MIBANCO, Banco de la Microempresa S.A.

completed

Mibanco provides financing primarily to micro-enterprises, but also extends consumer and commercial credit. Financing includes working capital, fixed assets, personal use and home mortgages. It is a rapidly expanding microfinance institution and as of March 2001, it had over 63,000 clients and a total loan portfolio of approximately US$40 million.The proceeds of the proposed IFC investment would be used for on-lending to microfinance recipients in Peru, in particular micro-enterprises to whom Mibanco extends most of its credit. In the short-term the investment will allow Mibanco to continue its portfolio growth and expansion; however, the medium-term goal is to help the bank directly access the market to fund its operations.Small and micro-enterprises in Peru are vital to the economy. Estimates put the two together at 98% of firms, which generate 75% of national employment and 45% of the country’s total GDP. Unfortunately these sectors suffer from lack of access to and high cost of financing. Estimates indicate that less than 15% of small and micro-enterprises have access to the formal financial sector. The development impact of this transaction lies primarily in providing financial services directly to poorer segments of the population and to savers and borrowers who do not have access to the formal financial sector.