FMO has signed a senior loan agreement with Mikrofin, the largest MFI in Bosnia and Herzegovina. With its focus on micro clients in the agricultural sector, Mikrofin promotes inclusive finance. By providing a €5 mln loan from the MASSIF fund, FMO will support about 3.800 clients.
Small entrepreneurs Mikrofin is dominantly active in the rural areas, with a focus on the agricultural sector and a loan portfolio of EUR 70 million. They show a stable and healthy performance and are socially committed. For instance, the company provided 0% interest loans to help the people affected by the 2014 floods in cooperation with the Government of Federal Republic of Germany and KfW.
By providing finance to micro clients, Mikrofin promotes economic growth amongst the low-income population in a country with an unemployment rate estimated to around 40%. The environmental risk is rather low supporting small entrepreneurs, having an average loan of € 1.300 with the social (CPP) risk being well-guarded by the institution itself and by the supervisor.
FMO’s involvement The transaction concerns a €5 mln senior loan from the MASSIF fund. The tenor is 5 years with a 1 year grace period. What makes this transaction special is the fact that FMO provides long-term finance to an institution operating in a struggling economy in a country with a dysfunctional political system.
About FMO
FMO (the Netherlands Development Finance Company) is the Dutch development bank. FMO supports sustainable private sector growth in developing and emerging markets by investing in ambitious entrepreneurs. FMO believes a strong private sector leads to economic and social development, empowering people to employ their skills and improve their quality of life. FMO focuses on three sectors that have high development impact: financial institutions, energy, and agribusiness, food & water. With an investment portfolio of EUR 6.6 billion, FMO is one of the largest European bilateral private sector development banks. www.fmo.nl
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