MICROCAPITAL STORY: KfW Entwicklungsbank, Development Arm of German Bank, Lends $14.7m to Moroccan Microfinance Institution (MFI) Fondation pour le Développement Local et le Partenariat (FONDEP)

The Microfinance Capital Markets Newsletter of the Consultative Group to Assist the Poor (CGAP) reported that KfW Entwicklungsbank, the emerging-economy financing arm of a German banking group, issued a loan of EUR 10 million (USD 14.7 million) to the Fondation pour le Développement Local et le Partenariat (FONDEP), a Morocco-based non-governmental organization (NGO).

The loan accompanies a convention of partnership signed by both parties that aims to establish a basis for future collaborations. The loan is refundable over eight years with a grace period of two years.

As previously reported by MicroCapital, FONDEP Micro-Crédit was ranked number five among the top 50 microfinance institutions (MFIs) of 2007 by Forbes magazine.

KfW Entwicklungsbank is a part of KfW (Kreditanstalt für Wiederaufbau) Bankengruppe, founded in 1948 as a reconstruction bank for post-war West Germany. The Entwicklungsbank finances investments and accompanying consulting services in developing economies on behalf of the German Federal Ministry for Economic Cooperation and Development. As of June 30, 2007, it had EUR 681.6 million (USD 923.0 million) allocated to 99 active microfinance investments. Financial ratios are not available from data on the MIX Market, the microfinance institution information clearinghouse, or from the bank’s own Web site. All the most recent ratings from Fitch Ratings, Moody’s, and Standard & Poor’s have KfW securities as AAA long-term.

FONDEP Micro-Crédit was founded in 1996 with a mission to make credit available to the poor, particularly women and young people. As of December 31, 2006, its assets totaled USD 30.5 million, of which USD 26.8 million was vested in its loan portfolio. Its return on assets was 19.17 percent and its debt/equity ratio was 225.14 percent. Active borrowers numbered 76,378. The latest report from ratings agency Microfinanza Rating in July 2006 gave FONDEP an A, up from its previous BBB rating.

By Stephen Son

Additional Resources:

CGAP: “List of Recent Transactions”

FONDEP: “KfW and FONDEP sign a convention of partnership for a loan of euros 10 millions”

MicroCapital.org article, January 21, 2008: “Forbes’ Special Feature on Private Investment in Microfinance Includes Top 50 Microfinance Institutions”

MIX Market: Profile for KfW; Profile for FONDEP

KfW Bankengruppe: Rating