According to an announcement made by Grameen Foundation and the U.S. Agency for International Development (USAID), they would be providing a credit guarantee of $1.5 million to the Peruvian savings and credit cooperative, Cooperativa de Ahorro y Credito (ABACO), to help it support almost $3 million for local currency financing to two Peruvian microfinance institutions (MFIs).
The microfinance sector is quite well=established in Peru, as all the major institutions can easily approach the international capital markets. However, a lot of local currency financing is still required, especially by small microfinance institutions, which are unable to get loans from the local banks.
With the help of this new credit guarantee to ABACO, Grameen Foundation and USAIDwill be able to provide support to many microfinance institutions, with the same agreement. As part of this new agreement with ABACO, Grameen Foundation and USAID also hope to provide local currency financing to smaller MFIs that deal with the poor population in the villages. The organizations also aspire to implement the same model of agreement in different countries, in future.
According to USAID’s Administrator, Rajiv Shah, “This unique global partnership with Grameen will enable us to make more microfinance loans available to borrowers around the world. By unlocking local private capital to support underserved micro entrepreneurs, this opportunity will help leverage our core development investments and deliver meaningful results for the people of Peru.
Alex Counts, who is the P-President and CEO of Grameen Foundation, said, “While Peru is one of the most competitive microfinance markets globally, there are still areas of the country that have not benefitted from these services. We are pleased to work with USAID and ABACO to help Pro Mujer Peru and Arariwa get the local financing they need to reach deeper into poor, marginalized communities, particularly in rural areas.
On the occasion, Rocio Miyashiro Kiyan, CEO of Cooperativa ABACO, said, “ABACO is committed to promoting financial access and inclusion through its associated microfinance institutions. This strategic alliance with Grameen Foundation and USAID will help us meet the financing needs of microfinance practitioners in Peru.”
As a joint venture, Grameen Foundation and USAID, have been aiding MFIs around the world, by providing them with approximately $162.5 million in local currency financing. The guarantee to ABACO is also arranged by the same collaboration.
