Nordic Microfinance Initiative (NMI) has invested more than DKK 1 billion in microfinance institutions in Africa and Asia. The institutions have serviced more than 7 million customers, of which 96 per cent are women.
But there is still a need to increase the effort, as 1.7bn people globally still do not have access to basic financial services such as bank deposits and loans. This is especially the case in developing countries, which limits the possibilities of poor people to improve their standard of living by e.g. investing in a business, education or health or handle financial setbacks in connection with drought or disease.
Microfinance therefore plays an important role in the development of poor countries and offers a very direct access for people to invest in their own future.
Fund 4 under way
Nordic Microfinance Initiative began in 2008 as a Norwegian initiative. IFU made its first NMI investment in 2016, and the ambition is to extend the collaboration to all the Nordic countries. IFU is now increasing its commitment by investing DKK 200m in fund 4, which has a total expected commitment of more than DKK 1bn.
– There is a great need for microfinance in developing countries, and we are happy to increase our involvement through the Nordic Microfinance Initiative. We hope that more Danish investors will help with this important task in the future, said Torben Huss, acting CEO of IFU.
A solid business case
In addition to reaching 7 million customers, NMI’s three current funds have contributed through equity investments to developing local microfinance institutions and making them more professional. The funds have provided an annual net yield of about 10 per cent to the investors.
– We are proud of the results created so far and very pleased with the trust shown by the investors. It has contributed to improving the standard of living for millions of people and also provided a solid yield to the investors, said Arthur Sletteberg, Managing Director of NMI.
Fund raising initiated in Denmark
NMI is based on a public-private partnership with the Norwegian DFI Norfund and IFU contributing public funds. Private investors so far are the largest family-owned Norwegian investment company Ferd, Norway’s largest finance institution DNB and Norway’s largest pension fund KLP.
All current investors have committed to investing in fund 4 as well, and NMI is now initiating fundraising in Denmark.