Brussels, 07/06/2010 (Agence Europe) - The ability of poor rural communities around the world to access finance received a significant boost earlier today with the creation of Rural Impulse II, a new specialist microfinance fund backed by leading public and private financial institutions and investors. The European Investment Bank, IFC - part of the World Bank Group, KfW Entwicklungsbank (The German Development Bank), the Belgian Investment Company for Developing Countries (BIO) and Netherlands Development Finance Company (FMO) formally agreed to participate in the fund. A range of private banks and investors will also participate. The fund managed to mobilise private resources and specialist expertise from additional investors: Italian Fund of Funds “Microfinanza 1”, Belgian trade union ACV-CSC Metea and VDK spaarbank, Germany's Bank fuer Kirche und Caritas, Norwegian Microfinance Initiative (NMI), and others. The fund is an initiative of Incofin Investment Management, which will act as fund advisor.
The Rural Impulse Fund II follows the groundbreaking achievements of the Rural Impulse Fund I, the world's first microfinance facility to specialise in commercially viable rural microfinance institutions. Rural Impulse Fund I achieved its planned deal flow in half the expected time, reflecting the strong demand for rural microfinance and has now made investments with 24 institutions across 18 countries with a customer base of 1.5 million clients.
Eligible microfinance institutions must be in developing countries and with at least a 30% presence in rural areas. The fund will invest in a range of microfinance intermediaries, including NGOs, credit unions, microfinance banks and institutions targeting small businesses.
Rural Impulse Fund II aims to become the worldwide reference for rural microfinance and will invest in institutions in Africa, Latin America, Central Asia, the Caribbean, Central and Eastern Europe, India and South East Asia. Partner institutions have already been identified in Zambia, Brazil and India. The fund will adopt a similar business model to the predecessor fund and include both private and public investors.
In a press release, the EIB comments: “Rural microfinance activities are challenged by seasonality, high administration costs of small loans and limited resources. Rural Impulse Fund II will mitigate these factors by a careful selection of experienced and successful institutions active in both rural and urban areas and directly encourage activity outside economically active and densely populated urban districts.” (O.L./transl.fl)