The Nordic Microfinance Initiative secures millions for the poor
TEXT: IRINA LEE
18 May 2016 was a significant day for microfinance in a Norwegian and Nordic context. After a year of negotiations, the agreement with the Danes to set up the Nordic Microfinance Initiative was in place. The Nordic Microfinance Initiative is a collaboration between Norfund (the Norwegian Investment Fund for Developing Countries) and IFU (the Danish Investment Fund for Developing Countries), in addition to a range of Norwegian private sector investors.
“This is a big breakthrough for us! Our task is to strengthen the position of the poor in developing countries by giving them access to financial services. This new fund will enable us to provide microfinance to several million new clients in East Africa and Asia”, comments Arthur Sletteberg, CEO of the Norwegian Microfinance Initiative. Around 90% of these borrowers will be women.
The Nordic fund, which is called Fund III, is a joint project involving private sector and state organisations. The Norwegian and Danish investment funds for developing countries, Norfund and IFU respectively, have contributed equal amounts that together represent 55% of the total capital.
“The Norwegian Microfinance Initiative has helped create jobs and promote economic and social sustainability in developing countries since 2007. With the IFU on board, it will be possible to develop the Norwegian Microfinance Initiative further into a leading Nordic microfinance platform”, commented Kjell Roland, Managing Director of Norfund, in connection with the launch of the fund in Copenhagen in May.
The Danes were also very positive about the cross-border collaboration: “We see this as a first step towards an even broader platform involving private sector investors from more Nordic countries”, commented Tommy Thomsen, IFU’s CEO.
With regard to the private sector’s involvement, Ferd, KLP, DNB, Storebrand and TD Veen have together contributed 45% of the total capital of NOK 715 million. Ferd was the largest contributor with a contribution of slightly under NOK 120 million, equivalent to about 17% of the total amount.
The aim of the new fund, Fund III, is to invest in medium-sized financial institutions in East Africa, South Asia and South East Asia that have the potential to grow. Arthur Sletteberg, CEO of the Norwegian Microfinance Initiative, is excited about the opportunities opened up by the new Nordic fund.
“We now have a stronger capital base than before, and this means we are in a position to expand the organisation. We will now be ensuring we are closer to our investments, and we have already employed our first local employee in Nairobi. We also want to employ someone in Delhi very soon, as well as someone in South East Asia. This will give us coverage in our three main regions,” comments Arthur Sletteberg. There is also a plan to employee someone in Copenhagen in the near future.
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- The Norwegian Microfinance Initiative was launched on 2 June 2008 by Norfund, Ferd, DNB, Storebrand and KLP. Its investment capital at the time was NOK 600 million, half of which was contributed by the Norwegian state through Norfund.
- As a result of the new agreement with Denmark, a new management organisation has been set up, the Nordic Microfinance Initiative, which is responsible for Fund III.
- The Norwegian state investment fund Norfund owns a third of the Nordic Microfinance Initiative, the same proportion as the Danish Investment Fund for Developing Countries (IFU). The final third is owned by Ferd, KLP and DNB. Storebrand does not have any ownership interest in the Nordic management organisation, but has contributed to Fund III.
A longer version of this article is available in Norwegian in the Ferd Magazine by clicking here.