Kenya: Water.org says it will partner with local finance institutions to boost access to money

By George Omondi, Business Daily Africa

Water.org, a company that launched water credit in Kenya two years ago, hopes to partner with local financial institutions to give more low-income earners utility loans over the next three years.

From a seed capital of Sh306 million disbursed through Equity Bank, the Kenya Women Finance Trust, Small and Micro Enterprise Programme (Smep) and Eclof Kenya, the company targets to increase its loans to Sh1.6 billion by 2014.

“This concept has been largely successful not only in this region but also in South Asia and Central America where repayment rate has been between 97 and 98 per cent,” April Rinne, the company’s director of Water Credit, said at a water financing forum held in Nairobi lat week.

Under the water credit model co-financed by MasterCard Foundation, microfinance institutions (MFIs) partnering with Water.org have the flexibility to profile clients and develop products that suit their specific needs.

In Kenya, these loans — averaging Sh13,600 ($160) per applicant — are structured for water and sewerage connections, shallow wells, boreholes, pumps for wells, rainwater harvesting tanks, septic tanks, biogas digesters and latrines. Ms Rinne said she expects MFI partners to encourage their clients who have no access to safe water to take the loans.

“Of the 24 MFIs that we are working with in Africa, USA and Asia the smallest has 20,000 clients while the largest has five million customers,” she said

Data from Water.org shows that by October, the four financial institutions had disbursed 1,870 loans to more than 9, 300 people. All the loans were charged at prevailing commercial interest rates.

The institutions plan to expand the loans to 400 of their branches by next year, reaching a total of 180,000 people before crossing the border with the concept to Uganda.

Data gathered by the Water ministry indicates that about 14 million Kenyans (35 per cent of population) lack access to safe and reliable water, while 22 million do not have proper sanitation facilities.

While the government has lately increased budgetary allocation to water sector to Sh40 billion annually from just Sh2 billion 10 ago, this level of financing still falls far below the Sh500 billion required annually by the sector to meet the Millennium Development Goals.

At a recent credit forum, government officials called for innovative ways from the private sector to boost access to water and sanitation among the poor.

“Safe water and basic sanitation are now classified by the constitution as human rights, but the government faces a huge challenge in meeting the needs of its fast growing population,” Mr Peter Mangiti, director of Water at Water and Irrigation ministry said in a speech.

The ministry, he added, has been discussing with water service providers how to implement affirmative action and cheap technology to benefit low income earners.

The Water.org’s campaign of using loans to boost access to safe water and sanitation among low-income earners has won the support of most micro-finance institutions which see it as a model for rural development.

Says Mr Benjamin Nkungi, the Association of Microfinance Institutions of Kenya’s CEO: “The moment you provide safe and reliable water to a village, you release energies of rural women to engage in other income-generating activities.”

Like Water.org, most MFIs focus on education, agriculture and water which are seen as key planks of rural development. “Of these three, water provision has the highest multiplier effect in the way it opens doors to all other aspects of rural development,” said Mr Nkungi.
omondi@ke.nationmedia.com

Kenya: Samsung, KWFT pact to boost mobile banking

By Charles Gichane, Capital FM

NAIROBI, Kenya, Oct 10 – Samsung has partnered with local microfinance solutions provider, Kenya Women Finance Trust – Deposit Taking Microfinance (KWFT-DTM) to promote the uptake of mobile technology solutions among women.

The joint programme by KWFT-DTM and Samsung is geared at bridging the digital divide and facilitating mobile banking solutions for millions of unbanked women in Kenya.

To kick off the partnership, the two firms have pledged to target the provision of mobile banking services to more than 600,000 women account holders at KWFT-DTM.

Samsung Electronics East Africa (SEEA) Business Leader Robert Ngeru explained that the firm will provide Samsung phones for onward lending to KWFT-DTM account holders to boost the recently launched KWFT Mobile banking product uptake.

He disclosed that Samsung will also provide a platform for local Mobile Application Architects to develop suitable mobile banking products to be hosted on the Samsung Apps store, which will be customised to meet local demands including language considerations.

KWFT-DTM Board Chairperson Mary Okelo termed the M-banking service a great milestone since in the past, clients have had to travel long distances to access financial services.

With the new partnership, KWFT DTM Managing Director Mwangi Githaiga, confirmed that the deposit taking micro finance institution will provide a range of Samsung phones at affordable rates to account holders allowing them to conveniently enjoy mobile banking solutions alongside other benefits arising from Internet access.

Ngeru reiterated that the partnership with KWFT-DTM is part of Samsung’s strategy to provide a platform for more than eight million mobile subscribers to upgrade from basic mobile handsets functionalities to smart phone capabilities.

“In a market such as Kenya and indeed in the rest of the third world countries, mobile phones are increasingly becoming a key tool for economic and social survival with a proven capacity to act as development catalysts,” he noted.

“For this reason, Samsung is very keen to forge partnerships with organisations such as KWFT-DTM in our quest to bridge the digital and economic divide through quality and affordable devices,” he said.

Njeru added that Samsung will actively seek to develop customised Mobile Banking Apps to further support social financial inclusion efforts in Kenya and beyond.

The recently rolled out KWFT Mobile Banking Services allows clients to conveniently access banking services through their mobile phones.

According to KWFT-DTM Managing Director Mwangi Githaiga, the institutions account holders are currently using KWFT’s mobile banking service for loan repayments and savings.

“With the Samsung partnership, KWFT-DTM is now very well positioned to empower women to purchase a phone which is undoubtedly a very valuable business tool through easy and flexible terms as part of our strategy to bank on women through enhanced telecommunication access,” Githaiga said.

The KWFT Mobile Banking Service is loaded with innovative features allowing account holders to enjoy services such as balance enquiries, mini statements, funds transfers, M-Pesa, purchase airtime, ATM services and utility bill payments.

KWFT-DTM has witnessed great innovation through its delivery channels, which include 225 physical offices, ATMs on the Kenswitch network and now mobile banking that facilitates micro savings and payments, thus further deepening its outreach and financial inclusion.

Kenya: Stringent rules push microfinance firms into losses

By George Ngigi, Business Daily Africa

Stringent regulations are making it hard for Central Bank of Kenya (CBK) licensed micro finance institutions to operate profitably, a new research has found.

The survey by Financial Sector Deepening (FSD) states that the conversion from a credit microfinance institution to a CBK-licensed, deposit taking micro lender is a costly venture that is made even more expensive by elaborate regulatory requirements.

“The current CBK requirements, especially with regard to branch security and prudential ratios, are not adapted to the microfinance business in Kenya. To encourage other organisations which are performing well to transform, a review of actual risks for DTMs would be necessary to lower some of the requirements and therefore costs,” reads the FSD report.

Faulu Kenya, Kenya Women Finance Trust (KWFT) and SMEP are some of the microfinanciers that have converted to deposit-taking institutions.

Some of the changes that the micro-finance institutions had to make include the installation of security devices, setting up new information technology infrastructure and recruitment of staff with a banking background.

“The challenge in transformation is not in meeting the regulatory capital requirements, but in realising the related costs to comply with the non-capital requirements.

Key among these is investment in ICT/MIS and the establishment of a deposit-taking infrastructure,” said FSD Kenya.

The micro-financiers were in agreement with the report, saying several amendments to the law were needed to address emerging bottlenecks.

“Most institutions are not able to meet those requirements because of cost; you can’t transform without Sh10 million and for most institutions their capital base is less than Sh50 million,” said Association of Microfinance Institutions (AMFI) CEO, Benjamin Nkungi.

Mr Nkungi said that institutions that set up as DTMs from the onset were not having a problem complying with the regulatory requirements, but those seeking to convert were bearing the brunt of the new laws. Newly set up DTMs include Remu and Uwezo DTM, with the latter being a community-based institution.

The ones that have converted have declared a drop in earnings in the first year of operation owing to high costs of conversion. Faulu Kenya was the first to convert to deposit taking in 2008, a venture that pushed them to losses of Sh130 million by end of 2010.

The conversion process also cut the net earnings of KWFT to Sh321 million from Sh676 million.

Since introduction of the DTM rules in 2008, CBK has amended them to allow for the use of the outlets that existed before the conversion as business units, said Mr Nkongi.

To ensure protection of customer funds, especially in the microfinance segment whose risk exposure is considered to be high, the Central Bank has been demanding higher reporting standards and loan provisioning from the lenders.

While DTMs are supposed to classify a loan that is not serviced for more than three months as a loss, the banks have six months to provide for the same.

“Yes you are trying to meet stringent rules, but it is good to determine the strength of the industry. We appreciate that when entering the financial sector there is need to interrogate those coming on board,” said Michael Gichohi, managing director of Uwezo DTM.

Mr Nkungi also said that limitation of shareholding for individuals or an organisation to 25 per cent is an impediment as most of the micro-finances were ran by NGO’s or individuals.

The rule, which is similar to regulations in the commercial banking sector, is intended to safeguard against domination by single individuals, which could weaken corporate governance standards.

“Existing shareholders are having problems getting new shareholders to come in with same financial muscle,” said the association executive.

Kenya: CBK issues rules for micro-finance agency operations

By Geoffrey Irungu Business Daily Africa

The Central Bank of Kenya has placed a high moral standard for businesses seeking to distribute financial products from deposit-taking microfinance institutions (DTMs).

The measures aimed at protecting customers will see the agents require references from the provincial administration, religious leaders and credit reference bureaus among other disclosures on behaviour and financial standing.

The Central Bank said the new guidelines would ensure that the agent “will not compromise safety, soundness and supervision of the DTM sector”.

The DTMs currently in operation include Faulu Kenya, Kenya Women Finance Trust, Uwezo and Small and Micro-Enterprise Programme.

The regulator said there were now nearly 9,000 agents for commercial banks who have handled it 5.92 million transactions valued at Sh28.7 billion.

“In order to enhance the inclusivity of the financial systems, the Central Bank is to extend the agency model to the microfinance sector.,” said a circular from Frederick Pere, the director of bank supervision. “The third parties to be contracted by the DTMs will be approved by the Central Bank of Kenya.”

The directive allows the institutions to appoint only the agents who have been running a commercial activity for at least a year and have a good credit record. The agent will also require secure premises and competent personnel.

According to the rules, the entities that will be eligible for appointment as agents include limited liability companies, sole proprietorship, partnerships, societies, co-operative societies, state corporations, trusts, public entities and any other entity which the Central Bank may prescribe.

Also to be provided are audited financial statements for corporate entities or certified financial affairs in the case of sole proprietors or partnerships for the past 12 months immediately preceding the date of suitability assessment.

Where it is a sole proprietor or a partnership, a certificate of good conduct or a letter of recommendation from the local chief, a registered religious leader or a regulated financial institution where the proposed agent holds an account.

Patrick Lumumba, a senior programmes officer at the Association of Microfinance Institutions, said many DTMs now have the option to convert their marketing offices and branches into agencies in line with the provisions.

“Some DTMs were opening high-tech banking offices or branches in order to increase their reach. They can now appoint new agents as well. We can say these rules have made things clearer,” said Mr Lumumba.

CBK first rolled out the agency model in the banking industry in 2010.

The rules say that a DTMs may require a director, shareholder, sole proprietor, partner, manager or any other officer or employee of an entity to be vetted if the vetting of that person is necessary for do the business.

“Prior to engaging an entity as an agent, an institution shall assess the moral, business and professional suitability of the sole proprietor or partners of an entity proposed to be appointed as an agent,” says the rules.

Kenya: HP and KWFT Sign KES162m Systems Upgrading Contract

From Ratio Magazine

Global integrated IT solutions provider Hewlett Packard (HP) today signed a USD1.8m (KES162m) contract with the Kenya Women Finance Trust Deposit Taking Microfinance Ltd (KWFT) to upgrade the latter’s information communications technology systems and revamp its primary data center.

The upgrade, coming after the Central Bank of Kenya (CBK) awarded KWFT a license to operate as a fully-fledged deposit taking institution, will be anchored on HP’s state of the art Superdome 2 solution that will enable the financial institution manage its technological requirements and achieve operational efficiency in service delivery in keeping pace with the high growth trend at KWFT.

“The upgrade will also enable us manage growing demands for our ever expanding customer base that currently stands at over 450,000 as well as internal staff operations and regulatory reporting.” said the KWFT Managing Director Mr. Mwangi Githaiga.

KWFT is an affiliate of Women’s World Banking (WWB). The financial institution has risen to become one of the most successful and best practice financial institutions in Kenya targeting low income women and their families with credit and savings products through an extensive office network which provides deep penetration into the rural, remote and peri-urban areas.

The HP East Africa (EA) Managing Director Mr. Ken Mbwaya said KWFT’s technological advancement complimented the new way of delivering value to customers and citizens instantly dubbed as the Instant-On Enterprise. The HP Instant-On Enterprise, technology is everywhere that matters, from disparate mobile devices to global data centers and everywhere in between.

“We have converted KWFT into an Instant-On financial institution with technology to deliver flexibility, automation, security, insight and speed. These are technology imperatives delivered through HP solutions including the HP Application Transformation, HP Converged Infrastructure, HP Enterprise Security, HP Information Optimization and HP Hybrid Delivery. With these solutions KWFT is able to deliver IT services faster and more reliably than ever,” Mr. Mbwaya added.

Mr. Mbwaya further reiterated that future partnerships will be flexible and accommodative to new technologies, changing demography and workforce.

KWFT has a total of 215 business outlets, including 10 deposit taking branches in Kakamega, Eldoret, Nyeri, Mombasa, Nairobi’s River Road, Malindi, Kericho, Kisii, Embu and Migori with three additional opening soon in Machakos Kitale and Nanyuki. Several other deposit taking branches are scheduled to be opened across the country in 2011.

To supplement the extensive geographical presence, KWFT clients use GSM mobile money transfer services to remit savings and loan repayments and the institution is currently implementing a robust mobile banking system that will see their clients enjoy the services round the clock from their convenience.

Further, KWFT is certified on a shared ATM network, enabling clients to transact through ATMs conveniently. The institution is currently deploying its own ATMs both at the deposit taking branches and at other strategic off site locations across the country. Some key customer service processes are automated for instance origination of account opening through mobile phone based application.

This year the finance institution clinched the coveted WWB excellence in Leadership Award where it was recognized as top among 39 network members in 27 countries across the world for demonstrating excellence in principled leadership, financial and social performance and upholding institutional commitment to gender diversity and women leadership.

NCCK Microfinance to Take Deposits

By Peter Kiragu, Nairobi Star

The National Council of Churches of Kenya’s (NCCK) micro-finance arm will next Monday officially launch deposit taking activities after a go ahead by the Central Bank in December last year to carry out nationwide deposit-taking microfinance business.

SMEP Deposit Taking Microfinance Limited evolved from the Small Scale Business Enterprise Programme (SSBE), a project of the NCCK, which was started in 1975.

The project started as a relief arm of the church council providing the poor in a number of slum areas with food and later small business grants. The project was then modified, developed and evolved into a microcredit company that was registered as a company limited by guarantee in 1999.

The institution now boasts of 87,500 clients and an outstanding loan balance of approximately Sh1.1 billion. The transformation into a deposit-taking microfinance institution will enable SMEP DTM offer savings products to its clients in addition to the loan products.

SMEP DTM became the fourth deposit taking microfinance institution to be licensed after Faulu Kenya Deposit Taking Microfinance, Kenya Women Finance Trust Deposit Taking Microfinance and Uwezo DTM Limited, which were licensed in May 2009, March 2010 and November 2010, respectively.

The licensing of SMEP DTM progresses the financial inclusion initiatives of CBK. Deposit Taking Microfinance institutions will particularly address these entry barriers in areas that have not been well served by mainstream financial institutions.

Microfinance firms profits drop on high set-up costs

By George Ngigi, Business Daily Africa

Restructuring costs and higher regulatory expenses have eaten into the earnings of newly licensed deposit-taking micro finance institutions, with Faulu Kenya sliding further into loss territory and Kenya Women Finance Trust (KWFT’s) profits dropping by more than half.

Faulu Kenya, which was licensed as a deposit-taking institutions in 2008, recorded a loss of Sh130 million, deepening the net loss of Sh5.3 million reported last year.

KWFT reported a 110 per cent drop in profits to Sh321 million from Sh676 million for 2009.

“We being profitable is good as most people expected us to slip into loss following the infrastructural and staff costs related to transforming,” said Mwangi Githaiga the managing director of KWFT.

Increased costs

He said costs incurred in transforming the business to a deposit-taking lender were estimated at over Sh500 million which were composed mainly of branch set up costs, core banking system upgrade to facilitate processing of reports as required by the regulator, stationery and increased staff costs.

The microfinanciers were restricted to lending only and could not take deposits from the public before the licensing by Central Bank of Kenya.

KWFT had to source for professionals in the banking sector to help them manage deposit-taking and further train their staff on the risk associated with cash handling.

The micro-lender was issued with a deposit taking license in April last year and by end of year had mobilised Sh6.1 billion in customer deposits.

The deposits mobilised were, however, not sufficient to stop its reliance on external funding, which stood at Sh10.2 billion and for which it paid out Sh811 million as interest.

Some of the external debt was disbursed in foreign currencies which led to foreign currency losses amounting to Sh3.7 million owing to the depreciation of the Shilling.

“Already we have 10 licensed branches collecting deposits and we hope to roll out more, with that we expect to cut our reliance on external funds,” said Mr Mwangi.

With its loan book growing to Sh11.6 billion from Sh10.1 billion the financier’s interest income from loans and advances rose by Sh1.4 billion to Sh3.5 billion.

Though the cost burden, transformation also opened the door for the institution to earn income from over the counter charges and transaction income releasing them from reliance on one revenue stream.

“What we have reported is dependent on one product, lending, but we usually give money to women who are charged transactional fees by other players. We now want to ensure we bring that commission home” said Mr Mwangi.

Though Faulu Kenya management was not available to comment on its performance a statement from the company said that Faulu undertook a consolidation exercise to improve the quality of the loan book which resulted with an additional impairment charge of Sh74 million mainly on account of agricultural sector loans whose recovery was hampered by the 2008 post election violence.

As a result the bank’s gross non-performing loans declined by 35 per cent to Sh289 million from Sh446 million and its provision for loan impairment rose to Sh78 million from Sh4 million.
The institutions loan book and deposits shrunk by Sh400 million and Sh200 million respectively.

Faulu Kenya opened 23 banking branches during the year which is expected to have affected their revenues with the cost of opening a branch estimated by market players at Sh20 million.

The transformation process has led to a decline in its profit as in 2007 it reported after tax profits of Sh77 million on a total revenue of Sh461 million, which declined to Sh11 million in 2008 on total income of Sh586 million, before turning to a loss of Sh5.3 million in 2009 after on revenues of Sh808 million.

Mr Mwangi of KWFT said that with the amendment of the micro-finance act making it possible for them to convert their marketing stations to deposit taking stations would increase their grassroots presence and ability to mobilize deposits.

Though its performance outdoing that of some banks the management is cautious of converting to a fully fledged bank.

Being under the micro-finance act KWFT cannot be able to earn from streams such as current accounts, foreign currency accounts and international money transfer services apart from being locked out of the clearing house.

“Though the micro-finance institutions are more labour intense the clientele that we serve can be easily locked out if we evolve into a bank. What we need is a strong regulatory framework that is conducive for micro-finance,” said Mr Mwangi.

The other licensed nationwide deposit taking micro-finance institutions, small and micro enterprise programme (SMEP) is a not-for-profit micro finance institution while Remu was licensed this year thus is not obliged to release its financials.

Central Bank of Kenya licenses first start-up microfinance institution

By George Ngigi, Business Daily Africa -

Micro-lenders turn to external financiers for cash

By George Ngigi, Business Daily Africa -

Newly licensed deposit-taking micro-finance institutions (MFIs) are turning to development financiers for funds since customer deposits have failed to measure up to the demand for loans.

The Kenya Women Finance Trust (KWFT), which was early this year licensed to collect deposits, last week signed a Sh535 million seven-year loan with Proparco, an investment fund owned by the French government, and Sh215 million with Grameen Credit Agricole Microfinance Foundation.

It also received a Sh500 million loan from Oikocredit last month.

Managing director Mwangi Githaiga said the micro-financier wanted to bridge a widening gap between demand for loans and new deposits from customers.

He said loan applications have been on the rise since the lender got a deposit-taking licence from the Central Bank of Kenya (CBK).

“The credit appetite is still higher than the savings rate,” he said.

KWFT had 415,965 customer accounts and held total deposits of Sh5.6 billion at the end of October, while the loan portfolio stood at Sh11.6 billion.

Faulu Kenya, the other licensed deposit-taking micro-finance lender, also has in its books a Sh450 million credit line from Standard Chartered Bank and the International Finance Corporation.

The reliance on external funds has made micro-lenders charge relatively higher interest rates than conventional commercial banks since they are forced to factor in higher profit margins to repay the debts.

Carol Mulwa, the country manager of Oikocredit Kenya, a development finance institution, said the interest rate on loans to MFIs and NGOs is determined by risk analysis conducted on borrowers.

“We load a certain risk rate, dependant on the customer, to our base rate. Averagely, the rate lies between 10 per cent and 14 per cent,” said Ms Mulwa.

CBK data shows the current average interest rate paid by banks on deposits is 1.47 per cent, making customer deposits a cheaper source of funds as it yields a wider interest spread for the lenders.

KWFT’s current lending rate is 1.4 per cent per month (pegged monthly as some loans mature in less that a year), which translates to an annual rate of approximately 16.8 per cent.

Faulu Kenya lends at an average yearly rate of 18 per cent.

The cost of mobilising deposits is high as institutions have to put in place measures to ensure they adhere to the set regulations that seek to protect public savings.

They also have to bear increased construction costs while rolling out branches.

“Transforming into a deposit-taking institution had significant cost elements for us. We had to upgrade our IT system so as to cope with the increased business and also meet the new regulatory reporting requirements. We have been opening one deposit-taking branch at a time and currently we are at seven branches,” said Mr Githaiga.

Faulu Kenya reported an after-tax loss of Sh49 million last year, a reverse from profits of Sh11 million in the previous year.

The management attributed the decline in performance to the transformation process.

MFIs yet to be licensed as deposit-taking institutions have to seek external funding so as to meet customer needs. Last week, Oikocredit disbursed loans to micro-lenders.

The money was given to Pamoja Women Development Programme (Sh120 million), Small Medium Enterprise Programme (Sh100 million), AAR Credit Limited (Sh50 Million) and Molyn Credit Limited (Sh50 Million).

The loans are intended to expand the loan portfolios of these institutions.

“We mainly support SMEs and they usually have seasonal businesses that push them to seek simple funding. The demand now is being pushed by the festive season, which will be closely followed by the schools’ reopening before the agricultural season sets in,” said Lydia Anyangu, the CEO of Molyn Credit Limited, which has 19,000 clients with a loan book of Sh180 million.

gngigi@ke.nationmedia.com

KfW Entwicklungsbank promotes private initiative of microentrepreneurs in Sub-Saharan Africa

From The FINANCIAL -

REGMIFA has disbursed the first loans totalling USD 13.75 million to microfinance institutions in Ghana, Kenya, Senegal and Tanzania.

Structured by KfW Entwicklungsbank, the Regional Micro, Small and Medium Enterprises Investment Fund for Subsaharan Africa (REGMIFA), the first of its kind, invests in microfinance institutions that grant loans to microentrepreneurs.

The first loan in Ghanaian cedi was granted to the Sinapi Aba Trust (SAT). The microfinance institution gives loans to microenterprises mainly located in rural areas, primarily through a group lending methodology. The second loan went to First Allied Savings and Loans (FASL), which offers mainly individual loans but also group loans to micro and small entrepreneurs. The third loan went to the Kenya Women Finance Trust (KWFT) for onlending in Kenya shillings to low-income women borrowers. Further loans went to Faulu Kenya, PAMECAS in Senegal and FINCA in Tanzania.

“The disbursement of these loans is an important milestone for REGMIFA, a fund designed to support employment and entrepreneurship of small businesses in Sub-Saharan African countries. It will help to deepen Africa’s economic growth and to improve the economic opportunities of small enterprises and poor population groups. REGMIFA will support particularly those institutions that act responsibly towards their customers and keep a watchful eye on their debt situation. Thus the Fund sets important standards”, said Dr Norbert Kloppenburg, member of the Executive Board of KfW Bankengruppe.

The Fund was officially launched on 5 May 2010, with over a dozen public investors committing over USD 150 million. The Federal Ministry for Economic Cooperation and Development and KfW Entwicklungsbank will contribute some EUR 30 million to the Fund. The Fund is expected to develop a credit portfolio of some USD 200 million by 2014. It is the first fund to offer microfinance institutions in Sub-Saharan Africa a range of financing instruments such as long-term debt capital and quasi-equity financings such as subordinate loans in local currency.

“The Fund has achieved a great deal in its first six months, it has acted quickly and effectively. Its portfolio will further expand with the scheduled disbursement of loans to microfinance institutions in Nigeria and Cameroon”, said Dr Kloppenburg.

REGMIFA will make funds available to numerous MSME lending intermediaries which will grant local currency loans to some 300,000 micro and small enterprises. The advantage is that the intermediaries will incur no currency risk and, hence, their debt burden will be lower.

KfW Entwicklungsbank is the world’s largest financier of microfinance in developing and transition countries. In 2009 alone, almost one third of its commitments (EUR 1.1 billion) went to the financial sector.

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