US-based Overseas Private Investment Corporation (OPIC) has entered into an agreement with Citi to provide up to $250 million in microfinance funding in emerging markets.
OPIC will risk participate in Citi originated and funded local currency loans to microfinance institutions (MFIs).
MFIs make small loans to micro-borrowers in Africa, the Middle East, Asia, Eastern Europe and Latin America. The microfinance sector in India has witnessed significant interest from private equity and venture capital investors.
The new agreement follows a $100- million OPIC-Citi microfinancing funding facility launched in December 2006, which has financed 23 MFIs in 13 countries.
OPIC was established as an agency of the US government in 1971 and helps businesses invest overseas, fosters economic development in new and emerging markets.
“The global economic crisis has significantly curtailed microfinance lending, raising the cost of lending and causing liquidity problems for many MFIs. MFIs need access to markets and funding to continue their work,” said OPIC Acting President Dr. Lawrence Spinelli.
Citi works with over 100 MFIs in more than 40 countries.