Chinese rural-focused microfinance provider CD Finance has raised debt funding of $30 million from DEG, a subsidiary of German state-owned development bank KfW.
The corpus, which was agreed upon in November, is a part of a syndicated loan facility amounting to $80 million led by the International Finance Corporation (IFC), a member of the World Bank Group that offers investment, advisory, and asset management services for private companies in less developed countries, DEG revealed on its website.
As part of the deal, IFC has also provided $30 million in debt funding to CD Finance in the initial close of the debt financing round, according to a separate statement on CD Finance’s website.
Established in 2008, CD Finance gets through to the last hectometre of rural finance by providing an average loan size of 29,943 yuan ($4,270) to over 350,000 active borrowers across a country-wide presence of 320 branches.
The company’s borrower profile attests to its focus on promoting the development of underserved groups: As much as eighty-nine per cent of its borrowers are rural clients, 69 per cent are women, 84 per cent of borrowers’ education level is at or below middle school, 51 per cent of the borrowers are first-time borrowers of formal credit, and 21 per cent are ethnic minorities.
The loan will be used to help expand CD Finance’s lending to women micro borrowers to support the growth of the cultural, tourism, and creative service industries in north-central China’s Gansu Province, the least developed province in China where 10 per cent of the population still lives in extreme poverty.
CD Finance also plans to further improve the financial capabilities of the rural population by means of financial (literacy) education.
The company, which started offering microfinance in Gansu in 2012, has served nearly 31,000 borrowers across 17 counties in the province, with about 530 million yuan ($76 million) in loan balance as of November 2019.