The Multilateral Investment Fund (MIF), a member of the US-based Inter-American Development Bank (IDB) Group, recently announced a USD 4.9 million loan and technical assistance package for Root Capital, a US-based nonprofit social investment fund that serves agricultural businesses that are considered too small and risky for mainstream banks and too large for microfinance funding. Root Capital is focused on serving this “missing middle” that includes many organic coffee and sugar cooperatives.
The funding provided by MIF includes a USD 3 million loan that will be used to expand financing for organizations in Honduras, Guatemala and Nicaragua, with Root Capital expecting to leverage the MIF funding to garner an additional USD 13 million financing through partnerships with local banks and microfinance institutions (MFIs). A non-reimbursable USD 1.9 million technical assistance grant will be directed towards efforts to strengthen the financial management of Root Capital investees.
MIF Team Leader Alejandro Escobar said, “The last 10 years have seen a great expansion in exports by coops and grower’s associations in Latin America to higher-value markets such as organic and fair-trade. Consumers are demanding sustainably-grown, ethically-sourced products and those in the developed world are willing to pay a premium price, but without access to adequate finance, rural communities are unable to capitalize on this booming demand for their specialty products”.
Root Capital reported total assets of USD 63 million and gross loan portfolio of USD 47.5 million as of March 31, 2011.
By Carol Kim, Research Associate
About Multilateral Investment Fund (MIF): MIF is an autonomous fund that was founded in 1993 by the Inter-American Development Bank (IDB). MIF has 38 donating member countries from Latin America, the Caribbean, North America, Europe and Asia. The United States and Japan play leading roles in the organization. As of 2010, MIF reported having approved approximately 1000 projects in approximately 26 developing member countries and together with its partners has financed approximately USD 2.5 billion in project funding.
About the Inter-American Development Bank (IDB): The Inter-American Development Bank (IDB) is a US-based multilateral finance institution established in 1959 that operates in Latin America and the Caribbean. IDB works with governments, companies and nongovernmental organizations (NGOs) to provide both loans and grants to support small and medium-sized enterprises (SMEs), health, education and other sectors. IDB also provides technical assistance and research in these areas. Its Board of Executives is elected by 48 member countries, 26 of which are located in Latin America and the Caribbean. IDB reported total assets of USD 84 billion as of December 31, 2009.
About Root Capital: Root Capital is a US-based nonprofit social investment fund that was founded in 1999. It provides capital, financial education, and market connections to small and growing businesses in the developing world. Root Capital has provided services across 26 countries in Latin America, Africa and Asia. As of March 31, 2011, Root Capital reported total assets of USD 63 million, gross loan portfolio of USD 47.5 million and 105,000 small agricultural enterprises reached.
Sources and Additional Resources:
Inter-American Development Bank News Release: “MIF supports innovative financing scheme for sustainable agriculture in Honduras, Guatemala and Nicaragua”, August 2011, http://www.iadb.org/en/news/news-releases/2011-08-04/latin-america-sustainable-agriculture-financing,9495.html?WT.mc_id=NewsEmail_Long_9495&wtSrc=Email&wtType=Long&wtArticleID=9495
MicroCapital.org: “MICROCAPITAL BRIEF: IDB Provides Partial Credit Guarantee to Patrimonio Hoy Microfinance Program of Mexico’s CEMEX to Boost Lending in Mexico, Colombia, Costa Rica, Nicaragua, Dominican Republic”, July 4, 2011, https://www.microcapital.org/microcapital-brief-idb-provides-partial-credit-guarantee-to-patrimonio-hoy-microfinance-program-of-mexico%E2%80%99s-cemex-to-boost-lending-in-mexico-colombia-costa-rica-nicaragua-dominican-republ/
MicroCapital.org: “MICROCAPITAL BRIEF: Backed by G20, Ashoka Changemakers Announces 14 Winners of Small and Medium-sized Enterprise (SME) Finance Challenge”, November 8, 2010, https://www.microcapital.org/microcapital-brief-backed-by-g20-ashoka-changemakers-announces-14-winners-of-small-and-medium-sized-enterprise-sme-finance-challenge/
MicroCapital.org: “MICROCAPITAL BRIEF: Good Capital Invests $200,000 in Microfinance Services of Root Capital”, September 7, 2010, https://www.microcapital.org/microcapital-brief-good-capital-invests-200000-in-microfinance-services-of-root-capital/
MicroCapital’s Universe Profile: Multilateral Investment Fund (MIF), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Multilateral+Investment+Fund+%28MIF%29
MicroCapital’s Universe Profile: Inter-American Development Bank (IDB), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Inter-American+Development+Bank+%28IDB%29
MicroCapital’s Universe Profile: Root Capital, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Root+Capital
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
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