The International Finance Corporation (IFC), the private sector arm of the World Bank Group, has agreed to issue a $1m credit guarantee to Uganda Microfinance Limited, one of the most successful microfinance institutions in Africa.
The guarantee will permit Uganda Microfinance to borrow in local currency on commercial terms for the first time and, in due course, enable it to borrow on the strength of its own balance sheet.
Citibank Uganda Limited, a subsidiary of Citigroup, has agreed to provide a local currency loan to Uganda Microfinance for this purpose.
â€œIFC is committed to supporting and strengthening the financial sector in Uganda, to promote the development and growth of micro entrepreneurs,â€ said Richard Ranken, director of IFC sub-Saharan Africa Department.
As a leading provider of credit to micro businesses in the country, Uganda Microfinance Limited is a strategically important client for IFC.
Uganda Microfinance has more than 50,000 clients and a micro loan portfolio of more than $10m.
IFC guarantee is expected to have strong developmental benefits by helping create jobs and accelerating the growth of target businesses.
Jyrki Koskelo, IFC director of Global Financial Markets, said, IFC investment in Uganda Microfinance will make it easier for many low-income Ugandans to grow their micro enterprises and boost their incomes.
This is a milestone investment for IFC in the commercial microfinance sector in Africa.
Rodney Shuster, Uganda Microfinance executive director, said, â€œWorking with Citibank and IFC, two of the strongest financial institutions in the world, means that Uganda Microfinance meets stringent international financial standards and this collaboration further enhances our institution market presence.â€
Nadeem Lodhi, Citigroup country officer for Uganda, said, â€œThe extension of credit to Uganda Microfinance is a clear expression of Citigroupâ€™s global commitment to working with leading microfinance institutions, such as Uganda Microfinance Union, that expand access to financial services to the underserved. It is a demonstration of our confidence in the role of microfinance as a contributor to the economic development of Uganda.â€
IFC coordinates its activities with other institutions of the World Bank Group but is legally and financially independent.
Its 178 member countries provide its share capital and collectively determine its policies.
Its mission is to promote sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve peopleâ€™s lives.
. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications.
IFC to lend Uganda Microfinance $1m