The Asian Development Bank (AfDB) and leading impact investment management firm BlueOrchard Finance Ltd signed a $ 50 million risk-sharing agreement to expand microfinance coverage in developing member countries of the AfDB.

BlueOrchard is the first impact investing asset manager to partner with the AfDB’s microfinance program. As part of this program, the company’s flagship fund, the BlueOrchard Microfinance Fund, will invest in selected microfinance institutions (MFIs) and banks. The AfDB will share the risk of default of these issuers to help broaden the fund’s risk appetite and the capital deployed in DMCs, and encourage greater flow of funds from the private sector to deepen financial inclusion.

“Loans from microfinance institutions are a lifeline for underserved clients such as low-income households and small businesses, including those owned or run by women, to help them resist and bounce back from the difficulties imposed by the COVID-19 pandemic, ”said Suzanne Gaboury, Executive Director of Private Sector Operations at the AfDB.

“This partnership will strengthen microfinance as a tool to build economic resilience, reduce gender disparities and support recovery in our region,” added Anshukant Taneja, AfDB Microfinance Program Manager.

“We are honored to be the first impact investment firm to partner with the AfDB’s microfinance program and look forward to working together to promote financial inclusion in Asia, ”said Philipp Mueller, CEO of BlueOrchard .

The agreement will focus on expanding the microfinance coverage of the AfDB and BlueOrchard and facilitate entry into new markets and segments, including financing for climate change adaptation and resilience building. . Over the next 4 years, more than 150,000 borrowers and microenterprises in India, Indonesia, the Philippines and other developing countries are expected to receive funding under this partnership.

The risk-sharing arrangement will help MFIs access finance for on-lending activities despite liquidity and funding issues. This will expand financial inclusion, contributing to the achievement of sustainable development goals, such as reducing poverty and gender inequalities and improving access to clean water and sanitation.

BlueOrchard, headquartered in Switzerland and with regional offices in Asia, Latin America and Africa, was founded in 2001 as the world’s leading business manager of microfinance investments. It has invested more than $ 8 billion in more than 90 countries and provided access to financial services to 216 million people. The company is a member of the Schroders group.

Launched in 2010, the AfDB’s microfinance program supported $ 1.8 billion in loans and helped mobilize $ 881 million in co-financing. It has provided access to microcredit to more than 8 million borrowers, 98% of whom are women. Microfinance has helped improve livelihoods, reduce poverty, promote gender equity, and promote microenterprise and employment growth.

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