Grameen Foundation : Resource Center : Print Newsletter : Fall 2005 : Projected $300 Million into Microfinance
New Loan Guarantee Program Projected to Bring $300 Million to Poor Worldwide
GFUSA’s Growth Guarantees Program to bring millions in resources to microfinance and clients.
GFUSA announced the innovative Growth Guarantees Program (GGP), one of the microfinance sector’s largest financing efforts dedicated to microfinance institutions(MFIs) that serve the poorest population. This program will provide $50 million in guarantees that aims to generate US$300 million in microfinance loans to poor people to help them start, sustain or grow their own businesses. The massive infusion of capital into the sector means millions more of the world’s poor people will have the chance to benefit from microfinance. Just in the next 12 months, the Growth Guarantees Program alone could increase by one-third the total number of clients that all
our partners serve.
The innovative program, developed by GFUSA in collaboration with Citigroup, allows selected donorguarantors to issue a five-year standby letter of credit (SBLC) for at least $1 million to Citigroup. The donorguarantors are individuals who share GFUSA’s vision that microfinance is a scaleable solution to global poverty and who have made substantial philanthropic investments in GFUSA in the past. The guarantors do not provide an out right donation. They multiply the power of their assets to further microfinance by pledging their assets as part of a pooled guarantee. Citigroup in turn issues SBLCs to local commercial banks to support financing for MFIs selected by GFUSA. The multiplier effect is powerful. Each dollar provided as a guarantee through a SBLC is projected to be leveraged up to six times for the MFI in their own currency through a variety of transaction structures such as direct loans from local banks, securitizations, and bond issues that will go to provide microfinance to more poor people.
GFUSA has already secured commitments for more than half of the program’s $50 million target. The first closing is near and GFUSA seeks to reach its target within
the next 12 months.
The program was unveiled September 15 at the inaugural meeting of the Clinton Global Initiative, a nonpartisan conference seeking solutions to critical global challenges. Former President Bill Clinton joined in making the announcement, with GFUSA Board Chair
Susan M. Davis; Vinod Khosla, one of the donorguarantors and a partner with Kleiner Perkins Caufield & Byers; and Robert Annibale, Global Director of Citigroup’s Microfinance Group.
Learn more about the Growth Guarantees Program and other innovative work of our Capital Markets group.
Grameen Foundation : Resource Center : Print Newsletter : Fall 2005 : Projected $300 Million into Microfinance
Grameen Foundation uses microfinance and innovative technology to fight global poverty and bring opportunities to the world's poorest people. With tiny loans and financial services, we help the poor, mostly women, start businesses and escape poverty. Our global network of 55 microfinance institution (MFI) partners including our Growth Guarantee partners has touched more than 34 million people in 24 countries. In addition, we introduced and now sustain technology initiatives (Mifos and Village Phone) in Cameroon, Kenya, Rwanda, and Uganda, bringing our total country outreach to 28.
+1-202-628-3560 www.grameenfoundation.org
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