PRESS RELEASE: KfW Entwicklungsbank and IFC launch cross-border fund to boost lending to microenterpreneurs in developing and transition countries

Source: kFW

Original press release here.

December 23, Washington D.C. – kFW Entwicklungsbank and the IFC signed a declaration of intent to establish a cross-border refinancing facility for microfinance institutions. The fund, designed by KfW Entwicklungsbank, acting on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), and the IFC, has a volume of USD 500 million and aims to support microfinance institutions (MFIs) by assuring their ability to lend to small and micro enterpreneurs, thus preserving and creating jobs at micro and small businesses.

“Supporting micro enterprises is highly relevant for development policy reasons because in developing and transition countries, the smallest and small businesses act as a motor for growth and for jobs while also laying the groundwork for safeguarding existing employment. With this facility we can set a strong example and quickly counteract the current downward trend in lending among MFIs”, said Wolfgang Kroh, member of the Managing Board of KfW Bankengruppe.

In a second phase plans call for endowing the facility with further funds from the BMZ and other public donors. Additional funds are also to be mobilised from further development financiers and possibly commercial investors as well.

KfW is one of the largest micro financiers the world over. On behalf of the German Government, KfW Entwicklungsbank is currently promoting some 100 microfinance projects in around 60 developing and transition countries that reach out to over 14 million people. Its current project portfolio adds up to approx. EURO 800 million (as of the end of 2007). About two thirds of these funds are raised by KfW at its own risk.

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