NORDIC COLLABORATION ENSURES DKK 500M FOR MICROFINANCE
Norfund, IFU and a number of private investors have established Nordic Microfinance Initiative to strengthen microfinancing in developing countries. The objective is to give poor people access to loan financing, so they can invest in their business and improve their living conditions.
In many developing countries, access to loan financing is limited. Espcially for poor people living in the countryside. Microfinancing is an opportunity to create better access to financing investments in small businesses to create economic progress and development locally.
Nordic Microfinance Initiative (NMI) is based on a public-private partnership between the public development fiannce institutions Norfund and IFU as well as a number of Norwegian institutions such as Ferd AS, DNB Livsforsikring ASA, Storebrand ASA and KLP. The total commitment is at DKK 575m. About half of the financing comes from private investors.
“We hope that Nordic Microfinance Initiative can become a strong platform with private investors from several Nordic countries. In that way we can intensify the work on delivering financial services to the development of poor people”
Tommy Thomsen, CEO, IFU
NMI will invest in medium-sized microfinancing institutions with a commercial mind-set, which are managed professionally and focus on sustainability and social responsibility. The fund’s strategy is based on active ownership, and the objective is to develop the institutions when it comes to profitability and sustainability. At first the fund’s activities will be directed at 14 countries – 10 in Africa and 4 in Asia.
The fund will contribute to more self-employed and small businesses, primarily in the countryside, gain access to capital and thereby the possibility to develop their business, create employment and higher income. Furthermore, the objective is to offer education and financial insight to more poor people. Finally, a number of jobs will be created directly in the microfinancing institutions, as microfinance is a labour intensive business.
Loans to 800,000 women in Kenya
Currently, the fund has invested in Kenyan Women Financial Trust, delivering financial services to close to 800,000 women all over Kenya. Initially, the fund’s investments are expected to reach 2.5 to 3 million clients; 90 per cent being women.
Must meet international standards
To ensure the best possible development effects, the microfinancing institutions that NMI invests in must comply with the UN guidelines “Principles for Investors in Inclusive Finance”, and these principles must be part of the basic values in the institutions.
Furthermore, the institutions must live up to international standards such as CGAP Client Protection Principles, IFC Microfinance Exclusion List, anti-money laundering requirements and anti-corruption guidelines.