Frequently Asked Questions (FAQs)

1. What is MIF?

Established in 1993 as part of the IDB Group, the Multilateral Investment Fund (MIF) is a driving force behind innovative private sector development in Latin America and the Caribbean, using both grants and investments to help micro and small businesses thrive. MIF projects are designed to first test, then demonstrate the effectiveness of innovative concepts. However MIF does not do this alone, but rather has approved more than 1000 projects, primarily grants, with over 800 civil society, private sector, and government partners.

Together, these efforts are putting US$2.2 billion to work in all 26 developing countries of the IDB, and will continue thanks to the replenishment of resources, which took effect with the initiation of MIF II in March 2007.

Apart from being a source of funding, MIF is also a fountain of knowledge, committed to sharing the lessons learned from its work with this growing network of private sector institutions, research centers, NGOs and public sector partners.

The main areas of MIF focus are: Business Framework, Enterprise Development and Financial Democracy.

2. How does MIF work?

MIF uses grants and investments—loans, equity and guarantees—to stimulate private sector development. Most MIF funding is in the form of grants targeting small, innovative pilot projects. MIF investments are geared towards micro and small businesses that normally don't have access to capital, aiming to boost competitiveness and promote further investor interest in areas such as microfinance and venture capital funds.

MIF grant projects are undertaken in partnership with a wide array of both public and private organizations, which also contribute from 30 to 50% of the total project cost, depending on the country. Generally, for grant financing, private sector institutions must be non-profit and can include non-governmental organizations (NGOs), industry associations, chambers of commerce and foundations. Under certain circumstances grants are provided to for-profit organizations as well.

MIF investment projects typically fund private financial institutions, such as banks, cooperatives, microfinance institutions or NGOs, who can then onlend the resources to the benefit of micro and small businesses region wide. MIF has also had an active hand in promoting investment in venture capital funds throughout the region, partnering with co-investors to help entrepreneurs and business start-ups get off the ground.

3. How is MIF funded?

Funds for MIF activities come from contributions made by the 38 member countries from Latin America and the Caribbean, North America, Europe and Asia that make up the Donors Committee. MIF was originally equipped with $1.2 billion to carry out its mandate.

The Donors Committee has the final say in the approval of all projects, with voting share based on contribution level. In the original Agreement Establishing the Multilateral Investment Fund, the United States and Japan were the largest contributors at $500 million each, followed by Spain with $50 million.

Securing resources for future MIF projects, the replenishment process for MIF funds was successfully completed in 2005, with five new countries—the United Kingdom, France, Switzerland, Sweden, and Haiti—becoming donors with the advent of MIF II in March 2007.

For more information on the MIF II Replenishment Process, please see the following documents:

Agreement Establishing MIF II and Donors Report
Replenishment: Overview, Status of Resources and Action Plan
Working Paper on MIF Replenishment
Proposed Strategic Framework
Managing for Results

4. What can MIF fund?

Projects in all sovereign developing member countries of the Inter-American Development Bank and the Caribbean Development Bank are potentially eligible for MIF funding.

In general, MIF looks for projects exhibiting the following characteristics:

• Innovation: Projects should be fresh, introducing new and effective approaches to promote private sector development and poverty reduction.
• Demonstration Effect: Projects should have the potential of being taken to scale, or replicated in other sectors and/or countries.
• Sustainability: Projects should have a feasible plan and strong potential for financial sustainability once MIF financing comes to an end.
• Partnership: Projects are carried out with local partners, which are responsible for contributing between 30 to 50% of project costs.
• Additionality: Projects must show that MIF financing is essential to their execution and is the most appropriate funding source.
  

In terms of investment projects, MIF has supported the microfinance industry in Latin America and the Caribbean through loans and equity investments in targeted microfinance institutions, and has also been the lead investor in a number of venture capital funds. Recently, MIF has also actively supported alternative financial instruments such as factoring and leasing, as well as those linked to remittances.

Please visit the Financing Opportunities section for more information on MIF funding.

5. Which countries are members of the MIF Donors Committee?

Argentina, Bahamas, Barbados, Belize, Bolivia, Brazil, Canada, Chile, China, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, France, Guatemala, Guyana, Haiti, Honduras, Italy, Jamaica, Japan, Korea, Mexico, Netherlands, Nicaragua, Panama, Paraguay, Peru, Portugal, Spain, Suriname, Sweden, Switzerland, Trinidad and Tobago, United Kingdom, United States, Uruguay and Venezuela.

Haiti, France, Sweden, Switzerland, and the United Kingdom joined the ranks of MIF donors with the initiation of MIF II in March 2007. China is the newest member, joining in January 2009.

6. How many projects has MIF financed?

MIF has financed over 1,000 projects with a wide range of partners throughout the region.

7. How much has MIF financed towards its projects?

MIF has financed over $1.1 billion in grants and investments towards private sector development projects.

8. How do I present a project idea to MIF?

Please see the Financing Opportunities section for a detailed explanation of the application process.

9. How can I get in touch with a MIF specialist?

Please see the Contact Sheet for MIF specialists at IDB/MIF country offices throughout the region.