24124 - Microfinance Downscaling Facility

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Summary of Proposed Investment

Project Number

24124

Company Name

Accion International

Date SPI Disclosed

Jan 12, 2005

Country

World Region

Industry

Financial Markets

Projected Board Date

Jan 27, 2005

Status

Active

Sector

Commercial Banking - Microfinance and Small Business

Department

Global Industry, Financial Markets

Environmental Category

Previous Events

Approved : Jan 28, 2005
Invested : Jan 31, 2008

Project Description

The Microfinance Downscaling Facility (the facility) is an investment and technical assistance project designed to support commercial banks in Latin America, Africa, Asia, and the Middle East that have a strategic interest in expanding their lending operations to microentrepreneurs (downscaling). The facility, undertaken in collaboration with ACCION International, would establish downscaling units at commercial banks designed to attend the underserved entrepreneurial population. At the conclusion of the program, participating banks are expected to serve at least 100,000 low-income microentrepreneurs with appropriate and sustainable financial services.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	10.0
Equity	5.0

Development Impact

The project will have a very high development impact. Microfinance has been shown to have a major positive role in alleviating poverty and unemployment in developing countries. The facility would support and facilitate the introduction and transfer of management expertise, new financial products and lending methodologies that allow commercial banks to effectively and profitably service low-income microentrepreneurs (it would also likely result in the creation of several new microfinance entities linked to existing commercial banks). By enabling commercial banks to enter and sustain microfinance on commercial terms, the facility has the potential to generate a massive increase in the availability of financial services for the poor. At the conclusion of the facility, the participating banks are expected to serve at least 100,000 low-income microentrepreneurs with appropriate and sustainable financial services. Their microfinance outreach is expected to continue to grow from there, unencumbered by the funding limitations that usually face specialized microfinance institutions.

Support of microfinance goes to the core of IFC’s mission to promote sustainable private sector investment and poverty reduction. Microfinance is also an integral part of IFC’s strategic emphasis on small business development. The facility would allow IFC to roll out bank downscaling on a global scale. The experience gained through the collaboration with ACCION would enable IFC to expand the model to other partners and banks, including existing IFC clients in countries where microfinance remains underdeveloped but demand is strong.

This is a Financial Intermediary (FI) Type 1 microfinance project according to IFC''s environmental and social review procedure. Each institution supported by this project will be required to designate appropriate individuals to have responsibility for environmental issues, and to establish an environmental management system to manage environmental opportunities, as well as ensure that activities financed under relevant operations are consistent with applicable local environmental, occupational health and safety regulations and IFC''s Microfinance Exclusion List. IFC''s Sustainable Financial Markets Facility will contribute to the Technical Assistance Component of this project by providing microfinance-oriented training on environmental, health and safety risks and opportunities, to help microfinance borrowers build better businesses.
Location of environmental documents In locally affected community

Contacts

For Inquiries About the Project, Contact

Ms. Marcia Brown, Vice President, Resource Development,
ACCION International & ACCION USA Headquarters
56 Roland Street, Suite 300
Boston, MA 02129 USA
Phone: 617-625-7080
Fax: 617-625-7020

This Summary of Project Information (SPI) is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC's activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC's Disclosure of Information Policy that went into effect September 1998.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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