The International Finance Corporation (IFC), the private sector arm of the World Bank, has granted a five-year loan of Ps13.8bn (US$5.4mn) to Fundacin Mundo Mujer, a leading Latin America microfinance institution headquartered in Popayn, Colombia.

This is the second time IFC has provided funds to a microfinance organisation in Colombia. The transaction consists of a loan in local currency, or indexed to the Colombian peso, and will allow FundaciÃn Mundo Mujer to offer 70,000 additional loans to low-income clients over the next five years.

Backed by its strong AAA credit rating, IFC will set up long-term swaps with financial institutions in the Colombian market to help Fundacin Mundo Mujer hedge its foreign exchange risks.

Atul Mehta, IFC’s director for Latin America, states, “Fundacin Mundo Mujer has a wealth of experience with low-income microbusinesses and is one of the most efficient and successful institutions of its kind in Latin America. This makes it an ideal candidate for IFC financing. The transaction marks the beginning of a strategic partnership that benefits both parties.”

Leonor Melo de Velasco, founder and chair of Fundacin Mundo Mujer, highlighted the importance of this agreement: “To embark on a loan agreement with IFC is to build on our future by democratising loans.”

Fundacin Mundo Mujer of Popayn is a not-for-profit organisation and an affiliate of the Women’s World Banking Network, a global group of 24 microfinance organisations in 19 countries.

In several years of sustained growth, Fundacin Mundo Mujer has financed over 110,000 microbusinesses, 60% of them headed by women. Many of its beneficiaries live below the country’s poverty line and have been able to access loans for working capital and other essential financial services.

Average loans amount to 900,000 Colombian pesos (equivalent to US$391) and usually represent the first time a microbusiness has dealt with a financial services provider. As of March 31, 2006, Mundo Mujer’s net loan portfolio was Ps114bn (US$50mn).