IFC, a member of the World Bank Group, has announced that it will invest USD 7.4 million (a 16.4 percent participation/stake) in Microlender Caja Nuestra Gente, a Microfinance Institution serving 170,000 clients microlending in Peru. The IFC investment is also aimed to promote the growth and expansion of the Fundación BBVA para las Microfinanzas (owner of microlender, Caja Nuestra Gente) in Peru and Peruvian rural geographies. The IFC provides investments and advisory services to build the private sector in developing countries. Terms of the IFC’s investment are not provided. According to the IFC, Caja Nuestra Gente loan portfolio is currently at USD 146 million (average loan of USD 1,506 dollars) and presently serves 170,000 borrowers from low-income economies. Caja Nuestra Gente’s largest funder is Fundación BBVA para las Microfinanzas.
Caja Nuestra Gente was established in September 2008 as a merger of three microfinance institutions (Caja Rural de Ahorro y Crédito Nor Perú, Caja Rural de Ahorro y Crédito del Sur, and Edpyme Crear Tacna). The new resulting microlender is entitled Caja Rural de Ahorro y Crédito Nuestra Gente aka (Caja Nuestra Gente).
According to the MIX Market, Caja Nuestra Gente reported a gross loan portfolio of USD 122 million, Debt to Equity (671 percent), Total Assets (USD 162 million) and Gross Loan Portfolio/Total Assets (75.4 percent) as of December 31, 2008. Caja Nuestra Gente has not reported Return on Assets to the Mix Market.
Peru’s central bank recently revised downwards its forecast for 2009 GDP growth to 4 percent 2009 from 9.8 percent in 2008. According to Peru’s Finance Minister Luis Carranza, slumping commodity prices may be a cause for Peru’s GDP downward revision. Lower interest rates can help prompt businesses to invest and consumers to buy good and services, such as from SMEs. In addition, Microloans from microlending institutions such as Caja Nuestra Gente can potentially spur spending for productive usage and strengthen demand. Rural areas outside of Lima, Peru have banking penetration rates that are significantly lower with access to finance and loan being very limited.
MicroCapital reported in April 2009 the impact of the global financial crisis on Latin American and Caribbean microfinance institutions. According to MicroRate, the Peruvian microfinance sector should continue to grow at a healthy pace for 2009 (led by deposit-taking institutions such as municipal banks and regulated MFIs). MicroRate believes that Peru’s MFI sector consists of some of the most sophisticated and advanced MFIs in the world with increased competition in urban centers pushing MFIs into new geographic regions such as the underserved jungle regions.
Furthermore, MicroRate has stated that the microfinance sector in Peru “has proven to be a valuable alternative for Peru’s entrepreneurial self-employed and is served by specialized banks, municipal banks rural banks, NGOs, other specialized financial institutions as well as the commercial banking sector.” It is important to note that as many MIVs reach their lending limits for Peru, less established non-deposit taking MFIs may encounter challenges in raising capital.
The Bank of International Settlements (BIS) has developed contingency measures for Peru to combat the global financial crisis that includes larger provisions. In addition, MicroRate has learned that Peruvian financial institutions will have to follow Basel II accounting norms by July 2009, “including those institutions that regulate capital requirements that attempt to cover credit, operative and market risk.” This should provide greater transparency for the Peruvian MFI sector.
The International Finance Corporation (IFC) was established in 1956. IFC fosters sustainable economic growth in developing countries by financing private sector investment, mobilizing capital in the international financial markets, and providing advisory services to businesses, governments and microfinance institutions. New investments totaled USD 16.2 million for its 2008 fiscal year. The organization aims to foster sustainable economic growth in emerging countries by supporting private sector development, mobilizing private capital and providing advisory services and risk mitigation companies and governments. The IFC has supported the creation and development of 24 microfinance institutions in Latin America and the Carribbean with total investments of USD 213 million. The IFC does not report to the Mix Market.
The Fundación BBVA para las Microfinanzas is a nonprofit organization founded in 2007 with the aim of making the provision of financial products and services at the base of the pyramid in order to help people of low income revenue to undertake small-scale productive activities that contribute to improving their standard of living. The foundation is the non-profit microfinance arm of Spanish retail and commercial bank Banco Bilbao Vizcaya Argentaria SA (BBVA) and began operations with a USD 259.9 million endowment, as previously reported by MicroCapital.
By Zoran Stanisljevic
Additional Resources:
IFC Homepage, May 2009, IFC y la Fundación Microfinanzas BBVA expanden servicios microfinancieros en Perú
Bloomberg, April 2009: Peru Central Bank Cuts Lending Rate on Slowing Growth
MicroCapital Paper Wrap-Up, April 2009: Cautious Resilience: The Impact of the Global Financial Crisis on Latin American & Caribbean Microfinance Institutions, by Sebastian von Stauffenberg
BBVA Microfinance Foundation: Homepage
BBVA Microfinance, May 2009, International Finance Corporation to take a 16.4% Stake in Caja Nuestra Gente to Support Expansion of the BBVA Microfinance Foundation in Peru.
Caja Nuestra Gente: Homepage
Mix Market: Profile, Caja Rural de Ahorro y Credito Nuestra Gente
Global Partnerships: Profile Partner: Caja Nuestra Gente
MicroCapital, February 2007: Banco Bilbao Vizcaya Argentaria SA (BBVA) Invests USD 259.94 mn in Latin American Microfinance Institutions Caja Nor, Caja Sur, Corporacion Mundial de la Mujer and Medellin
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