19 September 2017
By providing insurance capacity to a novel lending platform of the International Finance Corporation (IFC), Munich Re is facilitating the mobilisation of US$ 500m in long-term borrowing capacity for micro, small and medium enterprises in low- and middle-income countries, some of which are amongst the poorest in the world.
Munich. Micro, small and medium enterprises
(MSME) in low- and middle-income countries often have restricted
access to debt finance. They are thus hampered in investing in
growth opportunities with a medium- to long-term horizon. By
providing longer-term refinancing to banks in IFC partner
countries, the IFC enables these banks in turn to provide
much-needed debt finance to MSMEs. The IFC, a member of the World
Bank Group, thus contributes to economic growth, and hence
indirectly to a reduction in poverty.
Given the overwhelming demand, and in order to boost its lending capacity, the IFC established an novel syndication platform – the Managed Co-Lending Portfolio Program for Financial Institutions (MCPP-FIG). The program pools IFC loans to financial institutions, and blends them with US$ 1bn unfunded risk capacity provided by Munich Re and Liberty Mutual. As a consequence, the IFC will be able to provide at least US$ 2bn in loans to commercial banks for onward lending to support MSMEs, businesses owned by women, and climate change strategies.
“Financial institutions, because of their reach, are critical elements in the ecosystem to fight poverty,” Jingdong Hua, Vice President and Treasurer of IFC said. “The world’s insurance giants like Munich Re and Liberty Mutual are recognising the value of supporting IFC’s lending operations in emerging markets via our unique MCPP Financial Institutions platform. They have shown willingness to go beyond convention using innovation to create impact. I would like to thank them for their commitment.”
Doris Höpke, member of Munich Re’s Board of Management, said: “We are proud to add another facet to our cooperation with the World Bank Group. Providing insurance capacity to IFC’s MCPP Program will facilitate the mobilisation of much-needed long-term loans to micro, small and medium enterprises in some of the poorest countries in the world. By doing so, we have the opportunity to contribute to IFC’s objective of stimulating private-sector development and economic growth in low- and middle-income countries, while developing future markets for our business.”
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