1 Empowering the Poor by Accommodating their Basic Needs OFID’s Perspective 5 June 2012 Vienna

OUTLINE Examples of Microfinance Projects Introduction to OFID 2 Lessons Learned and Conclusions

3 Member Countries

4 Vision To aspire to a world where Sustainable Development, centred on human capacity-building, is a reality for all. Mission To foster South-South partnership with fellow developing countries worldwide aiming at poverty eradication. Vision & Mission

Number of beneficiary countries Beneficiary Countries 41 Asia 7 Europe 53 Africa 31 Latin America & the Caribbean

Partners Coordination Group World Bank & Regional Banks UN Agencies

Demand Driven (Countries are in the Driver Seat) Wide reach (132 countries, serving all sectors) Large network of partner institutions Adoption of Country procurement system Untied Aid 7 Characteristics of our Assistance

8 OFID Financing Windows

9 Operation Sector Region Cumulative Operations: US$ 14.1 billion (May 2012) OFID’s operations significantly scaled up to meet partner countries’ development needs, particularly since the financial crisis. Microfinance has been a sub-component of a large number of projects that OFID has co- financed (especially with IFAD) However, OFID has recently supported stand alone Microfinance projects, due to the importance they play in empowering the poor Breakdown of our assistance

Examples of Microfinance Projects Introduction to OFID 10 Lessons Learned and Conclusions

A US$ 10M grant channelled through UNRWA to establish the PALFund which supports microfinance in the West Bank and Gaza The grant was disbursed over three tranches ( ) So far, PALFund has revolved several times generating more than 46,000 loans totalling more than US$ 69M Wide reach (geographically, gender, age group, sectors). Excellent repayment rates. 11 Micro Enterprise Fund for Palestine (PALFund) A Response to Special Circumstances Micro Enterprise Fund for Palestine (PALFund) A Response to Special Circumstances MEC (Microenterprise Credit) Product targeting microenterpris es with the aim of increasing working capital to these firms. MEC+ Product targets larger businesses that require higher amounts of capital to develop their business. Solidarity Group Lending (SGL) Product targets women micro- entrepreneurs requiring credit for business development. The Women Household Credit Product (WHC) targets women with household based income‐ generating and self‐ employment activities.

12 Energy for the Poor A Special Sector and a Global Mandate Energy for the Poor A Special Sector and a Global Mandate In 2011, OFID created an Energy Poverty Grant Program. These Grants will support innovative energy access solutions that could be replicated in different countries. US$ 250,000 microfinance grant in Tanzania and Kenya. The grant was channelled through the Shell Foundation (an independent charity) and focused on distributing d.light products (a social enterprise) The grant was used as a revolving pool for rural energy distributers, and unlocked the distribution hurdle. This grant allowed more than 415,000 poor people to receive solar lights in 8 months.

13 Public Sector Loans Social Funds for Development Public Sector Loans Social Funds for Development Through our Public Sector Window, OFID extended several loans to social funds Other Micro-Credit programs supported in Egypt, Peru, Nicaragua, Ethiopia, Pakistan and Vietnam Social Fund for Development (Egypt): US$ 25M in 2009; 29 regional offices covering the entire country; Microfinance loans target Female headed households, poor families, entrepreneurs, and small farmers; SMEs, community development and microfinance work through 80 MFI’s and 340 NGO’s Bank For the Poor (Vietnam): US$ 10M in 1998 Lends to rural poor engaged in agricultural production. Assisted the bank’s capacity building initiatives and the development of village based mass organizations.

14 SME’s and microfinance represent about 45% (US$ 500M) of the portfolio Loans provided via 10 specialist microfinance financial intermediaries for support of microenterprises: US$ 57M Microfinance Enhancement Facility: US$ 20M Part of the IFC/DFI Fund which is a US$ 500M global financial crisis response initiative Private Sector Facility Assisting Financing Entities Private Sector Facility Assisting Financing Entities Amret of Cambodia: US$ 12.5M, Target: the rural poor - 238,000 clients in 5,400 village associations Focus: agricultural production and small business investments and services. DFI Financing: equity and lines of credit. Blue Financial Services : US$ 15M in 2009 Target: 12 Sub-Saharan Africa countries and South Africa Over 200,000 clients Focus: micro and consumer credit, insurance, housing, education, savings products DFI Financing: equity and lines of credit.

Examples of Microfinance Projects Introduction to OFID 15 Lessons Learned and Conclusions

Although impact of lending not easily measured, it is indeed visible in terms of: – (a) jobs created; (b) increase in income and (c) empowerment The poor are disciplined and have a good repayment record; Well established and managed Financial Institutions proven to be the best channels to support the poor in a sustainable manner; The poor also need ancillary services such as savings, banking, insurances and also education, health, energy, clean water; MFI’s and the poor are vulnerable to financial crisis Although impact of lending not easily measured, it is indeed visible in terms of: – (a) jobs created; (b) increase in income and (c) empowerment The poor are disciplined and have a good repayment record; Well established and managed Financial Institutions proven to be the best channels to support the poor in a sustainable manner; The poor also need ancillary services such as savings, banking, insurances and also education, health, energy, clean water; MFI’s and the poor are vulnerable to financial crisis 16 Lessons Learned and Conclusion

Some issues of debate: – Are microfinance loans priced fairly – Do the poor pay for the cost of ineffective deliveries by MFI – How can we measure the impact of Microfinance programs – Is there over lending in some markets Concluding Remarks: – Today’s symposium is a unique gathering of stakeholders, donors, MFI’s, experts and partner countries – Significant opportunity to debate how more support can be provided to MFI’s and to focus on strengths and weaknesses in the industry – As stated by our DG, OFID strongly believes in microfinance as a tool to combat poverty. We are in the process of scaling up our microfinance activities in general and particularly in the energy sector Some issues of debate: – Are microfinance loans priced fairly – Do the poor pay for the cost of ineffective deliveries by MFI – How can we measure the impact of Microfinance programs – Is there over lending in some markets Concluding Remarks: – Today’s symposium is a unique gathering of stakeholders, donors, MFI’s, experts and partner countries – Significant opportunity to debate how more support can be provided to MFI’s and to focus on strengths and weaknesses in the industry – As stated by our DG, OFID strongly believes in microfinance as a tool to combat poverty. We are in the process of scaling up our microfinance activities in general and particularly in the energy sector 17 Lessons Learned and Conclusion