Local funding to increase in Latin America's microfinance industry - BlueOrchard

- Friday, February 18, 2011

Local funding to increase in Latin America's microfinance industry - BlueOrchard

Geneva-based microfinance investment manager BlueOrchard sees Latin American microfinance institutions (MFIs) increasingly using local sources of funding to finance their operations over the next several years, a company executive told BNamericas.

The quick recovery by most of the region's economies from the global financial crisis has resulted in readily available liquidity on the home front for many MFIs, said Camilo Mendez, regional head of investment analysis and managing director of BlueOrchard's office in Lima, Peru.

Mendez pointed to deposits, domestic bond issues and investments from local players as the menu of financing alternatives that Latin American MFIs have.

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MICROFINANCE FUND COULD RAISE MORE FINANCING

BlueOrchard Finance USA manages a US$140mn microfinance fund called MiGroF, launched in September last year in response to the impact of the financial crisis on MFIs' access to financing. The fund will be in place for seven years and could be increased to US$250mn.

BlueOrchard could seek additional funds for MiGroF beyond the third quarter this year, said Ann Miles, managing director for BlueOrchard Finance USA. There have not been any formal talks with investors yet, but some development institutions have expressed interest in raising their current contribution to the fund, and some European banks could also be potential investors, she said.

The biggest part of MiGroF's capital was provided by the US government's Overseas Private Investment Corporation (OPIC). Many other development institutions have also contributed funds, including the IDB's Multilateral Investment Fund (MIF), the Inter-American Investment Corporation (IIC), the Andean Development Corporation (CAF), Acción International, Norwegian Microfinance Initiative and Mexico's second largest bank, Banamex.

BlueOrchard specializes in debt and equity financing for a range of MFIs and microfinance network funds. It is one of the largest commercial microfinance investment managers in the world.