International Finance Corporation (IFC), the private sector arm of the World Bank Group, has agreed to issue a US$1mn credit guarantee to Uganda Microfinance, one of the most successful microfinance institutions in Africa.

The guarantee will permit Uganda Microfinance to borrow in local currency on commercial terms for the first time and, in due course, enable it to borrow on the strength of its own balance sheet. Citibank Uganda, a subsidiary of Citigroup, has agreed to provide a local currency loan to Uganda Microfinance for this purpose.

Uganda Microfinance has more than 50,000 clients and a micro-loan portfolio of more than US$10mn. IFC’s guarantee is expected to have strong developmental benefits by helping create jobs and accelerating the growth of target businesses.

Jyrki Koskelo, IFC’s director of Global Financial Markets, says, “IFC’s investment in Uganda Microfinance will make it easier for many low-income Ugandans to grow their microenterprises and boost their incomes. This is a milestone investment for IFC in the commercial microfinance sector in Africa.”