World Bank Group disbursed funds totaling USD 44 billion.

By Nicholas Galimberti, Research Associate

Sources and Additional Resources

IFC press release
https://ifcextapps.ifc.org/IFCExt/Pressroom/IFCPressRoom.nsf/0/B0CBE82458DD0A65852582AB002DF62C

AFK background
http://www.afkonline.org/rreth-nesh-eng.html

AFK Microfinance Information Exchange (MIX) profile
https://www.themix.org/mixmarket/profiles/afk

IFC annual report
https://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/annual+report/2017-online-report/printed-version

World Bank annual report
https://openknowledge.worldbank.org/handle/10986/27986

MicroCapital Brief; March 7, 2017; International Finance Corporation (IFC) to Advise Microfinance Institution (MFI) Agency for Finance of Kosovo (AFK) on Agricultural Services
https://www.microcapital.org/microcapital-brief-international-finance-corporation-ifc-advise-microfinance-institution-mfi-agency-finance-kosovo-afk-agricultural-services/

MicroCapital Brief; May 22, 2018; Incofin’s agRIF Buys 10% Equity Stake in Armenia’s Inecobank from IFC, DEG
https://www.microcapital.org/microcapital-brief-incofins-agrif-buys-10-equity-stake-in-armenias-inecobank-from-ifc-deg/

Do you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at http://www.microcapital.org/products-page/ .