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DCA Credit Guarantees
Global |
|
Deutsche Bank, NA
Microfinance – US $50 million -
Loan Portfolio Guarantee
Deutsche Bank, NA has developed a cross-border debt
financing facility—the Global Commercial Microfinance
Consortium—to overcome the access-to-credit problems
faced by MFIs and to attract private sector debt investment
in these financial intermediaries. The facility nurtures
linkages between the microfinance sector and domestic
and international capital markets, fostering partnerships
with local financial institutions through demand-driven,
risk-sharing products. USAID’s $10 million loan
guarantee will support up to $47.75 million in additional
lending to MFIs worldwide.
The goal of the Global Commercial Microfinance Consortium
is to demonstrate viable linkages between MFIs and local
and international commercial institutions that will
address the capital access issues confronting MFIs.
Unlike other new investment funds, the facility does
not rely exclusively on donor organizations but seeks
to position itself as a resource that aggregates commercial
investor interests. Its strategy is to develop indigenous
financial systems that support the poor and to create
linkages between local commercial banks—a fundamental
source of capital—and the expanding microfinance
industry.
Oikocredit/Opportunity Transformation
Investments (OTI)
Microfinance - US $10 million - Loan
Portfolio Guarantee
Opportunity Transformation Investments (OTI) is an investment
fund established by Opportunity International to make
equity investments network affiliates that are either
being formed by the conversion of existing microfinance
institutions or are being started as new organizations.
A loan portfolio guarantee supports a $2.0 million line
of credit from Oikocredit, a Dutch development investment
fund. The line of credit is being used by OTI to address
the needs of affiliates for:
- additional capital to meet statutory minimum capital
requirements,
- short term, bridge financing for working capital,
and
- other short-term capital needs.
Ten affiliated organizations ready to transform. Over
the next several years, OTI plans to invest approximately
US$13 to $15 million into those institutions using grant
funds received by OTI from Opportunity International.
The stand-by line-of-credit from Oikocredit provides
additional flexibility to OTI to meet short-term capital
needs of those transforming affiliates when needed.
|
Africa |
Ethiopia |
|
Awash International Bank and Bank of Abyssinia
Agriculture – US $18 million -
(2) Loan Portfolio Guarantees
To expand access to credit in the agricultural sector,
USAID/Ethiopia established a ten-year loan portfolio facility
of up to US$18 million. The facility is shared by two
private commercial banks, each receiving a loan portfolio
guarantee of US$9 million, with a 50 percent credit guarantee
from USAID on the net loss of principal. The guarantee
supports the banks in extending credit to agricultural
cooperatives, livestock marketing groups, private sector
agro-processors, and private sector commercial horticulture
producers. As a whole, the facility builds upon the Mission’s
agricultural capacity building and economic growth activities
focused on coffee, food grains (cereals, oilseeds, and
pulses), horticulture, and livestock/livestock products
(meat, dairy, hides/skins, and leather/leather products).
|
Ghana |
|
Ecobank Ghana
Small & Medium Enterprises/Agriculture
- US $3 million - Loan Portfolio
Guarantee
The development of the private sector is paramount to
the economic growth of Ghana. The sector is a strong
provider of employment (16 percent of the labor force)
and has experienced employment growth of 5 percent over
the past few years. In addition, the private sector
has made tremendous contributions to the economy in
terms of inflow of foreign exchange. Despite the wide-ranging
economic reforms instituted in Ghana, the private sector,
especially small and medium enterprises (SMEs), faces
a variety of constraints related to the difficulty with
absorbing large fixed costs, absence of economies of
scale and scope in key factors of production, and higher
unit costs of providing services to smaller firms.
To improve access to commercial finance and promote
the development of competitive private enterprises in
Ghana, USAID is sharing risk with EcoBank on a portfolio
of loans to MFIs and SMEs. This guarantee increases
financial intermediation and strengthens both the productive
capacity of private enterprises and the management capacity
of production and marketing enterprises.
Ecobank Ghana
Small & Medium Enterprises - US
$7 million - Loan Portfolio Guarantee
This loan portfolio guarantee is a
follow-on to the above project in Ghana to increase
the bank's lending to all sectors and economic levels.
The total authorized amount guaranteed for EcoBank
is US$10 million with a 50 percent guarantee on principal.
The use of a guarantee is intended to improve the bank's
lending activities in new business sectors—beyond
existing companies that tend to be large and well established
borrowers. The guarantee leverages financing from local
USAID funds to promote the use of private capital for
both emerging small and medium enterprises as well as
microenterprises. |
Kenya |
|
Cooperative Bank of Kenya
Agriculture – US $3 million -
Loan Portfolio Guarantee
USAID is supporting the Cooperative Bank of Kenya by
covering up to 50 percent of the risk exposure on the
principal of loans to qualifying borrowers. The sectors
and/or borrowers covered by this guarantee include private
sector enterprises involved in maize, dairy, horticulture,
agribusiness processing, storage capacity, and microfinance
institutions (MFIs). The guarantee promotes lending
by the Cooperative Bank to mitigate perceived risks,
excessive loan loss provisioning, prohibitive collateral
requirements, and collateral eligibility problems, as
well as building the participating bank’s experience
and capacity for lending to private enterprises in targeted
sectors. By promoting bank lending, the guarantee supports
USAID/Kenya’s ongoing initiative in financial
markets development, and a new initiative in developing
enterprises in the agricultural production and processing
sector, all with the ultimate objectives of increasing
economic growth, employment and prosperity.
Cooperative Bank of Kenya
SMEP - $1.5 million
Small and Medium Enterprises/Microfinance
Faula - $1.5 million
Agriculture/Trade/Tourism - US $3
million - (2) Loan Portfolio Guarantees
The program supports participating
financial institutions by covering up to 50 percent
of the risk exposure on the principal of loans to qualifying
borrowers. The sectors and/or borrowers that are covered
by this guarantee include private sector enterprises
involved in maize, dairy, horticulture, agribusiness
processing, and storage capacity, microfinance institutions
(MFIs) and non-governmental organizations.
USAID's guarantee facility has two components. The
first provides support to micro-finance institutions
(MFIs) in gaining access to capital from the commercial
banking sector. MFIs use the proceeds of their loans
for on-lending to microenterprises. The second component
is designed to support commercial bank lending to micro,
small and medium size enterprises with a particular
focus on agriculture. The program strongly supports
USAID’s objective to increase rural household
incomes in Kenya. |
Mali |
|
BICIM
Agribusiness - $3 million - Loan Portfolio Guarantee
A partial guarantee
made available to BICIM assists in mobilizing credit for
medium and large-size agribusinesses operating in Mali
and directly support USAID’s on-going activities
in Mali's agricultural sector. The guarantee is intended
to stimulate financing for the agricultural sector by
demonstrating that lending to agribusinesses can be profitable
when risk is prudently managed. Technical assistance combined
with a risk management tool such as a partial guarantee,
can create a powerful combination of resources to leverage
private-sector investment for development. |
Rwanda |
|
Banque de Kigali
Agriculture - US $2 million - Loan Portfolio Guarantee
In Rwanda, USAID is providing the Banque de
Kigali, a leading Rwandan private commercial bank, with
a loan portfolio guarantee to expand access to credit
for agricultural enterprises in export-oriented sectors
around the country. The Banque de Kigali is guaranteed
on up to US$ 2 million in new loans to finance short-term
working capital and medium-term capital investment activities.
USAID's coverage will provide a 40 percent guarantee on
net loss of principal. The facility is designed to complement
USAID’s assitance in strengthening Rwanda's agricultural
sector. |
South Africa |
|
Futuregrowth Asset Management
Microfinance - US $8.3 million - Loan Guarantee
South Africans who have never been banking
customers will now have the opportunity to benefit from
expanded lending and new savings products as a result
of the guarantee. The loan to Capitec will enable the
bank to take an important step in achieving its goal
to provide—on a large scale—a wide range
of financial services to South Africa’s low-income
population. To date, loan funds have been used to purchase
ATMs, computer software, branch construction and furnishings,
but Capitec expects to use the bulk of the loan as working
capital to fund its new, longer-term instruments (starting
with 60- and 90-day).
Since USAID’s guarantee was put in place, Capitec
has expanded the number of banking clients from 18,104
to 60,856 and grown its loan book by 20%. USAID and
Futuregrowth expect the transaction to demonstrate the
viability of lending to commercial financial service
providers targeting the low-income market in South Africa.
Given Capitec’s objective to increase its banking
services to low-income groups, USAID saw an opportunity
to support the bank’s plans. USAID recognized
that Capitec’s long-term growth was contingent
on access to private sector financing, so it provided
a guarantee that allows Capitec to secure a five-year,
$8.3 million loan from Futuregrowth, a South African
investment trust with Rand4.5 billion under management.
The loan represents Capitec’s first from the private
sector.
Investec Bank
Infrastructure - US $10 million - Portable to a Loan
Guarantee
As part of its ongoing urban infrastructure program,
USAID/Pretoria provided a five-year, rand-denominated,
portable guarantee not to exceed the rand equivalent
of $20 million. The purpose was to help finance a subsidiary
of the Infrastructure Finance Corporation (INCA) that
was established to purchase existing municipal debt
experiencing repayment problems, rehabilitate that debt,
and resell it to private investors in the capital market.
ABSA Bank
Infrastructure - US $25 million - Portable to a Loan
Guarantee
This guarantee supports USAID/South Africa’s
objective to increase access to housing and environmentally
sound urban services for the historically disadvantaged.
To meet service delivery requirements, these new entities
needed major capital investments. To overcome the reluctance
of financial institutions to lend to municipalities,
the Greater Johannesburg Municipal Council (GJMC) sought
a DCA loan guarantee. Under this $25 million facility,
USAID reviewed and approved a Project Delivery Plan
prepared by GJMC, rather than approve individual investments.
The plan established project selection criteria for
water and electricity services, roads and storm-water,
waste management, housing and urban redevelopment, and
health clinics.
HLGC
Housing/Mortgage - US $100 million - Loan Guarantee
South African banks are reluctant to make new housing
related loans to lower income borrowers because of the
potential default risks flowing from the HIV/AIDS pandemic.
In order to promote the continued lending by South African
banks to low-income individuals seeking home-improvement
loans or mortgage loans, the Home Loan Guaranty Company
(HLGC) entered into agreements with several South African
banks and financial institutions to insure against the
risk of defaults by low-income borrowers due to HIV/AIDS
related incapacitation. HLGC charges an annual premium
to the banks for providing this HIV/AIDS related coverage
and this premium, together with interest earned on it,
will be preserved by HLGC to payout claims under its
HIV/AIDS related coverage. The rate of the premium charged
by HLGC is intended to yield a pool of revenue sufficient
to pay all claims made under HLGC’s HIV/AIDS related
coverage. USAID/South Africa proposes to utilize the
guarantee to cover part of the obligations of HLGC to
the banks should the premium pool be exhausted.
Municipal Infrastructure Investment Unit
(MIIU)
Infrastructure - US$35 million - -
Loan Portfolio Guarantee
USAID’s portable guarantee covers up to 50% of
the risk exposure held by a set of lenders on the principal
(and interest) of loans extended to qualifying non-sovereign
borrowers defined as municipalities endeavoring to improve
the quality and sustainability of essential municipal
services, particularly water supply. Loans extended
under the guarantee enable municipalities to invest
in infrastructure projects and purchase equipment necessary
to improve levels of service and enhance the generation
and collection of related revenues. In this way, municipal
service provision can develop in a sustainable manner.
|
Uganda |
|
Allied Bank International (U) Ltd. - US $2
million
Centenary Rural Development Bank - $5.885 million
Barclays Bank of Uganda Ltd. - $5.5 million
Citibank Uganda Ltd. - $4 million
Nile Bank Ltd. - $2 million
Stanbic Bank Uganda Ltd. - $6 million
Standard Chartered Bank of Uganda - $4 million
Micro/Small and Medium Enterprises - $16.4 million - Loan
Portfolio Guarantees (7)
USAID/Uganda established a multi-bank loan portfolio
guarantee in Uganda that provides desperately needed access
to finance for microfinance institutions (MFIs) and micro-,
small-, and medium-sized businesses (MSMEs). The activity
contributes to the achievement of the mission's objective
to expand sustainable economic ppportunities for rural
sector growth and represents an integration of environment,
agricultural development, and economic growth portfolios.
The activity also contributes to the objective to increase
rural household incomes. |
Zambia |
|
Barclays Bank Zambia PLC - $6.5 million
Finance Bank Zambia, Ltd. - .5 million
Stanbic Bank Zambia Ltd. - $3 million
Standard Chartered Bank Zambia PLC - $2 million
Agriculture - US $16.5 million - Loan Portfolio Guarantees
(4)
To encourage lending to the agricultural sector
using warehouse receipts as collateral, USAID provided
50 percent credit guarantees to four local commercial
banks for lending against ZACA warehouse receipts. The
guarantees will cover principal on up to $16.5 million
in new loans. USAID will also support bank and agriculturalist
sensitization and training, warehouse management instruction,
warehouse certification, and grades and standards testing—to
ensure warehouses are properly managed and collateralized
commodities securely stored.
For farmers and traders, stored commodities can now
be leveraged into cash, allowing access to financing
for new supplies or additional stock. With local banks
entering new rural markets and agricultural producers
gaining greater price stability by storing their grain,
rather than selling it at harvest time, wealth is shifting
to smaller farmers and traders. |
|
Bangladesh |
|
Hong Kong Shanghai Banking Corporation (HSBC)
Energy - US $2 million - Loan Portfolio Guarantee
This loan portfolio guarantee covers loans to two types
of private sector enterprises: 1) new compressed natural
gas (CNG) filling stations and 2) conversion workshops
for the installation of CNG units in vehicles. These guarantees
help mobilize private sector investment in the provision
and use of CNG as an alternative fuel.
USAID is helping Bangladesh increase the use of clean
fuels e.g. natural gas and thereby reduce greenhouse gases
(GHGs). The purpose is to improve the performance of key
institutions in the energy sector by building capacity
so that the entities can transit from the present integrated
or “bundled” operations to a restructured
and more business-oriented approach under a reform regime.
By enhancing institutional capacity and encouraging policies
that promote the use of cleaner fuels, such as natural
gas, and by reducing energy demand, through more efficient
energy use and a reduction in system losses, economic
growth will be accelerated and the emissions of harmful
GHG reduced.
Prime Bank Ltd.
Energy - US $1.5 million - Loan Portfolio Guarantee
The loan portfolio guarantee to Prime Bank
encourages lending for businesses interested in setting
up operations that will increase the use of CNG, as
a clean and alternative vehicle fuel in the transportation
sector. Businesses include, but are not limited to,
the importation and installation of CNG refueling stations
for various vehicle types, the establishment of CNG
workshops, and the importation of CNG conversion kits
to convert vehicles that run on liquid fuels to CNG.
The loans are expected to provide debt financing for
capital investment in the CNG sector to supplement equity
infusion from private entrepreneurs. HSBC and Prime
Bank Ltd will administer the credit financing out of
these funds up to $3.5 million. USAID covers 50 percent
of the total principal debt each bank has in its portfolio
of loans for CNG businesses. These guarantees will aid
in improving the air quality of Dhaka City and other
areas. |
Egypt |
|
National Société Générale
Bank (NSGB)
Energy - US $17.3 million - Loan Portfolio Guarantee
USAID/Egypt has set up a loan portfolio guarantee with
the National Société Générale
Bank (NSGB). The guarantee covers up to the local currency
equivalent of $8.65 million. This pilot effort is used
to test how effectively and efficiently guarantees can
be used to leverage private investment in a number of
key sectors of the USAID/Egypt environment portfolio:
(a) energy efficiency, particularly cogeneration, (b)
fuel switching to natural gas, and (c) nature tourism
(ecotourism) in ecologically rich areas of the Red Sea
Southern Zone.
Commercial International Bank
Water - US $40 million - Loan Portfolio Guarantee
The guarantee is designed to expand
and improve water and wastewater service delivery to
underserved areas of Egypt, by facilitating utilities’
capacities to initiate private sector provision (PSP)
of services. Through this USAID guarantee, approximately
$40 million in loans is made available from local private
banks to locally-based businesses for the purpose of
providing water and wastewater services on a contracted
basis.
This project is expected to offer lower-cost septic
tank evacuation services to 50,000 Egyptians living
in outlying areas, currently without piped wastewater
systems. It will also lower the cost and increase the
accuracy of water meters, translating to lower water
bills for 200,000 families and businesses. In addition,
it will provide cheaper and more extensive pipe maintenance
and better customer service for a service area of three
million customers. |
India |
|
Karnataka - Water & Sanitation
Pooled Fund
Water - US $21.7 million - Portfolio Guarantee
In India, USAID is using a portfolio guarantee for the
issuance of an infrastructure bond to encourage private
investor participation in local development projects.
Proceeds from the bond offering will be used to improve
and expand provision of water and sewerage services in
the Bangalore Metropolitan Area (BMA). The municipal bond
market remains underdeveloped; the Karnataka bond issuance
is the second pooled municipal bond in the marketplace.
The project will increase transparency and efficiency
in the allocation and mobilization of resources and improved
access to clean energy and water in 8 municipalities.
The guarantee provides the investment opportunity to increase
capital market financing of large capital infrastructure
projects. It stimulates investor interest in municipal
bonds, builds technical experience and knowledge in municipal
financing, and creates the potential for the development
of a secondary market.
Partial funding for the project will be raised by the
private placement of a total of Rs 1,000 million (Rupees=
100 crore) of non-convertible 15-year bonds. The bonds
will be issued by a public trust established solely
for the purpose of assisting these and other urban local
bodies (ULBs) in gaining access to market borrowing
for infrastructure development. Repayment of these funds
will fall to the ULBs (municipalities).
T amil Nadu - Water & Sanitation Pooled
Fund
Water - US $6.4 million - Bond Guarantee
Through USAID’s Development Credit Authority (DCA),
a pooled financing mechanism has been set up to provide
a cost-effective way for villages, towns and cities
in the Indian state of Tamil Nadu to implement much-needed
water and sanitation projects. Promoted under the Indo-USAID
FIRE project, municipal bonds have been enthusiastically
received by numerous municipal authorities in India.
This bond guarantee supports the establishment of the
“Water and Sanitation Pooled Fund” (WSPF),
which will on-lend $6.4 million to multiple municipal
water and sanitation projects. The funds raised by the
bond issuance are disbursed as sub-loans to the participating
municipalities for these projects.
One example is the township of Valasaravakkam, with
a population of 26,260, which has no adequate water
supply system, relying on open and bore wells and three
above-ground tanks, connected to 11 miles of piping.
This system provides an estimated 2 liters of water
per person per day. This is one of a number of innovative
DCA projects in India that have given access to financing
for water and sanitation projects to benefit the urban
and rural poor. It is the first to incorporate many
of the aspects of the CWSRF program. |
Morocco |
|
Société Générale
Marocaine des Banques (SGMB)
Microfinance - US $10 million
- - Loan Portfolio Guarantee
In Morocco, USAID is providing a 50 percent guarantee
to one of the country’s largest commercial banks,
Société Générale Marocaine
des Banques (SGMB), to encourage $10 million in new
lending to four Moroccan microfinance institutions (MFIs).
While SGMB is aware of the potential business opportunities
in lending to MFIs, the lack of MFI credit history had
discouraged them from lending to the sector. The guarantee
allows USAID to share the risk with SGMB to encourage
lending to participating MFIs. MFIs will use the funds
to make new loans to creditworthy microenterprises in
Morocco, enabling the MFIs to grow their loan portfolios
while serving an expanding client base of micro entrepreneurs.
The guarantee enables SGMB to develop a credit history
with and understanding of the MFIs, and eliminate such
restrictive conditions in the future, even without a
guarantee. As a result, the guarantee operates as a
demonstrative tool enabling banks to experience the
financial viability of microfinance institutions first
hand, and support, by extension, a large group of micro
entrepreneurs.
Dâr ad-Damâne (DAD)
Infrastructure - US $3 million - Loan Portfolio
Guarantee
Local Government Units (LGUs) in Morocco are required
to provide their own financing for projects undertaken
at the local level. Currently, LGUs do not have access
to private sector financing. Preliminary studies indicate
that the banking system currently funds only 7 percent
of LGU needs in spite of current excesses in liquidity.
Without access to financing, the LGU’s efforts
to act decisively and effectively to improve inhabitants’
quality of life are seriously constrained. To address
this issue, USAID’s mission in Morocco is providing
a partial re-guarantee of a portfolio of loans covered
by Dâr ad-Damâne (DAD), a local private-sector
guarantor owned by a consortium of mostly private banks.
Loans eligible for re-guarantee by USAID involve private-sector
financing from DAD’s banks to qualifying community-based
service delivery projects.
BMCE
Housing/Mortgage - US $5 million - Loan Portfolio Guarantee
This facility provides
low-income households with access to affordable “social”
housing based on incentives by promoting investments
from BMCE in the housing sector, improving access to
financing for housing by low-income households, and
improving the living conditions of urban low-income
households.
Zakoura
Microfinance - US $1 million - Portable Guarantee
To address the need for financing products
targeted to the lower end of the income spectrum, the
Mission has sought to forge strategic partnerships between
commercial banks that have the legal authority to engage
in housing credit and microfinance institutions that
understand the requirements of lending to the lower-income
strata in Morocco.
Zakoura provides credit to the most underprivileged
population of Morocco, especially women. The institution
works in both rural and urban areas. To support the
ongoing operations of Zakoura and to expand access to
micro-credit, USAID/Morocco extended portable loan guarantees
to Zakoura for its expansion of financing. The guarantee
facilities allow the institution to approach private
lenders to access capital for on-lending to clients.
This provides additional loan capital and likewise strengthens
Zakoura by supporting the diversification of its fund
sourcing.
Zakoura
Housing - US $2 million - Portable
Guarantee
Morocco suffers from a severe housing deficit with roughly
750,000 units needed to fill this void. Current Moroccan
law prevents microfinance institutions from lending
for home improvement or housing purposes, therefore
the housing sector lacks reliable sources of both public
and private sector financing. Several institutions are
lobbying the Ministry of Finance for a waiver to allow
direct lending for housing development.
This portable guarantee facility promotes investments
from commercial banks and microfinance institutions
in the housing sector, improves access to financing
for housing by low-income households, and improves the
living conditions of urban low-income households. The
guarantee allows the commercial banks to expand their
client-base using the sector-specific expertise of Zakoura
while bringing needed capital into the low-income housing
sector.
Al-Amana
Microfinance - US $1 million - Portable Guarantee
Al-Amana promotes microenterprise development and makes
loans to traders, craftspeople, and other small businesses
in urban areas of Morocco. Al-Amana provides access
to credit for all men and women microentrepreneurs who
are excluded from commercial banks and traditional bank
institutions. To address the need for financing products
targeted to the lower end of the income spectrum, the
Mission has sought to forge strategic partnerships between
commercial banks that have the legal authority to engage
in housing credit and microfinance institutions that
understand the requirements of lending to the lower-income
strata. Current Moroccan law prevents microfinance institutions
from lending for home improvement or housing purposes.
However, institutions are lobbying the Ministry of Finance
for a waiver to allow direct lending for housing purposes.
Al-Amana
Housing - US $5 million - Portable Guarantee
To support the ongoing operations of al-Amana
and to expand access to micro-credit in Morocco, USAID/Morocco
extended portable loan guarantees to al-Amana for its
expansion of financing. Al-Amana shares risk with the
lending bank and bears partial responsibility for any
defaults by the borrowers and receives compensation
on a performance basis. This form of strategic partnership,
made possible by this credit enhancement, allows the
commercial banks to expand their client-base using the
sector-specific expertise of al-Amana while bringing
needed capital into the low-income housing sector as
well.
Fonds d’Equipment Communal (FEC)
Infrastructure - US $4.696 million - Loan Portfolio
Guarantee
If current trends continue, Morocco is projected
to become a water deficit country by 2020. USAID’s
mission is focused on improving water resource management
by strengthening policy, regulatory, and institutional
frameworks; promoting adoption of improved technologies;
and broadening public participation for environmental
improvements, including urban sanitation. This loan
portfolio guarantee supports these objectives by expanding
FEC’s capacity to finance eligible projects and
by promoting investment from commercial banks into local
development activities as well as improving access to
financing for sanitation infrastructure projects by
local governments. The guarantee is unique, allowing
FEC to transfer a portion of the guarantee to local
private banks with a credit rating equal or better than
FECs.
|
Philippines |
|
Local Government Unit Guarantee Corporation
(LGUGC)
Urban/Environmental - US $28.5 million
- Loan Portfolio Guarantee
This guarantee covers a portfolio of loans
originated by private sector lenders to municipalities,
provinces and other Local Government Units (LGUs) to
finance infrastructure projects. The loans will be covered
by a primary guarantee from the Local Government Unit
Guarantee Corporation (LGUGC), a private domestic financial
institution whose goals are to encourage the flow of
private capital to creditworthy municipal infrastructure
projects. USAID's guarantee has been essential to the
credibility of the LGUGC with the local private financial
sector, whose investments in the guarantee fund are
the most important factor in the fund’s long-term
sustainability.
Opportunity Microfinance Bank - WFMC
Health - US $750,000 - Loan Portfolio Guarantee
USAID is providing a loan portfolio guarantee to the
Opportunity Microfinance Bank on its loan portfolio
for loans made to midwife clinics that are franchise
members of the social franchise known as the Well Family
Midwife Clinics Partnerships Foundation (the "Partnership").
The funds for borrower loans come from two sources:
bank funds plus a trust fund to be established by the
Partnership. To ensure quality control and, where necessary,
coaching for borrowers facing financial challenges,
guaranteed loans are only be made to midwife clinics
who are franchisees in good standing.
|
Vietnam |
|
Asia Commercial Bank Educational
Lending - US $500,000 - Loan
Portfolio Guarantee
This loan portfolio guarantee supports the extension of
loans by a local private bank – Asia Commercial
Bank (ACB) in Vietnam - to students who pursue graduate
degrees in economics and business administration at Vietnamese
educational institutions. The guarantee strongly supports
USAID/Vietnam’s objective to enhance the environment
for trade and investment, which includes accelerating
Vietnam’s transition to a market-based economy that
is open to the private sector and that can take advantage
of increasing access to global markets.
Asia Commercial Bank - US $5 million
Eastern Asia Commercial Bank - US
$5 million
Small & Medium Enterprises
- US $10 million -
(2) Loan Portfolio Guarantees
These loan portfolio guarantees establish agreements
with two local private banks in Vietnam in support of
increased lending to local private small and medium
enterprises (SMEs). Traditionally, the Vietnamese state-owned
commercial banks have directed their lending to big
state-owned enterprises as a target group of clients,
leaving most SMEs to the private banks. For their part,
private banks have followed a policy of collateral-based
lending that requires the borrower to pledge substantial
collateral in return for a loan. The guarantee will
encourage those banks that are developing their lending
skills as well as expand access to financing within
the SME sector. These guarantees are also intended to
support USAID/Vietnam’s goal to enhance the environment
for increased trade and investment.
|
|
Armenia |
|
Anelik Bank - US $1 million
Converse Bank - US $1 million
INECO Bank - US $1 million
Agriculture/Small & Medium Enterprises - $3
million - Loan Portfolio Guarantees 3
The purpose of the SME-Finance Support Project
(FSP) is to increase access to credit to Armenian small
& medium enterprises (SMEs), including agribusinesses.
The essence of the FSP is to encourage financial institutions
to extend loans to commercially viable SMEs and agribusinesses,
which are generally not able to access credit in the formal
financial markets due to the high risks and perceived
disproportionate transaction costs. The project offers
loan portfolio guarantees to a variety of bank and non-bank
financial institutions to partially (50 percent) cover
losses on loan principal arising from loans extended to
qualified borrowers. The project addresses the strategic
objective of supporting growth of a competitive private
sector. |
Bosnia and Herzegovina |
|
Volksbank BH d.d. Infrastructure
- US $25 million - Loan
Portfolio Guarantee
This loan portfolio guarantee secures up to 50 percent
of the principal of a $25 million loan portfolio from
Volksbank BH to local municipal governments. It enables
the bank to finance revenue-generating investments at
the municipal level that promote economic and environmental
development while strengthening the fiscal autonomy of
the participating local governments. Illustrative examples
of potential projects include: water (increased capacity,
improved meterage, decreased system loss, etc.); wastewater
(sewage pipes, treatment facilities, etc.); solid waste
(consolidated waste disposal, equipment upgrades, etc.);
and other infrastructure projects that support municipal
development and where revenue can be segregated, i.e.
parking structures.
Volksbank BH d.d. - US $12 million
UPI Bank - US $5 million
Zagrebacka BH Bank - US $9 million
Small & Medium Enterprises
- US $26 million - (3) Loan Portfolio Guarantees
In Bosnia and Herzegovina, USAID is working to overcome
a major obstacle to private enterprise growth - the
lack of financing for the small and meium enterprises,
particularly medium and long term financing. Despite
growth in deposits and retail lending, banks in BiH
are still reluctant to lend to private enterprises.
Total bank lending to private enterprises, as opposed
to lending to citizens, comprises less than 40 percent
of total bank lending, which is fairly low by transition
economy and international standards. Domestic lending
is an important source of investment and working capital,
especially where access to international sources of
funds is virtually non-existent. The guarantee covers
up to 50 percent of the loan principal provided to enterprises
in competitive sectors such as agriculture production
and processing, wood processing and tourism, with the
objectives to increase economic growth and employment. |
Bulgaria |
|
United Bulgaria Bank (UBB)
Energy – US $5 million - Loan
Portfolio Guarantee
This project was designed to increase lending
by financial institutions to commercially viable municipalities,
municipal enterprises, and energy service companies
for municipal energy efficiency projects. These municipalities
are generally unable to access credit in formal financial
markets due to the high risks and perceived disproportionate
transaction costs associated with larger infrastructure
projects. To support the private sector in extending
loans USAID provided the United Bulgaria Bank, a privately-owned
Bulgarian bank, with a loan portfolio guarantee covering
a portfolio of up to $5 million in loans to partially
cover (30 percent) losses in case of default.
First Investment Bank
Small & Medium Enterprises - US $20 million - Loan
Portfolio Guarantee
Lack of commercial finance continues to be an obstacle
to the development of competitive private enterprises
in Bulgaria and, hence, to overall economic and social
development in the country. The loan portfolio guarantee
is a critical component of the Mission’s comprehensive
enterprise development program, serving to stimulate
domestic lending and encourage greater financial intermediation.
The guarantee is intended to support the mission's focus
on accelerating the growth of private enterprises and
a more competitive and market responsive private financial
sector.
Hebros Bank - US $10 million
Post Bank - US $10 million
Agriculture/Small & Medium Enterprises - $20 million
- Loan Portfolio Guarantees
Overcoming the market imperfections that impede
lending to agriculture is critical to the development
of a viable agricultural sector in the country, thus
sustaining economic growth and employment in Bulgaria.
In order to address the farmer needs for investment
and working capital, USAID/Bulgaria is using a loan
portfolio guarantee to lend to the agriculture sector
as a means to encourage financial intermediation, job
creation, and increased productivity. The guarantee
promotes bank lending to agriculture by (1) mitigating
perceived risks, prohibitive collateral requirements,
and collateral eligibility problems, and (2) building
the participating banks’ experience and capacity
for lending to farmers and agriculture processors. By
promoting bank lending, the guarantee directly supports
USAID’s objective to promote improved business
climate conducive to private sector needs, economic
growth, increased employment and investment.
United Bulgarian Bank (UBB)
Energy - $10 million - Loan Portfolio Guarantee
A loan portfolio guarantee to the United Bulgarian Bank
(UBB) is being used to demonstrate the financial viability
of long term project financing for energy efficiency
investments. By acting as a catalyst for private financing,
the guarantee is helping reduce unnecessary expenditures
on energy, improve municipal finances, and decrease
greenhouse gas emissions. USAID is also providing extensive
technical assistance to help public and private borrowers
identify projects, develop their business plans, and
prepare loan applications. |
Croatia |
|
Erste Bank Rijeka
Agriculture – US $10 million - Loan Portfolio
Guarantee
To encourage lending, USAID has provided Erste
Bank, a local Croatian commercial bank, with a 50 percent
guarantee on up to $10 million in new loans to these
agri-businesses. The guarantee encourages the extension
of credit based on the cash flows from the new contracts,
where, for example, a large agri-processor would enter
into contracts with a group of preferred dairy farms
(the processor is effectively selecting the suppliers
that it believes can succeed in competitive markets).
On the strength of assigned contract commitments, the
dairies are able to access financing from Erste Bank
to use as working capital to improve their facilities
or purchase livestock and equipment. In turn, the dairies
agree to have the proceeds from their sales sent directly
to Erste Bank to repay their loans. Any remaining funds
are re-deposited into the dairies’ account at
the bank.
Privredna Bank
Housing Mortgage - US $20 million - Loan Portfolio Guarantee
The loan portfolio guarantee provides Privredna
Banka Zagreb, a privately owned Croatian bank, with
a loan portfolio guarantee to extend loans to new and
current home owners in the war-affected areas of the
country. Other banks have shown interest in USAID's
credit guarantees may be prospective lenders in the
future. The whole activity contributes towards the mission's
objective to accelerate the return and reintegration
of war-affected populations. |
Georgia |
|
Bank of Georgia Energy
- US$3 million - Bond Guarantee
Although corporate bonds have never been issued in Georgia,
to increase the availability of funds for medium and long-term
energy-related loans, the Bank of Georgia will launch
the country’s first corporate bond. The bonds will
be backed by a partial guarantee from USAID on up to US
$3 million or the local currency equivalent. The USAID
Mission-Caucasus developed the bond guarantee with Bank
of Georgia to help increase financing available for energy
and energy-related projects in the Republic of Georgia.
The guarantee covers up to 50 percent of investors’
risk exposure on repayments to investors. The proceeds
will make medium-term credit available for qualified energy-efficiency
and renewable-energy projects and targeted to private-sector
projects that contribute to cleaner and/or more efficient
energy supply and use in Georgia. |
Kazakhstan |
|
Kazkommertsbank
Energy - US$15 million - Loan Portfolio Guarantee
The USAID Mission-Central Asia is working with
Kazkommertsbank, a local financial institution on increasing
financing available for energy and energy-related projects.
This guarantee helps increase access to commercial investments
by partially guaranteeing (up to 50%) loans up to 5 years.
It also encourages participating financial institutions
to enter a new type of financing for which training will
be offered in conjunction with the program. The aggregate
principal amount of all qualifying loans covered under
this agreement at any one time shall not exceed $15,000,000,
or the local currency equivalent of this amount in Kazakhstan
tenge.
Lariba Bank
Housing Mortgage - US$1 million - Bond Guarantee
The purpose of this activity is to support the development
of mortgage lending and a secondary mortgage market in
Kazakhstan. USAID is providing a 50 percent principal
guarantee on a dollar-indexed $1 million mortgage-backed
bond issued by Lariba Bank. Once the bond is paid off,
a new, four-year, $1 million bond will be issued under
similar terms. The pilot bond issuance is designed to
demonstrate that banks can finance mortgages, building
a portfolio and then sell off the mortgages by issuing
a mortgage bond, such as the one mentioned above. This
gives banks the opportunity to re-lend and build a portfolio
of mortgages for servicing while capturing a positive
spread between the sale price of the note and weighted
average coupon of the originated portfolio. |
Kyrgyzstan |
|
Bai Tushum Water - US
$1 million - Loan Portfolio Guarantee
This guarantee expands access to potable water in rural
Kyrgyzstan where an estimated 50% of villages do not have
a functioning water system. Most of the existing systems
are in poor condition due to severe deterioration of water
supply infrastructure. USAID/CAR’s partial loan
portfolio guarantee (50%) to Bai Tushum, a leading Kyrgyz
microfinance institution, to guarantee loans to CDWUUs
to finance the initial cash contribution for the World
Bank/Asian Development Bank-funded water infrastructure
upgrade projects. |
Moldova |
|
Moldova Agroindbank - US $9 million
Victoriabank S.A. - US $6 million
Micro, Small & Medium Enterprises - US $15 million
- (2) Loan Portfolio Guarantees
USAID/Moldova has two loan portfolio guarantees
(LPGs) to support multi-sector lending to micro, small,
and medium enterprises (MSMEs) through two distinct
financial institutions, as a follow-on activity to the
successful Micro and Small Enterprise Program. The new
LPGs provide the two participant banks: Moldova Agroindbank
and Victoria Bank, which expressed interest in using
USAID Guarantees, to cover a portfolio of loans intended
for the SME sector and agriculture producers. The initiative
is a part of the Credit Enhancement Project (CEP), launched
in September 2003 by the regional Mission.
Banca Sociala
Agriculture/Small & Medium Enterprises -
US$1 million - Loan Portfolio Guarantee
The purpose of the USAID/Moldova's Credit
Enhancement Project (CEP) is to increase access to credit
for small and medium enterprises (SMEs) and agriculture
producers. The essence of the CEP is to encourage financial
institutions to extend loans to commercially viable
SMEs and agriculture producers, which are generally
not able to access credit in the formal financial markets
due to the high risks and perceived disproportionate
transaction costs. The project offers loan portfolio
guarantees to a variety of bank and non-bank financial
institutions to partially (50 percent) cover losses
arising from loans extended to SMEs and farmers. See
the two guarantees below.
Mobiasbanca
Agriculture/Small & Medium Enterprises -
US $4 million - Loan Portfolio Guarantee
USAID has established a loan portfolio guarantee to
cover loans to a variety of bank and non-bank financial
institutions to partially (50 percent) cover losses
resulting from their lending operations to SMEs and
farmers.
Moldinconbank
Agriculture/Small & Medium Enterprises - US $2 million
- Loan Portfolio Guarantee
The guarantee strengthens the bank’s ability to
finance loans to qualified borrowers in the small and
medium enterprise and agricultural sectors, thereby
promoting lending in both of these sectors. Qualifying
projects activities, including investments, are designed
to promote small business production and agricultural
production in Moldova – especially to improve
the productivity of private farmers. The mission is
providing a US$2 million loan portfolio guarantee with
a guarantee ceiling of US$1 million. Loans may be extended
in the local currency, MDL, or in US Dollars.
Rural Finance Corporation (RFC)
Agriculture/Small & Medium Enterprises -
US $1 million - Loan Portfolio Guarantee
The Rural Finance Corporation (RFC) is a non-bank financial
institution, 99 percent owned by the Savings and Credit
Associations, (SCAs), providing direct loans to farmers,
is currently receiving assistance from the World Bank
and CNFA. A portion of these loans have been granted
to farmers to assist them in buying new land, hence
promoting the further consolidation of farming land
in Moldova. The project also provides portfolio and
portable guarantees to the RFC to mitigate risk and
enhance liquidity. |
Romania |
|
Raiffeisen Zentralbank Housing
- US $7 million - Loan Guarantee
In Romania, USAID identified the housing market as one
of its target sectors, recognizing that mortgage lending
is critical to the long-term growth and stability of a
country's financial sector. Through the use of a partial
guarantee, USAID attracted capital from the private sector
for this program. With the guarantee, the Romanaian Enterprise
Fund (RAEF) was able to ecure a $7 million ten-year loan
from Raiffeisen Bank Romania on behalf of Domenia Credit,
a new mortgage finance company established by USAID. The
loan, combined with the capital provided by RAEF, provided
Domenia with the necessary long-term funding to commence
operations, once it was formally established and has produced
tremendous results in developing Romania's mortgage market..
|
Russia |
|
Center-Invest Bank
Small & Medium Enterprises - US$6 million –
Loan Portfolio Guarantee
The guarantee provides Center-Invest bank with
a 50% guarantee on a portfolio of loans made to commercially
viable SMEs that might not otherwise be able to access
credit in the formal financial markets due to perceived
risks of small business lending. USAID is encouraging
Center-Invest bank, based in Rostov-on-Don, to expand
its SME loan portfolio through its newly opened branches
in two neighboring regions - Krasnodar and Volgograd.
The program will help the Mission achieve its development
objectives to improve access to finance for small and
medium enterprises, and improved financial intermediation
by Russian commercial banks. In addition, the project
will create important synergies among various USAID/Russia
projects that support the development of the Russian
SME sector and the Russian banking system.
NDB Bank
Small & Medium Enterprises - US $8 million
– Loan Portfolio Guarantee
USAID’s objective is to strengthen the ability
of one of the Russian regional commercial banks, NBD
Bank, to finance small and medium enterprise development
in the Volga Federal District. USAID’s assistance
will be provided in the form of 50% risk-sharing guarantee
provided to the holders of the bonds issued by NBD Bank.
Money received from the public placement of the bond
will be designated for further on-lending to small and
medium size enterprises in the Nizhniy Novgorod region.
The bond guarantee will help capitalize NBD by encouraging
it to place its first 2-year RUR200 million bond in
the Russian market.
SDM Bank Small & Medium
Enterprises - US $3 million – Loan
Portfolio Guarantee
USAID provides SDM bank with a 50 percent guarantee on
a portfolio of loans made for micro and small enterprises.
Through this program, USAID encourages SDM bank to extend
loans through its branch network to commercially viable
small and medium enterprises (SMEs) that might not otherwise
be able to access credit in the formal financial markets
due to perceived risks of small business lending. The
program helps mitigate these obstacles and helps SMEs
to acquire needed capital to expand their operations,
contributing to the growth of this sector and increased
employment opportunities in the regions of operation. |
Ukraine |
|
NadraBank - US $1.5 million
UkrSibBank - US $1.5 million
Infrastructure - US $3 million - (2) Loan Portfolio
Guarantees
This project increases communal service enterprises’
(CSE) access to credit for infrastructure improvement
in Ukraine. The two banks will loan CSEs finance capital
for improvements on municipal infrastructure such as
water supply, wastewater disposal and district heating.
Under the facility, the U.S. government will issue a
guarantee on 50% of the net principal loss. The guarantee
covers principal only for the loans issued. USAID/Ukraine’s
experience with municipal finance indicates that a mid-sized
Ukrainian city (population of 200,000-400,000) should
be able to service (amortization plus interest) a larger
loan from current cash flows than the $100,000 - $200,000
projected for individual credits. Because this is a
new market, however, the facility adopts a conservative
borrowing strategy until the CSEs establish a track
record of successful municipal borrowings. The activity
is expected to replicate itself as banks and CSEs reap
mutual benefits from loans made under the facility;
in time, it is expected that lending volumes will increase
on their own, in the absence of U.S. Government guarantees.
Nadra Bank
SME - US $6 million - Loan Portfolio Guarantee
This project provides Nadra Bank, a privately
owned Ukrainian bank, with a partial loan portfolio
guarantee to extend loans to small farmers and suppliers.
USAID's guaantee has significantly contributed to increased
lending by local Ukrainian financial institutions to
support the growth of private enterprises and a more
competitive and market-responsive private financial
sector. |
Latin
America & Caribbean |
Regional |
|
Banco Mercantil - US $2 million
Banco Lafise - US $2 million
Small & Medium Enterprises - US $4 million - (2)
Loan Portfolio Guarantees
The agribusiness sector in Central America
is an important contributor to GDP. Despite its importance
for the region’s economies, this sector has been
characterized by the use of unsustainable practices
and constraints for small and medium size businesses
to access private financing and technical assistance.
This guarantee provides capital for small and medium
enterprises (SMEs) throughout Central America willing
to introduce, upgrade or retrofit industrial, agro-business
and services processes that utilize cleaner production
practices, certification processes and environmental
management systems. The guarantee targets small and
medium enterprises willing to introduce, upgrade, or
retrofit industrial, agro-business and service processes
that utilize cleaner production practices, certification
processes and environmental management systems. This
initiative focuses on providing capital support for
enterprises with substantial potential for expansion.
Ecologic Finance
Agriculture - US $4 million
- Loan Portfolio Guarantee
This guarantee is being used to enhance the access to
trade and investment within Latin America and the Caribbean.
EcoLogic Finance operates as a “green” or
ecologically enhancing loan fund, affording financing
to eco-enterprises located in environmentally sensitive
areas of Latin America. Ecologic is developing a portfolio
of loans from $10,000 to $200,000 targeted to small-scale
producer organizations. These common goals — biodiversity,
conservation and inclusive economic development —
are achieved through support of production of exportable
high-quality agricultural related products.
ProARCA/SIGMA
Environment/Small & Medium Enterprises -
$10 million - Loan Portfolio Guarantee
This guarantee provides capital for small and medium
enterprises throughout Central America willing to introduce,
upgrade or retrofit industrial, agro-business and services
processes that utilize cleaner production practices,
certification processes and environmental management
systems. The agribusiness sector in Central America
is an important contributor to the region's gross domestic
production. Despite its importance for the region’s
economies, this sector has been characterized by the
use of unsustainable practices and constraints for small
and medium size businesses to access private financing
and technical assistance. |
Ecuador |
|
Citibank - Banco Solidario
Micro/Small Enterprises - US $4 million - Portable
to a Loan Guarantee
In Ecuador, USAID recently launched a major
microfinance program to reduce poverty by increasing
economic opportunities for the large number of poor.
This guarantee is being used to build upon a previous
loan guarantee under USAID's Micro and Small Enterprise
Development (MSED) Program that enabled Banco Solidario
to access a revolving line of credit from Citibank .
The guarantee is intended to both expand the volume
and terms of credit available to Banco Solidario and
support the institution in its ongoing efforts to diversify
its source of funding.
Banco Solidario
Microfinance - US $7.4 million
- Loan Portfolio Guarantee
Following the use of a portable guarantee, described
above, USAID signed a loan portfolio guarantee agreement
with Banco Solidario to guarantee loans to micro- entrepreneurs
located in coastal and/or rural areas. The guarantee
facilitates the expansion of Banco Solidario's financial
services and the development of a loan product to address
unmet demand by Ecuadro's poorest citizens. USAID’s
guarantee supports the development an effective, dynamic,
and efficient microfinance industry in Ecuador.
Banco Procredit (ProCredit Bank in Albania)
Microfinance - US $5 million
- Loan Portfolio Guarantee
USAID is providing a partial credit guarantee for the
principal on up to $5 million in loans from ProCredit
to to Sociedad Financiera Ecuatorial (SFE). USAID/Ecuador
is using the guarantee to support Sociedad Financiera
Ecuatorial (SFE) efforts to become a commercial bank
that will support full financial services for microentrepreneurs
and have the ability to capture resources from public
and institutional investors to on-lend for microfinance
purposes. SFE will borrow $5 million from ProCredit
Bank in Albania to increase working capital, to continue
geographical expansion/presence, and to facilitate the
conversion of SFE from a regulated finance company to
a regulated bank with full ability to accept savings
and deposits. The guarantee provides 50 percent coverage
of repayment on loans from ProCredit for five years
with a three-year grace period. USAID’s maximum
contingent liability will be $2,500,000. SFE will create
a reserve account equal to one amortization payment
in the quarter previous to its due date. This loan structure
will give SFE greater flexibility to revolve ProCredit’s
loans by on-lending proceeds to micro enterprises. Additionally,
SFE will be able to expand their service area and develop
new financial products to capture savings from the public
at large. Through its SALTO contract, USAID/Ecuador
will continue providing technical assistance during
SFE’s transition from regulated finance company
to commercial bank. |
Guatemala |
|
Genesis Empresarial
Microfinance - US $5 million - Loan Portfolio Guarantee
Genesis Empresarial is a rural business development
consultancy with extensive experience financing and
providing technical assistance. USAID created a partnership
with Genesis to take advantage of their experience with
integrated community development and income-generation
activities at the micro level in Guatemala to facilitate
access to financing among micro entrepreneurs, particularly
in rural areas. USAID established a bond guarantee with
Genesis Empresarial to support the issuance of pagarés
(promissory notes) to increase their working capital,
expand to new departments with the opening of nine new
branches, and lower interest rates to their customers.
Genesis is focused on increasing its market share by
expanding in to new under-served rural markets and offering
more competitive interest rates to its customers.
Genesis Empresarial is a rural business development
consultancy with extensive experience financing and
providing technical assistance. USAID created a partnership
with Genesis to take advantage of their experience with
integrated community development and income-generation
activities at the micro level in Guatemala to facilitate
access to financing among micro entrepreneurs, particularly
in rural areas. USAID established a bond guarantee with
Genesis Empresarial to support the issuance of pagarés
(promissory notes) to increase their working capital,
expand to new departments with the opening of nine new
branches, and lower interest rates to their customers.
Genesis is focused on increasing its market share by
expanding in to new under-served rural markets and offering
more competitive interest rates to its customers.
Banco del Café
Small & Medium Enterprises - $20 million
- Loan Portfolio Guarantee
To promote rural lending, USAID provided a loan portfolio
guarantee to Banco del Café, an established Guatemalan
bank with a strong rural presence. The bank has made
a strategic decision to grow its microloan business,
and the bank president views the guarantee as the right
tool to support this new initiative, adding to USAID/Guatemala’s
objective to increase rural household incomes and food
security, with special emphasis on small farmers and
microentrepreneurs. It also supports the objective of
improving the management of urban growth in targeted
areas, in particular the expanded and equitable delivery
of urban services in selected market towns. |
Haiti |
|
Sogebank
Société Financière
Haitienne de Développement, S.A. (Sofihdes)
Small & Medium Enterprises - US $5 million
- (2) Loan Portfolio Guarantees
A USAID loan portfolio guarantee to Société
Financière Haitienne de Développement,
S.A. (Sofihdes) is helping increase medium-term lending
to productive sectors in Haiti. The guarantee supports
a long-time partner that is serving a unique niche in
the market. Sofihdes is a development finance corporation
that has the mandate and expertise to offer medium-term
loans to sectors that will generate employment and contribute
to the country’s economic growth. USAID/Haiti
is using the guarantee to support the continued growth
and expansion of Sofihdes for up to US$2 million in
new loans made during the transition to a new government.
USAID is also using a loan portfolio guarantee to stimulate
economic growth and employment generation during a period
of political transition. Through a risk sharing partnership
with Sogebank, USAID is facilitating lending of up to
US $3 million to sectors that Sogebank deems have employment
and growth potential, including textile manufacturing,
fruit and vegetable export, micro and very small enterprises
involved in various services, art, handicrafts, and
light manufacturing.
|
Honduras |
|
Atlantida Bank - $ 3 million
Covelo Foundation - $ 1 million
Small & Medium Enterprises/Microfinance
– $4 million - Loan Portfolio Guarantees
In Honduras, USAIDis using two loan portfolio
guarantees to target lending by three financial institutions
for micro, small and medium enterprises in need of access
to financing, especially in agribusiness, light industry/manufacturing
and tourism. These targeted sectors and enterprises
provide significant economic growth opportunities, especially
considering employment, investment and export potential.
Two of these entities are large commercial banks with
significant loan portfolios and local branches dispersed
throughout Honduras, in both urban and semi-urban areas.
Despite their size, they do not lend extensively to
small businesses. The third institution, a non-governmental
organization (NGO), operates as both an apex and retail
microfinance institution. It is predominantly focused
on activities that increase the access of credit to
micro and small enterprises. However, the NGO, the Covelo
Foundation, has a limited capital base to extend its
portfolio of loans to allow for larger loan sizes with
longer maturities to its increasing small business clientele,
while maintaining competitive market-based interest
rates. Loans to firms operating in these sectors are
covered under the loan portfolio guarantee; although
the final decision to extend credit remains with the
three lending institutions.
Banco De Occidente, S.A
Infrastructure - $5 million- Loan Portfolio
Guarantee
This project, in the short term, provides a line of
credit to targeted municipalities in Honduras that is
currently unable to obtain financing for infrastructure
development from the private sector. In the long-term,
this project will help introduce local public finance
to financial markets and support the development of
a municipal finance system in Honduras by demonstrating
that local governments are sound and viable credit recipients
capable of managing and implementing municipal-financed
infrastructure projects. In addition, the market for
this service is expected to develop sufficiently so
as to provide lower-cost, long-term financing for environmentally
friendly infrastructure projects. |
Jamaica |
|
Jamaica National Building Society
Small & Medium Enterprises/Housing - US $8.5 million
- Loan Portfolio Guarantee
USAID, in partnership with Jamaica National Building
Society (JN), is stimulating lending (1) for a new loan
product to enable poor Jamaicans to secure formal land
title and (2) to micro, small, and medium-sized businesses
affected by Hurricane Ivan by providing JN with a 50 percent
guarantee covering up to $8.5 million in new loans. With
the guarantee, JN has developed a new product to help
eligible households bridge the financial barrier and obtain
formal title to their land. This new product expands on
Jamaica’s national campaign to increase land titling
for its citizens. JN can offer loans of approximately
US$700 for approved applicants to finalize and obtain
title. This new product, to facilitate the conversion
of property from an informal asset into a working asset,
is the only product available in the market.
Royal Bank of Trinidad & Tobago Ltd. - Jamaica
Environment - $5 million - Loan Portfolio
Guarantee
This guarantee facilitates lending for two general purposes:
1) Small and medium-sized hotels and manufacturing firms
for environmental retrofitting projects including the
installation of new and improved equipment for energy
efficiency and water conservation and 2) Small and medium-sized
enterprises for a range of activities including business
expansion, fixed asset improvement, working capital, and
equipment purchases.
This project improves the development impact of USAID
to increase financing to the micro and small business
sector, and assists the Government of Jamaica (GOJ)
in its efforts to improve the overall business environment
in Jamaica. Loan portfolio guarantees provide an excellent
support to complement ongoing programs to strengthen
the SMME sectors. Using a loan portfolio guarantee,
USAID, working together with the selected local commercial
bank/s, brings in the necessary investments to stimulate
the growth of SMME. The guarantee together with current
USAID projects will result in sustained economic growth
in these sectors. Without expanding sustainable economic
opportunities for SMMEs growth, the goals of many USAID/Jamaica
programs may not be met. It is an essential component
of USAID/Jamaica’s mission. Additionally, it will
further cement USAID’s commitment to the GOJ implemention
of its competitive strategy for the private sector.
|
Mexico |
|
Union Progreso - Wells Fargo
Micro/Small Enterprise - $1 million - Loan Guarantee
This project seeks to increase the amount
of capital available to Unión Progreso to provide
microfinancing to marginal groups and the poor residing
in rural Chihuahua. The guarantee supports the Mission’s
objective to increase microenterprise development, which
strengthens the institutional base for sustainable microenterprise
growth by supporting Mexican initiatives. The project
peripherally supports environmental preservation and
energy conservation.
FinComún
Micro/Small Enterprise - $2.5 million - Loan
Portfolio Guarantee
The guarantee supports the mission’s objective
to increase microenterprise growth, which is designed
to solidify the institutional base for sustainable micro
enterprise growth. This includes strengthening the management
of financial services and promoting mechanisms to meet
the needs of micro enterprises. By stimulating increased
market-based lending by FinComún to micro enterprises,
the $2.5 million guarantee is intended to demonstrate
the existence of a large, profitable market for these
services. |
Nicaragua |
|
FINARCA - $2.5 million
BanPro - $2.5 million
Health - US $5 million - (2) Loan Portfolio Guarantees
In Nicaragua, USAID has set up a loan portfolio
guarantee to support private health care providers known
as Empresas Medicas Previsionales (EMPs). By structuring
the the guarantee to foster competition among local financial
institutions, USAID hopes to increase lending to these
health facilities at attractive terms. These two loan
portfolio guarantees increase access to working capital
and equipment investment for targeted health service providers
by sharing the risk on new loans with two local financial
institutions, FINARCA and BanPro. USAID included the two
banks to foster competition, which it believes will lead
to more attractive loan terms for end borrowers. Each
of the financial institutions begins with a ceiling of
$1 million. When that ceiling has been reached, the financial
institution can request an increase from USAID until the
overall guarantee ceiling of $5 million has been utilized.
Through this competitive approach, USAID hopes to encourage
utilization.
FINARCA - $10 million
BanPro - $10 million
Small & Medium Enterprises - US $20 million - (2)
Loan Portfolio Guarantees
COncurrent to the guarantees described above,
USAID set up a series of loan portfolio guarantees to
increase access to working capital for small and medium-sized
businesses working in light manufacturing, agriculture,
tourism, aquaculture, and service industry; and export
processing zone (EPZ) construction. Services eligible
for loans under this program include those that provide
services to exporting companies or companies that supply
exporters. USAID/Nicaragua seeks to support business
clusters where each firm plays a role in developing
and selling products for export. USAID/Nicaragua hopes
to maximize potential synergies among the borrowers
in specific clusters, particularly between small and
medium-sized enterprises that have the potential to
become exporters and/or suppliers to exporters of goods
and services.
Bancentro Micro/Small Enterprises
- $5 million - Loan Portfolio Guarantee
The lack of commercial financing in Nicaragua continues
to be an obstacle to the development of new sectors and
also hinders the successful recovery of historically profitable
sectors emerging out of recent crises such as the El Niño
phenomenon and Hurricane Mitch. The loan portfolio guarantee
is a critical component of the Mission’s economic
growth program, serving both to stimulate domestic lending
to new or under-served sectors, and encourage rural development.
|
Panama |
|
Banco Panameño de la Vivienda (Banvivienda)
Education - US $5 million - Loan
Portfolio Guarantee
In Panamá, USAID extended a guarantee to Banco
Panameño de la Vivienda (Banvivienda) to create
a new loan product for students attending Universidad
Interamericana de Panamá (UIP). The guarantee will
enhance a pilot structure designed to develop a private
sector student loan product. First, Banvivienda will extend
up to $5 million in loans to UIP’s students. Banvivienda
will be responsible for underwriting and servicing the
loans. UIP will dedicate 20 percent of the tuition charged
to students in the loan program to a reserve fund. The
fund will take a first loss position. Once it has been
depleted, USAID will share 50 percent of additional loss
of principal with Banvivienda.
USAID’s guarantee facilitates access to financing
for lower to middle-income students who are interested
in pursuing a university-level education. The investment
in professional training in careers that complement
the U.S.- Panama Free Trade Agreement will help Panama
take full advantage of market strengths and develop
new trade opportunities. USAID’s partial guarantee
is intended to demonstrate the profitability of student
loans and encourage similar long-term private financing
from other local commercial banks. |
Peru |
|
Banco de Credito
Energy - $2 million - Loan
Portfolio Guarantee
This activity provides a local bank with a loan portfolio
guarantee to provide capital for small and medium enterprises
(SMEs) in Peru willing to introduce, upgrade or retrofit
industrial processes that utilize cleaner technologies.
End-of-pipe projects are also be eligible, provided
that the corresponding projects could generate positive
cash flows for the debtor, for instance, in avoiding
pollution fines or penalties from the government, or
in new sales generation to international clients requesting
operative environmental standards. The activity promotes
and supports the development of sustainable financing
mechanisms for cleaner production and directly contributes
to the Mission’s ongoing environmental initiatives.
FOGAPI
Micro/Small Enterprise - $2 million - Loan Portfolio
Guarantee
"Increasing Microfinance for the Poor Activity”,
or IMPACT, is a five-year USAID/Peru program designed
to foster the growth and sustainability of microfinance
institutions (MFIs) by providing MFIs with technical
assistance, training, specialized services, and funding.
Over the years, IMPACT has played an important role
in the growth of village banking MFIs; the transformation
of credit non-governmental organizations (NGOs) into
EDPYMEs (a type of financial institution specialized
in microcredit), and the expansion of important industry-wide
services such as credit history reports and financial
procedure transparency. The guarantee supports the extension
of guarantees by FOGAPI, a guarantee fund for small
industries, to banks working with the microfinance sector.
The guarantee connects small and micro entrepreneurs
with much-needed capital by encouraging FOGAPI to offer
guarantees to unregulated microfinance institutions
and thus build confidence between credit NGOs, EDPYMEs
and commercial banks.
San Martin Rural Savings - $6 million
Senor de Luren Rural Savings & Loan - $4
million
Los Liberatores de Ayachucho - $2 million
Agriculture – US$ 12 million - (3) Loan Portfolio
Guarantees
In support of USAID’s mission-wide taskforce on
Alternative Development in Peru, three guarantees are
being used to expand the availability of financial resources
from various private-sector sources to finance the development
of well-structured and organized crop production value
chains. The sources of private capital include rural
savings and loan banks, buyers, and input suppliers.
USAID's Poverty Reduction and Alleviation (PRA) program
in Peru organizes and facilitates closed-market transactions
between these financing sources and small-scale agriculture
producers in the Alternative Development Zones by creating
upfront buyer-producer contracts, i.e. “contract
farming”, with an underlying need for external
financing to support the producer's operational costs,
predominantly as working capital. Loans guaranteed by
USAID are exclusively available to crop producers participating
in the PRA value chain program. |
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