New development mechanism for microfinance

(Mexico, March 20, 2010).- CAF, jointly with the Multilateral Investment Fund (MIF) administered by the Inter-American Development Bank (IDB), the Inter-American Investment Corporation (CII), and four private investors today launched the Microfinance Growth Fund (MiGroF), a new form of support for Latin American and Caribbean microfinance institutions. The signing took place in Cancun, Mexico, during the IDB meeting.

CAF President & CEO Enrique Garcia said, "CAF’s catalytic role is reflected in actions such as this. Our participation promotes the channelling of substantial funds for the development of Latin American microfinance institutions to facilitate the continuous growth of the sector."

In most Latin American and Caribbean countries, demand for microcredit continues high but sources of medium- and long-term financing are limited, which reduces the capacity of microfinance institutions to meet the demand.

Garcia added, "the objective of the fund is to partially offset this deficit." MiGroF will provide medium- and long-term finance in dollars and local currency to microfinance institutions in the region.

The Fund plans to increase its capital to US$50 million with the possibility of leverage up to US$200 million. The initial investors are CAF (US$10 million), MIF (US$10 million), CII (US$5 million), along with a group of private investors formed by Banamex, Norwegian Microfinance Initiative (NMI), ACCION International, and BlueOrchard.