> Eradicating Poverty, Building New Lives > Fighting Poverty with Strong MFIs > Building the Industry
Generating Funds for Poor Entrepreneurs Grameen Foundation’s Growth Guarantee program gives individuals or institutions a tangible way to reach microentrepreneurs. Donor-guarantors—participants who share Grameen Foundation’s vision that microfinance is a scalable solution to global poverty—provide their assets as a guarantee to a pool managed by Grameen Foundation and Citigroup. Citigroup then issues letters of credit to local banks to support financing for the microfinance institutions (MFIs) that Grameen Foundation selects. On average, each dollar pledged acts as a guarantee and could yield four dollars for the MFI. Since 2005, the Growth Guarantee program has generated over $145 million in financing for 20 of the world’s leading microfinance institutions. These funds generated new loans for almost 800,000 borrowers in 12 countries. Our program has helped open eyes in the commercial banking world and has prompted these banks to see lending to MFIs as an opportunity rather than a risk. In 2008, during the depths of the global financial crisis, Schwab Charitable Fund joined with Grameen Foundation to attack world poverty by committing $14 million to support the Growth Guarantee program. Schwab Chartable will meet this goal by enabling its more
than 12,000 donors to set aside up to 10 percent of their charitable gift accounts and pledge them to our industryleading guarantee program. With this new initiative, Schwab Charitable becomes the first donor-advised fund to participate in the Growth Guarantee program. In India, there are still an estimated 455 million people living under $1.25, and only 60 million of them have access to microfinance. For most MFIs, especially those operating in hard-to-serve areas, lack of capital is one of their greatest barriers. That’s why Grameen Foundation, in collaboration with IFMR Trust and Citicorp Finance India Limited, launched Grameen Capital India Limited (GCI), India’s first “investment bank” serving the microfinance sector. In April 2008, GCI brokered a transaction between Bandhan, an MFI with 675 branches in India, and IndustInd Bank for Rs 75 crore (US $15 million). This achievement was particularly significant because it occurred in the midst of an economic downturn during which many planned transactions in the industry were postponed or cancelled altogether. GCI has generated more than $100 million in financing for Indian MFIs which will fund more than 800,000 microloans for poor people that country.
Growth Guarantee Amount
Financing Generated (in local currency)
Leverage
Clients Served
$2,000,000
$5,000,000
2.5 times
35,714
Crecer—Bolivia
$750,000
$1,500,000
2 times
4,839
Pro Mujer—Peru
$200,000
$600,000
3 times
4,615
Dakahlya Businessmen’s Association for Community Development (DBACD)—Morocco
$750,000
$1,500,000
2 times
10,000
Grameen Koota—India
$225,000
$4,450,000
19 times
25,429
Total
3,925,000
13,050,000
28.5 times
80,597
MFI—Country Lift Above Poverty Organization—Nigeria
12 www.grameenfoundation.org