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BRAC of Bangladesh Launches $62m East Africa Fund

Discussion in 'Biashara, Uchumi na Ujasiriamali' started by Invisible, Jan 8, 2009.

  1. Invisible

    Invisible Admin Staff Member

    Jan 8, 2009
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    Bangladesh Rural Advancement Committee (BRAC), an International Development Organization founded in Bangladesh announced the launch of the BRAC Africa Loan Fund to provide microfinance loans to poor borrowers in Tanzania, Uganda and Southern Sudan. In a press release found on PRNewswire, BRAC announced that it has raised USD 62.6 million of capital towards the loan fund. The release stated that the Africa Loan Fund would provide long-term, local currency funding that would enable BRAC to scale up its microfinance operations to reach over 700,000 borrowers through over 200 branches across the three East African countries.

    BRAC, originally Bangladesh Rural Advancement Committee, was launched in 1972 through funding by former Shell Oil executive, Mr. Fazle Hasan Abed to help Bangladesh overcome the devastation and trauma of the liberation war in 1971 that secured Bangladesh its independence from Pakistan. BRAC serves an estimated 100 million64 districts of Bangladesh by providing access to credit for economic development, delivering health services, providing access to education, business management and skills training and creating social awareness among the poor of their legal and human rights. The first lending programs were established in 1974 and microfinance is its core component of operations for alleviating poverty. As of August, 2008 it has issued USD 5 billion in micro-loans to nearly seven million borrowers. In 2002, BRAC expanded its programs beyond Bangladesh with operations in nine Asian and African countries. Please refer here for the list of countries BRAC operates in and here for the list of completed and ongoing programs. For its micro-credit programs, BRAC was awarded the USD 1.5 million Conrad N. Hilton Humanitarian Prize in October 2008. Refer this MicroCapital story for details on the award. As of December 2007, BRAC had a total asset base of USD 619 million with a debt/equity ratio of 384.22 percent, return on assets of 1.4 percent and return on equity of 6.11 percent.

    According to the press release on PRNewswire, a diverse group of investors have invested in the Africa Loan Fund. The investors include Overseas Private Investment Corporation (OPIC), Triodos Fair Share Fund, Hivos-Triodos Fund, The Norwegian Investment Fund for Developing Countries (Norfund), Triple Jump, Stromme Microfinance East Africa, The Ford Foundation, The David and Lucile Packard Foundation, CARE USA, Three Guineas Fund, Calvert Social Investment Foundation, MMA Community Development, Inc., and Monarch Community Fund, LLC. According to the release, BRAC has also invested in the fund. No detail on the amount invested by BRAC and other investors is available. The Fund, which would be the first in a series to support multiple services in Africa, would make local currency loans to BRAC Uganda, BRAC Tanzania and BRAC Southern Sudan over a period of seven years. According to the press release, BRAC intends to explore the development of local operations in at least ten countries in Africa over the next ten years, including both East and West Africa. BRAC initiated operations in Tanzania and Uganda in 2006, followed by Southern Sudan in 2007 and Liberia and Sierra Leone in 2008. BRAC was advised in the raising of the BRAC Africa Loan Fund by ShoreBank International Ltd.(SBI), the international consulting arm of ShoreBank Corporation of the United States. SBI has engaged Citibank to act as fiscal agent for the Fund, leveraging Citibank's expertise and resources in Tanzania and Uganda. Refer this MicroCapital story for additional information on Citibank's association with BRAC.

    Poverty in East Africa is severe, with a majority of people surviving on less than 2 dollars per day, according to this MicroCapital newswire. According to the International non-profit organization Unitus, nearly 90 percent of the population in Tanzania and nearly 60 percent of the population in Kenya live in extreme poverty. It states that while microfinance has been present in the region for a number of years, availability remains limited with just 8 percent of the families that could benefit from microfinance having access to the life-changing services it provides. The World Bank reports that 39 of the world's 78 poorest countries are in Africa. As per the Bank's latest figures on fiscal assistance flows for the period ending June 2008, Africa has received the biggest share of assistance.

    By Bharathi Ram, Research Assistant

    Additional Resources:

    PRNewswire Press Release

    Bangladesh Rural Advancement Committee
    Oct 21, 2008: BRAC receives Hilton Humanitarian Prize
    Nov 25, 2008: Citibank grants funds to BRAC Tanzania
    Nov 21, 2008: Unitus to accelerate access to Microfinance in East Africa

    The Guardian: Nov 12, 2008 World Bank makes $100bn pledge to poorest Nations

    The EastAfrican News: Sep 28, 2008: World Bank funding to poor states hits $38.2B