At MicroVest our experience providing debt to financial institutions serving MSMEs in countries such as Kazakhstan, Liberia, and Paraguay illustrate how investors achieve financial and social returns by promoting financial inclusion:
• Nearly 200,000 borrowers in Kazakhstan have received vital support from KazMicrofinance (KMF). These microloans, averaging $1,000 each, bridge a severe financing gap in the country. Since MicroVest’s $15 million investment in 2014, KMF’s loan portfolio has grown from $120 million to $207 million.
• A 2016 investment in Access Bank Liberia (ABL) helped the microfinance institution reach over 11,000 borrowers, 60 percent of whom are women. Today, ABL is the largest commercial microlending institution in Liberia.
• For close to a decade, MicroVest has worked with Banco Vision in Paraguay, financing their expansion to more than 200,000 clients across the country. Since its inception in 1992, Banco Vision has transformed into a regulated deposit-taking bank providing a full array of financial services for its clients and stable jobs for its 1,700 employees.
There remains a tremendous unmet demand for basic financial services as microfinance lenders record 30 percent annual growth. We believe this demand is best served by an array of investment, primary among them are private debt vehicles as they reduce risk to investors and stand the greatest chance of amplifying the benefits to end users in the markets that need these services the most. Large ESG-oriented funds from the private equity industry are evidence of wider institutional support for impact investing, but they are not a one-size-fits-all solution. Veteran impact investors know private debt funds can be a perfect match for their financial and impact goals.
John Beckham is chief investment officer at MicroVest Capital Management LLC.