Exclusive: IFC to extend $21m debt to half a dozen MFIs in Myanmar

Photo: VisionFund Myanmar.

Increasing its financing exposure in Myanmar, the International Finance Corporation – the private lending arm of the World Bank – is extending a $21-million debt facility to four to six microfinance institutions in the frontier country.

IFC will extend from $3 million to $6 million financing to each selected MFI as a kyat-denominated loan. The move will deepen access to finance to the bottom of the pyramid market.

The move will also enable the microfinance industry to commercially operate in the country.

The IFC loan is expected to enable disbursal of 112,500 to 127,500 loans to low income households in the country, improving the underserved segment’s access to finance and create jobs, according to the IFC disclosure.

“Microfinance in Myanmar has grown up on a lot of donor funding. IFC is trying to help formalise the sector and provide sustainable local currency debt to MFIs to expand their loan portfolios,” said Julie Earne, Lead, Financial Institutions Group of IFC in Myanmar.

IFC is working across the financial sector with banks, microfinance institutions and digital finance companies to ensure all segments of the market are served.

IFC stated that there are about 250 microfinance institutions in Myanmar that are yet to commercially operate. The proposed loan facility will provide the scarce and much needed commercial funding to those institutions. It is also into providing advisory services to the candidates to build internal capacity.

Some of IFC’s existing microfinance clients include Acleda, Fullerton, Proximity Designs, Pact Global Microfinance Fund (PGMF) and VisionFund Myanmar.

We are looking at our existing investment and advisory relationships (on microfinance), as well as other clients that we were not working with yet, to put together a diverse group of institutions,” said Earne to DEALSTREETASIA.

IFC is currently in the process of reviewing the MFIs for participation in the debt facility.

Back in 2014, the IFC launched The Myanmar Microfinance Development Programme with the funding support from the Canada Department of Foreign Affairs, Trade and Development and funding from Livelihood and Food Security Trust Fund (LIFT). It expects to improve financial access for over 270,000 clients with an aggregate loan of over $70 million by 2017.

“Our existing programme provides technical assistance focused on formalising microfinance institutions, building capacity in treasury management, human resources, risk management, product development, assisting key players in the market to mature as they look to grow and scale their operations,” said Earne.

Building on this programme, IFC is supporting MFIs to borrow local currency Kyat funding.

“Right now the most critical issues for microfinance in Myanmar is to help facilitate local currency financing to MFIs so that they can expand their portfolios. We need to also crowd in and enable local banks to lend to MFIs. Local banks have kyat liquidity and it is important to facilitate them to lend to MFIs,” said Earne.

The Central Bank of Myanmar just issued a mobile financial service rules and telecom operators like Telenor are in talks with some MFIs to use their mobile financial service for microfinance lending.

IFC is engaged in the MFI operations for Myanma Awba, an agri-based business in Myanmar, in an advisory role, giving corporate governance assessment and drafting and implementing policies and training. Myanma Awba received a finance facility of $10 million in February 2016.

IFC has been active in debt and equity investment to Myanmar corporations. Some recent involvements include a $-million support for Myanmar Industrial Port enhancement, a $25-million financing to retail group City Mart and $40-million funding to Sembcorp and MMID Utilities Pte Ltd’s gas turbine project.

Also Read: IFC to invest $10m as convertible debt to fuel Myanma Awba’s expansion

IFC to provide $40m finance for Myanmar-based gas turbine project by Sembcorp, MMID

IFC to extend $200m financing for Myanmar Industrial Port modernisation

IFC to provide $25m funding for Myanmar’s largest retail group City Mart

 

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.