ADB Signs Microfinance Risk Sharing Agreement

    Stockholm (NordSIP) –  The Asian Development Bank (ADB) and BlueOrchard signed a US$50 million risk-sharing agreement to expand microfinance coverage in ADB’s developing member countries (DMCs).

    Under ADB’s Microfinance Program, the company’s flagship fund, the BlueOrchard Microfinance Fund, will invest in selected microfinance institutions (MFIs) and banks. ADB will take on the default risk of these investments to help encourage greater flow of private sector funds and help MFIs access funding for on-lending activities amid liquidity and funding challenges.

    “Loans provided by microfinance institutions are a lifeline to underserved clients such as low-income households and small businesses, including those which are owned or led by women, to help them withstand and rebound from the hardships imposed by the Covid-19 pandemic,” said ADB Director General for Private Sector Operations Suzanne Gaboury.
    “This partnership will strengthen microfinance as a tool to build economic resilience, reduce gender disparities, and support recovery across our region,” added ADB Microfinance Program Lead Anshukant Taneja.

    The agreement focuses on facilitating entry to new markets and segments, including financing for climate change adaptation and resilience building. 150,000 borrowers and microenterprises across India, Indonesia, the Philippines, and other developing countries are expected to receive financing under this partnership during the next four years. The agreement will assist in expanding financial inclusion and achieving such UN Sustainable Development Goals as reducing poverty and gender inequality and improving access to clean water and sanitation.

    Since its launch in 2010, ADB’s Microfinance Program has supported US$1.8 billion in loans and helped mobilize US$881 million in cofinancing. It has provided access to microloans for more than 8 million borrowers, 98% of whom are women. BlueOrchard, is an impact investment management firm and a member of the Schroders Group. Founded in 2001, it is headquartered in Switzerland and has regional offices in Asia, Latin America, and Africa. It has invested over US$8 billion in more than 90 countries and has provided access to financial services for 216 million people as of June 2021.

    “We are honoured to be the first impact investing firm to partner with ADB’s microfinance program and look forward to working together to promote financial inclusion across Asia,” said BlueOrchard Chief Executive Officer Philipp Mueller.

    Image by Dean Moriarty from Pixabay

    Filipe Albuquerque
    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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