The Overseas Private Investment Corporation (Opic) has approved up to US$250mn to expand a successful partnership with Citi that provides microfinance lending to borrowers in emerging markets. The facility has the potential to reach more than 480,000 borrowers.
Opic will risk participate in Citi originated and funded local currency loans to microfinance institutions (MFIs), which in turn make small loans to micro-borrowers in Africa, the Middle East, Asia, Eastern Europe and Latin America.
The project represents the expansion of a US$100mn Opic-Citi microfinancing funding facility launched in December 2006. Under this programme, Citi and Opic are providing financing to 23 MFIs in 13 countries.
“The global economic crisis has significantly curtailed microfinance lending, raising the cost of lending and causing liquidity problems for many MFIs,” says Opic acting president Lawrence Spinelli. “MFIs need access to markets and funding to continue their work. By expanding an existing – and successful – microfinancing facility with Citi, Opic is working proactively to help address this shortfall.”
Spinelli notes that Opic and Citi’s export and agency financing group have partnered in providing financing to emerging market borrowers for more than a decade, through a series of risk-sharing arrangements set forth in framework guaranty facility agreements: as of June 30, Opic had 18 such framework agreements with Citi. To date, there have been no payment defaults on any of the guaranteed loans.
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