Deal structured through unique collaboration
September 21, 2011 - Grameen Foundation and the U.S. Agency for International Development (USAID) today announced that they are jointly providing a $1.5 million credit guarantee to the Peruvian savings and credit cooperative Cooperativa de Ahorro y Crédito (ABACO) to support approximately $3 million for local currency financing to two socially-focused Peruvian microfinance institutions (MFIs).
ABACO will receive a $300,000 loan guarantee from Grameen Foundation and a $1.2 million loan guarantee from USAID. In turn, ABACO will provide ProMujer Peru with $2 million and Asociacion Arariwa with $1 million in loan financing. Both organizations work with clients in rural areas of Peru to provide financing and education to microentrepreneurs and agricultural producers.
Peru has an established microfinance sector, with mature institutions having relatively easy access to international capital markets. However, there continues to be a great need for local currency financing, especially among smaller microfinance institutions, which traditionally have not been eligible for loans from local banks.
Through this credit guarantee with ABACO, Grameen and USAID are able to support multiple MFIs through one umbrella agreement. Grameen Foundation and USAID expect to facilitate additional local currency financing under this arrangement with ABACO, helping it to expand its client base to include smaller MFIs that focus on the rural poor. The organizations also plan to use this model in other countries.
“This unique global partnership with Grameen will enable us to make more microfinance loans available to borrowers around the world” said USAID’s Administrator Rajiv Shah. “By unlocking local private capital to support underserved microentrepreneurs, this opportunity will help leverage our core development investments and deliver meaningful results for the people of Peru.”
“While Peru is one of the most competitive microfinance markets globally, there are still areas of the country that have not benefitted from these services,” said Alex Counts, P-President and CEO of Grameen Foundation. “We are pleased to work with USAID and ABACO to help Pro Mujer Peru and Arariwa get the local financing they need to reach deeper into poor, marginalized communities, particularly in rural areas.”
"ABACO is committed to promoting financial access and inclusion through its associated microfinance institutions. This strategic alliance with Grameen Foundation and USAID will help us meet the financing needs of microfinance practitioners in Peru," said Rocio Miyashiro Kiyan, CEO of Cooperativa ABACO.
The guarantees were arranged through a Grameen Foundation-USAID collaboration that makes up to $162.5 million in local currency financing available to MFIs globally by offering a wider range of financing options from local commercial lenders.
About Grameen Foundation
Grameen Foundation, a global nonprofit organization, helps the world’s poorest people lift themselves out of poverty by providing access to financing and management strategies to the local organizations that serve them. It also develops mobile phone-based solutions that address “information poverty” among the poor by providing tools, information and services in the fields of health, agriculture, financial services and livelihood creation. Founded in 1997, Grameen Foundation has offices in Washington, DC; Seattle, WA; Colombia; Ghana; Hong Kong; Kenya; the Philippines; and Uganda. Microfinance pioneer Dr. Muhammad Yunus, founder of Grameen Bank and winner of the 2006 Nobel Peace Prize, is a founding member of its Board of Directors, and now serves as director emeritus. For more information, please visit www.grameenfoundation.org.
USAID is a U.S. government agency that provides economic, development and humanitarian assistance around the world in support of the foreign policy goals of the United States. USAID’s Development Credit Authority, established by Congress in 1999, unlocks local capital through loan guarantees for sectors including agriculture, health, housing, clean energy, infrastructure, microfinance, and education.
For more information about USAID, visit www.usaid.gov.
About Cooperativa de Ahorro y Crédito (ABACO)
For more information about ABACO, visit http://www.abaco.com.pe/home.php