“The European Investment Bank is playing a leading role in supporting REGMIFA and its unique contribution to improving access to finance for entrepreneurs across Africa. Offering local currency loans, engaging a broad investor base and attracting private support will allow African companies to grow, create jobs and reduce poverty over the coming years.” said Plutarchos Sakellaris, European Investment Bank Vice President responsible for Sub-Saharan Africa.

REGMIFA’s potential contribution to African economic growth has been strengthened by feasibility studies and in particular a study on foreign currency lending financed by the European Investment Bank. The Bank will provide a further USD 2m in technical assistance grant funding to support the initiative and has played a key role is selecting specialist fund managers. The European Investment Bank has supported and helped design the fund since 2007, through its active cooperation with other donor finance institutions.

REGMIFA was formally launched at a signature ceremony earlier today in Berlin. The ceremony was attended by representatives of the European Investment Bank, Gudrun Kopp, Parliamentary State of Secretary at the Federal Ministry for Economic Cooperation and Development (BMZ), Dr. Norbert Kloppenburg, Member of the Board of KfW Banking Group and representatives of the Spanish Development Bank (AECID), International Finance Corporation, and other development institutions participating in the fund.

Investors participating in the fund contributed more than $ 150 million. The fund will develop a credit portfolio of 200 million USD by 2014. This marks the first time that a dedicated fund provides microfinance institutions in sub-Saharan Africa with a range of key financing instruments, including long-term debt and equity financing as well as subordinated local currency loans.

Gudrun Kopp said: “This innovative fund provides microfinance institutions across sub-Saharan Africa with a range of financial instruments for the first time. These will be able to finance 300,000 companies over the next five years and create and secure 500,000 jobs. The creation of these jobs marks a significant contribution to both poverty reduction and alleviating the effects of the economic crisis in Africa. ”

Micro, small and medium-sized businesses have little chance to invest and finance growth using adequate debt instruments. Across the continent there is a clear shortage of long-term loans.

The most common form of informal micro-enterprises, those employing most people across Africa, are barely able to grow and invest given the absence of suitable credit opportunities. They are therefore unable to make use of opportunities to grow and expand in new markets, and are prevented from hiring more workers. “More work in Africa means less poverty. Only those who earn money are able to access a doctor and get medicine, education and care when needed. REGMIFA will support economic growth in Africa and strengthen opportunities for small businesses and poor populations increase to benefit from economic growth, ”said Dr. Kloppenburg.

The Fund will provide direct funding for 50 microfinance institutions. They, in turn, will lend to over 300,000 small businesses in local currency. They key benefit will be the removal of currency risk and therefore a lower debt burden.

Experience shows that the vast majority of borrowers will be women, whose social position and income earning role as entrepreneurs will be strengthened.

Investors in the fund alongside the European Investment Bank, include the German Ministry for Economic Co-operation and Development (BMZ), KfW Development Bank, IFC, part of the World Bank Group, the Belgian Investment Company for Developing Countries (BIO), (OeEB) the Development Bank of the Netherlands (FMO), the European Commission, EuropeAid, French Development Agency (AFD), (PROPARCO), the Norwegian Microfinance Initiative (NMI), Spanish Agency for International Development Cooperation (AECID), Spanish Ministry of Foreign Affairs (MAEC) and African Development Bank (AfDB). The investment manager is Symbiotics.

The European Investment Bank is a leading provider of microfinance to Africa. The total commitment for microfinance in Africa, Caribbean and the Pacific exceeded EUR 150 million in both debt and equity in Microfinance Investment Vehicles and microfinance institutions. In Africa the bank’s portfolio exceeds EUR 122 million in 12 microfinance operations.