MICROCAPITAL STORY: responsAbility Global Microfinance Fund (rAGMF) of Luxembourg Lends a Total of $3.25m to the Foundation for International Community Assistance (FINCA) in Azerbaijan, Kyrgyzstan, and Georgia

The Consultative Group to Assist the Poor (CGAP) reports in its list of recent transactions that the responsAbility Global Microfinance Fund (rAGMF) financed USD 750,000 in loans to the Foundation for International Community Assistance Azerbaijan (FINCA Azerbaijan) on February 27, 2008, USD 1 million to FINCA MicroCredit Company (FMCC) of Kyrgyzstan on March 17, 2008, and USD 1.5 million to FINCA Georgia on March 19, 2008. The transaction to FINCA Azerbaijan is not to be confused with a separate responsAbility Microfinance Leaders Fund (rAMLF) loan taking place on the same date for the exact same amount, which was reported on by MicroCapital here.

Incorporated in Luxembourg, the rAGMF is the first fund created by Switzerland-based responsAbility, an organization aiming to connect the increasing number of social investors with successful microfinance institutions (MFIs) in need of capital. The fund reports 163 active microfinance investments totaling USD 224.5 million, according to the Monthly Report April 2008. Dedicating most of its funds to loans and debt securities (94 percent), the rAGMF also makes equity investments. The rAGMF reports total fund assets of over USD 250.5 million and is managed by the Credit Suisse Microfinance Fund Management Company according to the Fund Folder available on rAGMF’s web site. For more information on investing in microfinance with Credit Suisse, which is a founding shareholder (page 3) of responsAbility, please refer to their microfinance web site.

The Luxembourg Fund Labelling Agency (LuxFLAG), a nonprofit association established in July 2006 to promote capital-raising for quality microfinance investment vehicles (MIVs), has given the rAGMF its LuxFLAG Microfinance Label which is valid until April 30th, 2009. The rAGMF’s MIX Market profile can be found here. MicroCapital reported on LuxFLAG here.

responsAbility also runs the Luxembourg-based rAMLF, which was incepted in 2006, as reported by MicroCapital, and has 44 active microfinance investments totaling USD 118.9 million, as reported by the MIX Market, the microfinance information clearinghouse. The rAMLF, which invests most of its funds in Eastern Europe and Central Asia (53 percent), also reports investments spread across Latin America and The Caribbean (35 percent), Africa (7 percent), and East Asia and the Pacific (5 percent) and the fund’s total assets amount to USD 131.1 million. All figures are as reported on October 31st, 2007. MicroCapital recently reported on rAMLF here. LuxFLAG awarded the rAMLF its LuxFLAG Microfinance Label which is valid until April 30th, 2009.

FINCA Azerbaijan will complete ten years of work in the country on June 28, 2008 and launched a new web site (http://www.fincaazerbaijan.com/) on May 8th. Through a press release on the same day, Country Director Jeff Flowers announced that FINCA Azerbaijan has reached 80,000 clients and a loan portfolio of over USD 55 million. Founded in 1998 with support from the United States Agency for International Development (USAID), a US government agency extending “assistance to countries recovering from disaster, trying to escape poverty, and engaging in democratic reforms,” FINCA Azerbaijan’s stated mission is to provide Azerbaijan’s lowest-income entrepreneurs with financial services including loans ranging from USD 50 to USD 50,000. According to the MIX Market, the non-bank financial institution reported return on assets (ROA) in 2007 of 5.31 percent, an operational self-sufficiency (OSS) ratio of 120.8 percent, and a debt to equity ratio of 432 percent. FINCA Azerbaijan was most recently audited in 2006 by RSM Top-Audit of Russia—the report is available here. MicroCapital recently reported on FINCA Azerbaijan here.

Based in Bishkek, the FMCC was founded in 1995 through a USD 6.2 million grant from USAID and states on its web site that female bazaar workers are its primary clients. Reaching over 69,300 borrowers, 74 percent of whom are women, the FMCC has 12 branch locations and a total loan portfolio of more than USD 37.2 million. The MIX Market reports that the non-bank financial institution, which was formerly known as “FINCA Kyrgyzstan,” has an ROA of 6.07 percent. The rAGMF also invested USD 3 million in the FMCC in January, as reported here by MicroCapital.

An unregulated nonprofit based in Tbilisi, FINCA Georgia was founded in 1998 and maintains 27 branches which serve over 22,200 borrowers, 10 to 15 percent of whom are internally displaced persons (IDPs) from the wars in Abkhzaia and South Ossetia. The microfinance institution (MFI) has a total loan portfolio of USD 17.9 million and the MIX Market reports an ROA of 0.33 percent.

MicroCapital recently published a Who’s Who article on the Foundation for International Community Assistance (FINCA) here.

By Anthony Busch, Research Assistant

Additional Resources:

Consultative Group to Assist the Poor: Home, List of Recent Transactions

Credit Suisse: Home, Microfinance

FINCA Azerbaijan: Home, Press Release, History, Mission, Products and Services, MIX Market Profile

FINCA Georgia: Home, FINCA Site, MIX Market Profile

FINCA MicroCredit Company: Home, MIX Market Profile

Foundation for International Community Assistance: Home

The Global Microfinance Investment Congress: Home, “Investment Fund Strategies in Competitive Markets – Workshop 3″, PowerPoint Presentation by Christian Speckhardt, January 22, 2008

Luxembourg Fund Labelling Agency: Home, Who We Are, Listing Procedure, List of MIVs

MicroCapital article, December 6, 2007: “Eastern Europe Microfinance Institution LOKMicro Receives Over $6m in Loans from responsAbility Mikrofinanz-Fonds, responsAbility Microfinance Leaders Fund and VDK MFI Loan Portfolio”

MicroCapital article, March 26, 2008: “The Foundation for International Community Assistance (FINCA)”

MicroCapital article, February 8, 2007: “Luxembourg Fund Labeling Agency Luxflag Grants Microfinance Labels to Dexia Micro-Credit Fund, European Fund for Southeast Europe and responsAbility Micro-Credit Fund”

MicroCapital article, March 18, 2008: “Luxembourg-based responsAbility Global Microfinance Fund Loans $3m to FINCA Kyrgyzstan”

MicroCapital article, May 20, 2008: “responsAbility Microfinance Leaders Fund (rAMLF) of Luxembourg Lends $500k to Thaneakea Phum (Cambodia) (TPC), $303k to Catalyst Microfinance Investors (CMI), $929k to ASP Financiera (ASP), and $750k to the Foundation for International Community Assistance Azerbaijan (FINCA Azerbaijan)”

MicroCapital article, December 4, 2006: “ResponsAbility of Switzerland Launches ResponsAbility Microfinance Leaders Fund”

MicroCapital article, April 23, 2007: “Switzerland-based Symbiotics Intermediates a USD 3 mn Loan from Microfinance Loan Obligations to Foundation for International Community Assistance (FINCA) Azerbaijan”

MIX Market: Home, responsAbility Microfinance Leaders Fund

responsAbility: Home, Contact

responsAbility Global Microfinance Fund: Home, Monthly Report April 2008, MIX Market Profile, Fund Folder

United States Agency for International Development: Home, About