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IDB’s Multilateral Investment Fund backs emergency liquidity program for Haitian microfinance institutions

WASHINGTON, DC – The Inter-American Development Bank’s Multilateral Investment Fund (MIF) and a group of foundations will launch an emergency liquidity program for microfinance institutions to ensure the continuity of microcredit in Haiti.

Haitian microfinance institutions had approximately 130,000 borrowers at the end of last year, with nearly $62 million in loans outstanding. About one quarter of those clients were affected by the January 12 earthquake, with loans ranging from $180 to $1,400, according to microlenders.

The MIF will provide up to $2 million to the Haitian Emergency Liquidity Program (HELP), which will also receive contributions from partners including the Clinton Bush Haiti Fund, the Deutsche Bank Americas Foundation, the Calmeadow Foundation and the Calvert Foundation. Organizations contributing to HELP expect the program to leverage additional resources from other funders.

HELP will use the resources to buy earthquake-affected loans from microfinance institutions, providing them fresh funds to maintain their lending operations and preserve their capital base. The program will allow microlenders to restructure loans, offering borrowers extended repayment terms. Microfinance institutions will service the restructured loans over the next three years, after which they will repurchase all or a portion of the remaining loans.

The program will be executed initially by the Emergency Liquidity Facility (ELF), a fund established in 2004 by the MIF and other donors, lenders and investors to provide short-term loans to Latin American and Caribbean microfinance institutions hit by disruptions such as natural disasters or financial crises. ELF is managed by Omtrix, a Costa Rica-based financial advisory firm. Subsequently, the program will be transferred to a special purpose vehicle.

In addition to its $2 million contribution to HELP, the MIF is making a $250,000 technical cooperation grant to assist Haitian microlenders in, among other issues, improving their risk management, providing financial education to their clients and designing an insurance option to reduce microentrepreneurs’ vulnerability to external shocks affecting their businesses.

The MIF, a member of the IDB group, promotes equitable economic growth through the private sector in Latin America and the Caribbean. The MIF has been a leading supporter of microfinance in this region, helping develop many of the innovations that have allowed this industry to grow to a $10 billion sector.

Immediately after the earthquake the MIF, which has been working in Haiti since the 1990s, approved emergency funds to help its local partners restart operations, such as distributing remittances, a lifeline for millions of Haitians. Now focused on reconstruction, it is involved in a range of projects designed to benefit low-income people. For example, in partnership with The Coca Cola Company, the MIF is supporting a project to improve the incomes and productivity of 25,000 Haitian mango growers.

The Clinton Bush Haiti Fund was established by former U.S. presidents William J. Clinton and George W. Bush to raise funds for emergency relief and long-term, sustainable reconstruction in Haiti. The Deutsche Bank Americas Foundation administers Germany’s largest bank’s philanthropic activities in the United States, Canada and Latin America. Calmeadow is a Canadian foundation specialized in microfinance. The Calvert Foundation is a U.S. non-profit community investment organization.

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