The Global Microfinance Facility (GMF) provides loans to microfinance institutions in Latin America, Asia, Africa and Eastern Europe. GMF will target microfinance institutions that have demonstrated strong financial performance and that are seeking out local investors and/or bank lines of credit and access to local currency financing. Currently, GMF has a portfolio of US$28.2 million.
GMF principally offers five types of credit products:
- Direct Loans: Direct Loans will be made in U.S. Dollars. However, local currency loans may be extended in conjunction with mechanisms to mitigate the foreign exchange risk.
- Credit Line: This instrument allows clients to make use of GMF maximum loan term of 3 years during which they can gradually increase their loan amount.
- Syndicated Loans: Designed for MFIs interested in lowering their transaction costs, GMF can package debt from various commercial banks or local investors into a single contract loan.
- Purchase of Debt Instruments: GMF can purchase short- and medium-term debt instruments such as bond issues and CDs from MFIs.
- Guarantees: Stand-by Letters of Credit (SBLC) issued by an international bank with an investment-grade rating to fully or partially back local bank loans given to MFIs. The SBLCīs are collateralized with deposits made by GMF in the international banks issuing the SBLC.
All of GMF's instruments will be liquid with a maturity of less than three years, and when possible, negotiable.
GMF targets microfinance institutions including banks, financial companies and credit unions, in Armenia (10.7 percent), Cambodia (6.3 percent), Georgia (16 percent), Kazakhstan (7.1 percent), Bosnia & Herzegovina (22.7 percent), Bolivia (5.3 percent), Ecuador (5.3 percent), Nicaragua (5.3 percent), Mexico (7.1 percent) and Peru (14.2 percent). Seventy-two percent of GMF clients are regulated institutions, with 77.3 percent located in urban areas with a population of 1 million or more and 22.7 percent located in semi-urban areas with populations less than 1 million.
GMF has satisfied the expectations of its investors, in terms of solvency, portfolio quality, financial return, and in attracting new funds. GMF has constituted a portfolio denominated in US dollars, euros and local currencies in three continents (Asia, Eastern Europe and Latin America) equivalent to $28.2 million. As a result, GMF has generated a diversified portfolio in Armenia ($3 million), Cambodia ($1.8 million), Georgia ($4.5 million), Kazakhstan ($2 million), Bosnia & Herzegovina ($6.4 million), Bolivia ($1.5 million), Nicaragua ($1.5 million), Ecuador ($1.5 million), Mexico ($2 million) and Peru ($4 million).