Deutsche Bank, NA
Microfinance – US $80 million - Structured Guarantee
Deutsche Bank, NA has developed a cross-border debt financing facility—the Global Commercial Microfinance Consortium—to overcome the access-to-credit problems faced by MFIs and to attract private sector debt investment in these financial intermediaries. This partnership, begun in 2004 and expanded once in 2006 and again in 2007, guaranteed the junior debt of the facility, which has raised $80 million of worldwide investment in support of microentrepreneurs.

The goal of the Global Commercial Microfinance Consortium is to demonstrate viable linkages between MFIs and local and international commercial institutions that will address the capital access issues confronting MFIs. Unlike other new investment funds, the facility does not rely exclusively on donor organizations but seeks to position itself as a resource that aggregates commercial investor interests. Its strategy is to develop indigenous financial systems that support the poor and to create linkages between local commercial banks—a fundamental source of capital—and the expanding microfinance industry.

Oikocredit/Opportunity Transformation Investments (OTI)
Microfinance - US $10 million – Loan Portfolio Guarantee
Opportunity Transformation Investments (OTI) is an investment fund established by Opportunity International to make equity investments in network affiliates that are either being formed by the conversion of existing microfinance institutions or are being started as new organizations. A loan portfolio guarantee developed in 2003 supports a $2 million line of credit from Oikocredit, a Dutch development investment fund. The line of credit is being used by OTI to address the needs of affiliates for:

• additional capital to meet statutory minimum capital requirements,
• short term, bridge financing for working capital, and
• other short-term capital needs.

Ten affiliated organizations ready to transform. Over the next several years, OTI plans to invest approximately US$13 to $15 million into those institutions using grant funds received by OTI from Opportunity International. The stand-by line of credit from Oikocredit provides additional flexibility to OTI to meet short-term capital needs of those transforming affiliates when needed.

Oikocredit/Opportunity Transformation Investments (OTI)
Microfinance - US $36 million – Loan Portfolio Guarantee
USAID in 2008 structured a global guarantee with Oikocredit that will make approximately $36 million of financing available worldwide. Oikocredit is a cooperative society that provides financing to microfinance instituions (MFIs) around the world. The guaranteed credit will be used to expand access for global MFIs so that these MFIs can make loans to low-income populations, cooperatives, and small and medium enterprises with strong micro-enterprise linkages.

ShoreBank
Energy – US $1.5 million - Loan Guarantee
To promote the development of new and efficient uses of energy, USAID designed this loan guarantee to help E+Co, a U.S.-based clean energy investment company, access commercial financing. E+Co will use the capital raised to lend to ShoreBank, which will borrow from E+Co to invest in affordable energy services to households, businesses, and communities around the world. Developing alternative energy sources will not only reduce carbon emissions, but it will also make energy safer and more affordable.

REGIONAL - East Africa

Root Capital
Agriculture - US $9 million Loan Portfolio Guarantee
Rural cooperatives in East Africa have struggled to produce high value coffee for export to the US and Europe. When they need to borrow they have been unable to secure financing locally from conventional sources. Root Capital, formerly known as EcoLogic Finance, is a US alternative loan fund offering affordable credit to community-based enterprises in developing countries targeting the rural credit markets in Rwanda, Tanzania, Uganda, Kenya. USAID is guaranteeing up to $2 million in new loans made by Root Capital to eligible community-based cooperatives. The loans will be secured with signed purchase contracts from specialty coffee buyers.

ANGOLA (2)

Banco de Fomento Angola (BFA)
Agriculture - US $15 million Loan Portfolio Guarantee
In 2007, USAID signed a credit guarantee to support lending to the agriculture sector and related businesses in Angola. The guarantee, developed in partnership with Chevron, will serve to create linkages between small and medium sized agricultural producers and large processors and other agriculturally related businesses.

Banco Comercial Angolano
SME – US $6.5 million Loan Portfolio Guarantee
A credit guarantee developed by USAID/Angola in 2008 with Banco Comercial Angolano is enabling the bank to increase lending to small and medium enterprises (SMEs). In addition to increasing the bank’s SME lending portfolio, a portion of guaranteed loans will go to KixiCredito, which is an Angolan microfinance institution which will then on-lend to microenterprises. The total amount of the guarantee facility is approximately $6.5 million.

BURUNDI

Interbank
Agriculture – US $3 million Loan Portfolio Guarantee
USAID/Burundi in 2008 developed its first DCA guarantee, a $3 million loan portfolio guarantee with Interbank to support lending to the agricultural sector. It is estimated in Burundi that 90% of the population derive their income from this sector, so making credit available for purchasing inputs and equipment is key to increasing productivity. The guarantee targets lending to USAID-assisted agro-enterprises, as well as to other small and medium sized enterprises.

DEMOCRACTIC REPUBLIC OF THE CONGO

Trust Merchant Bank
MSE – US $5 million Loan Portfolio Guarantee
USAID/DRC in 2008 designed a $5 million loan portfolio guarantee with Trust Merchant Bank to support micro and small sized enterprises (MSEs). The guaranteed loans will target MSEs in the area around the city of Lumumbashi, where there are several mining concessions. The loans will be used by service or product providers that serve the concession companies, and also by artisanal miners or other underemployed individuals investing in alternative livelihoods.

ETHIOPIA (5)

Awash International Bank - US $9 million
Bank of Abyssinia - US $9 million
Agriculture – Total US $18 million -
(2) Loan Portfolio Guarantees
To expand access to credit in the agricultural sector, in 2004 USAID/Ethiopia established a ten-year loan portfolio facility of US $18 million. The facility is shared by two private commercial banks, Awash International Bank and Bank of Abyssinia, each receiving a loan portfolio guarantee of US$9 million, with a 50 percent credit guarantee from USAID on the net loss of principal. The guarantee supports the banks in extending credit to agricultural cooperatives, livestock marketing groups, private sector agro-processors, and private sector commercial horticulture producers. The facility builds upon the Mission’s agricultural capacity building and economic growth activities focused on coffee, food grains (cereals, oilseeds, and pulses), horticulture, and livestock/livestock products (meat, dairy, hides/skins, and leather/leather products).

Dashen Bank
Agriculture - US $10 million – Loan Portfolio Guarantee
Small and medium-sized businesses in Ethiopia are benefiting from USAID’s support to encourage the development and expansion of the country’s overall export capacity. USAID’s office in Ethiopia recently provided a credit guarantee to Dashen Bank to partially cover $10 million in loans to small and medium-sized enterprises engaged in agro-processing; services focused on information communications technology and tourism; manufacturing of textiles and garments, including leather products, handloom and handicrafts items; and commercial farming of labor intensive products such as cotton and flowers. Under the guarantee, loans to businesses owned by women are particularly encouraged.
To reduce the potential for loss on Dashen’s loans, USAID’s guarantee enables the bank to share the risk dollar for dollar on the new loans with 1 to 5-year terms with a maximum reimbursement of $5 million or 50 percent (up to $750,000 per borrower) of the total portfolio. This loan portfolio guarantee will help increase Ethiopia’s participation in the African Growth and Opportunity Act (AGOA), US legislation designed to help African businesses gain duty-free access to U.S. markets.

Bank of Abyssinia
Nib Bank International
SME – US $30 million (2) Loan Portfolio Guarantees
Two guarantees developed by USAID/Ethiopia in 2008 will mobilize a total of $17 in guaranteed loans. One guarantee with Bank of Abyssinia for $4 million is targeted at women-owned small and medium enterprises (SMEs). Women-owned businesses often face difficulty accessing credit so this guarantee will encourage the availability of financing so these SMEs can grow and expand. The other guarantee, with both Bank of Abyssinia and Nib Bank International, will mobilize $13 million for members of the Ethiopian Diaspora who are investing in Ethiopian businesses.

GHANA (5)

EcoBank Ghana Limited
SME/Agriculture - US $3 million Loan Portfolio Guarantee
The development of the private sector is paramount to the economic growth of Ghana. The sector is a strong provider of employment (16 percent of the labor force) and has experienced employment growth of 5 percent over the past few years. In addition, the private sector has made tremendous contributions to the economy in terms of inflow of foreign exchange. Despite the wide-ranging economic reforms instituted in Ghana, the private sector, especially small and medium enterprises (SMEs), faces a variety of constraints related to the difficulty with absorbing large fixed costs, absence of economies of scale and scope in key factors of production, and higher unit costs of providing services to smaller firms.

To improve access to commercial finance and promote the development of competitive private enterprises in Ghana, USAID is sharing risk with EcoBank on a portfolio of loans to MFIs and SMEs. This guarantee, developed in 2003, increases financial intermediation and strengthens both the productive capacity of private enterprises and the management capacity of production and marketing enterprises.

EcoBank Ghana Limited
SME/Agriculture - US $7 million Loan Portfolio Guarantee
Strengthening management, marketing and productivity in private enterprises is vital to economic development in Ghana. This 2005 loan portfolio guarantee is a follow-on to the above project to increase EcoBank’s lending to micro, small and medium-sized enterprises, especially to those businesses engaged in non-traditional export markets including manufacturing, agro-processing, tourism, and textiles. The total authorized amount guaranteed is US$7 million with a 50 percent guarantee on principal. The guarantee is intended to improve the bank's lending activities in new business sectors—beyond existing companies that tend to be large and well established borrowers.

EcoBank Ghana Limited
SME/Agriculture - US $5 million Loan Portfolio Guarantee
In 2007, USAID signed a third guarantee with EcoBank, designed to support the pre-export financing needs of small and medium sized firms. In the future, it is expected that this guarantee will be scaled up to include all of the West African region. This guarantee is designed to promote Ghana’s trade capacity under the African Global Competitiveness Initiative (ACGI), so that West Africans can take advantage of export opportunities under the African Growth and Opportunity Act (AGOA).

Opportunity International
Education – US $5 million Loan Portfolio Guarantee
USAID/Ghana in 2008 designed a $5 million loan portfolio guarantee with Opportunity International to support financing to private primary and junior secondary schools that serve low-income households. Private education in Ghana is becoming more and more prevalent as the government-run public schools face difficulties meeting growing demand. This guarantee will leverage technical assistance that will support the private education sector to enable them to continue to access finance after the guarantee expires.

Barclay’s Bank
Prudential Bank Ghana
SME – US $40 million Loan Portfolio Guarantee
Also in 2008, USAID/Ghana developed a joint guarantee between USAID and the African Development Bank that will guarantee loans made by Barclay’s Bank in support of export oriented small and medium enterprises (SMEs), particularly exporters of non traditional exports like papaya, pineapple, horticulture, garments, and handicrafts. These SMEs are often referred to as the “missing middle” because their financing needs are larger than what a microfinance organization can provide, but they are too small to obtain corporate loans.

KENYA (9)

K-Rep Bank Limited (2)
SME/Agriculture – US $3.2 million Loan Portfolio Guarantee
Extending credit to women-owned and -operated businesses is an important part of rural development efforts in Kenya. USAID has provided a loan portfolio guarantee to K-Rep Bank Limited to cover up to 50 percent of the principal on loans to creditworthy private Kenyan enterprises, particularly those in agriculture, merchandise trade and tourism. USAID’s guarantee covers $3.2 million in loans by K-Rep Bank to small and medium-sized businesses.

Water – US $5 million Loan Portfolio Guarantee
A 2008 credit guarantee in Kenya will increase access to water by mobilizing $5 million in lending to community-managed water enterprises. The guarantee with K Rep Bank, in support of the Paul Simon Water for the Poor Act, will increase access to water for 55 peri-urban and rural communities. This is a joint collaboration of the World Bank’s Water and Sanitation Program, the Global Partnership for Output-Based Aid, and the Public Private Infrastructure Advisory Facility.

Cooperative Bank of Kenya (3)
Microfinance - (2) Loan Guarantees -
SMEP $1.5 million and Faula $1.5 million
SME/Agriculture - (1) Loan Portfolio Guarantee - US $1 million
Total $4 million
USAID's guarantee facility has two components. The first provides support to two microfinance institutions (MFIs), SMEP and Faula, in accessing up to $1.5 million each in operating capital from the Cooperative Bank of Kenya. Both MFIs intend to use the proceeds of their loans for on-lending to microenterprises. The second component is a $1 million guarantee designed to support commercial bank lending to micro, small and medium size enterprises with a particular focus on agriculture. The three guarantees, as a whole, strongly support USAID’s objective to increase rural household incomes in Kenya.

Kenya Commercial Bank
SME - US $7.9 million Loan Portfolio Guarantee
In 2006, USAID structured a loan portfolio guarantee to support lending to SMEs involved in agriculture, tourism, manufacturing, and to microfinance institutions.  These sectors constitute a significant part of the vibrant private sector that is growing at a fast pace in Kenya.

Fina Bank
SME - US $5 million Loan Portfolio Guarantee
This guarantee was structured at the same time as the one with Kenya Commercial Bank and targets the same sectors. It is anticipated that the two banks will compete for borrowers and thereby improve lending terms such as loan tenors and collateral requirements.

Equity Bank
Oikocredit
Microfinance – US $10 million Loan Portfolio Guarantee
To address the post-election crisis of 2008, USAID/Kenya designed a $10 million to support the microfinance industry. The guarantee with two microfinance institutions, Equity Bank and Oikocredit, encourages rapid loan disbursement by decreasing the guarantee coverage percentage over time. Loans disbursed before March 31, 2009 are guaranteed at fifty percent, while loans disbursed after that date are only guaranteed at thirty percent. This innovative use of the Development Credit Authority is an example of how it is an appropriate tool for post-conflict situations.

Faulu Kenya Limited
Microfinance – US $5 million Portable Loan Guarantee
A portable guarantee developed by USAID/Kenya in 2008 will enable Faulu Kenya Limited, a microfinance institution (MFI), to obtain $5 million in guaranteed financing. Faulu will use the capital to expand its health insurance premium product to lower income households, which currently cannot afford to pay the lump sum required to purchase health insurance.

MALAWI

Standard Bank
Agriculture - $13 million – Loan Portfolio Guarantee
In 2007, USAID signed a loan portfolio guarantee with Standard Bank to guarantee loans made to borrowers in the agriculture sector. This guarantee will serve as a catalyst for the expansion of access to financing for agriculturally linked MSME in Malawi where there is currently minimal lending.

MALI

BICIM
Agriculture - $3 million – Loan Portfolio Guarantee
A 2001 partial guarantee made available to BICIM assists in mobilizing credit for medium and large-size agribusinesses operating in Mali and directly support USAID’s on-going activities in Mali's agricultural sector. The guarantee is intended to stimulate financing for the agricultural sector by demonstrating that lending to agribusinesses can be profitable when risk is prudently managed. Technical assistance combined with a risk management tool such as a partial guarantee, can create a powerful combination of resources to leverage private-sector investment for development.

MOZAMBIQUE

BCI Fomento
Agriculture - $4 million – Loan Portfolio Guarantee
In 2006, USAID structured a guarantee in Mozambique to enable agro-enterprises to invest in equipment and facilities, in addition to working capital, that will facilitate the development of their businesses. This guarantee is part of the USAID DCA Argo - Enterprise Commercialization Program.

NIGERIA (4)

Zenith Bank
Housing - $10 million – Loan Portfolio Guarante
Accessing the financing needed to buy a house is difficult in developing countries, where financial institutions hesitate to make long-term loans. In 2006, USAID structured a guarantee with Zenith Bank in order to extend loan tenors, enabling low and middle-income Nigerians to access 10-year mortgages.

Fidelity Bank
SME - $5 million -  Loan Portfolio Guarantee
Also in 2006, USAID structured a guarantee to facilitate SME access to financial services. This guarantee will support underserved SMEs that lack the capacity to access financing because of constraints such as high collateral requirements and interest rates.

Platinum Habib Bank - US $5.5 million
Skye Bank - US $5.5 million
Agriculture – Total US $11 million - (2) Loan Portfolio Guarantees
In 2007, USAID structured two guarantees under the same agreement in order to spur lending to SMEs along the agriculture commodity value chain. This guarantee will help farmers, producers, and other actors on the chain access the finance needed to purchase inputs, hire more employees, or improve machinery.

RWANDA (3)

Banque de Kigali
Agriculture - US $2 million – Loan Portfolio Guarantee
In Rwanda, USAID is providing the Banque de Kigali, a leading Rwandan private commercial bank, with a loan portfolio guarantee to expand access to credit for agricultural enterprises in export-oriented sectors around the country. The Banque de Kigali is guaranteed on up to US$ 2 million in new loans to finance short-term working capital and medium-term capital investment activities. USAID's coverage will provide a 40 percent guarantee on net loss of principal. The facility is designed to complement USAID’s assistance in strengthening Rwanda's agricultural sector.

Banque Commerciale de Rwanda - US $2.7 million
Banque de Kigali - US $2.4 million
Agriculture – Total US $5.1 million - (2) Loan Portfolio Guarantees
The export industry, including coffee and other agricultural products, has been growing intensively in Rwanda, contributing to the country’s impressive economic growth. In 2006, USAID structured two guarantees under the same agreement to increase loans to Rwanda's export-oriented agribusiness sector through increased access to short-term working capital and medium-term capital investment, thereby stimulating economic growth.

SENEGAL (3)

Compagnie Bancaire de l'Afrique Occidentale- US $3.3 million
Attijari Bank- US $3.3 million
Ecobank Senegal - $3.3 million
SME/Agriculture – Total US $10 million - (3) Loan Portfolio Guarantees
In 2007, USAID entered into a guarantee with three Senegalese banks to raise financing for capital investment needs. Targeted enterprises are in sectors under the Government's Accelerated Growth Strategy: agriculture, textile, handicraft, fisheries, ICT. All loans will have a minimum one year term002E

SOUTH AFRICA (5)

Futuregrowth Asset Management
Microfinance - US $8.3 million - Loan Guarantee
South Africans who have never been banking customers will now have the opportunity to benefit from expanded lending and new savings products as a result of the guarantee. The loan from Futuregrowth to Capitec, the identified borrower under the guarantee, will enable Capitec to take an important step in achieving its goal to provide—on a large scale—a wide range of financial services to South Africa’s low-income population. To date, loan funds have been used to purchase ATMs, computer software, branch construction and furnishings, but Capitec expects to use the bulk of the loan as working capital to fund its new, longer-term instruments (starting with 60- and 90-day). Since USAID’s guarantee was put in place in 2004, Capitec has expanded the number of banking clients from 18,104 to 60,856 and grown its loan book by 20%. USAID and Futuregrowth expect the transaction to demonstrate the viability of lending to commercial financial service providers targeting the low-income market in South Africa.

Investec Bank
Infrastructure - US $10 million - Loan Guarantee
In 1999, as part of its ongoing urban infrastructure program, USAID/Pretoria provided a five-year, rand-denominated, guarantee not to exceed the rand equivalent of $20 million. The purpose was to help finance a subsidiary of the Infrastructure Finance Corporation (INCA) that was established to purchase existing municipal debt experiencing repayment problems, rehabilitate that debt, and resell it to private investors in the capital market. Now expired, the guarantee enabled much-needed municipal upgrades.

ABSA Bank
Infrastructure - US $25 million - Loan Guarantee
This expired 1999 guarantee supported USAID/South Africa’s objective to increase access to housing and environmentally sound urban services for the historically disadvantaged. To meet service delivery requirements, these new entities needed major capital investments. To overcome the reluctance of financial institutions to lend to municipalities, the Greater Johannesburg Municipal Council (GJMC) sought a DCA loan guarantee. Under this $25 million facility, USAID reviewed and approved a Project Delivery Plan prepared by GJMC, rather than approve individual investments. The plan established project selection criteria for water and electricity services, roads and storm-water, waste management, housing and urban redevelopment, and health clinics.

Old Mutual Investment Group
Housing - US $123 million – (2) Loan Guarantees –
Real People $69.4 million and Doornkuil $53.6 million
Although South Africa is the strongest economy is sub-Saharan Africa, many remain unable to afford housing.  In order to address this, USAID structured two local currency guarantees to enable South Africans to access the necessary finance to rent, own, or rehabilitate their housing.  The first is a guaranteed loan to Real People, a financial services company providing innovative financial products to middle and lower income households in South Africa.  The second, to Doornkuil, will finance the development of a large mixed use residential development catering to the affordable housing market.

FirstRand Bank
Agriculture - US $43 million - Loan Portfolio Guarantee
Over a decade after the end of apartheid in South Africa, blacks still struggle to achieve the economic opportunities afforded to whites. In 2008, USAID structured a guarantee on loans made by FirstRand Bank to emerging back farmers and black-owned agribusinesses in all of South Africa’s provinces, helping South Africa’s economy grow and fostering the development of an underserved sector.

SWAZILAND

Nedbank
Standard Bank
SME - US $25 million - Loan Portfolio Guarantee
This 2007 guarantee is intended to support SME lending to approximately 50 entrepreneurs who are interested in starting or expanding a business in Swaziland.  The participating banks, Nedbank and Standard Bank, have been allocated $5 million each of guarantee coverage and will compete for the remaining guarantee. This facility will be closely linked with USAID’s Swaziland Enterprise and Entrepreneurship Program (SWEEP) which is being implemented by TechnoServe.

TANZANIA

CRDB Bank
Agriculture – US$ 20 million Loan Portfolio Guarantee
USAID’s first joint guarantee with the African Development Bank following the signing of a Memorandum of Understanding between the two organizations in April 2008 is a $20 million loan portfolio guarantee with CRDB Bank, targeted at Tanzania’s agricultural sector. The developmental impact of increasing small holder farmers’ and agribusinesses’ access to credit is evidence of true donor collaboration, both through the joint facility, and by complementing technical assistance provided by the World Bank, the Government of Denmark, the African Development Bank, and USAID. The guarantee is expected to result in increased agricultural production by enabling producers and processors to access the financing they need to purchase inputs and invest in equipment upgrades.

UGANDA (11)

Allied Bank International (U) Ltd. - US $2 million
Centenary Rural Development Bank - $5.5 million
Barclays Bank of Uganda Ltd. - $5.5 million
Citibank Uganda Ltd. - $0.25 million
Nile Bank Ltd. - $3 million
Stanbic Bank Uganda Ltd. - $6 million
Standard Chartered Bank of Uganda - $4 million
Micro/Small and Medium Enterprises – Total $26.25 million -
Loan Portfolio Guarantees (7)

In Uganda, micro, small and medium enterprises (MSMEs) are not being adequately served by the formal banking system. Commercial bank lending to MSMEs and microfinance institutions remain at a low level. USAID guarantees can act as an incentive to expand lending to these entities. In 2002, USAID established a multi-bank loan portfolio guarantee in Uganda that provides desperately needed access to finance for microfinance institutions (MFIs) and micro-, small-, and medium-sized businesses. The activity contributes to USAID’s goal to expand sustainable economic opportunities for rural sector growth and to increasing rural household incomes. The guarantee, now expired, encouraged partner banks to continue lending to targeted borrowers, even without the safety net of the guarantee.

Stanbic Bank Uganda Ltd. - $6 million
Uganda Microfinance Union - $2 million
Nile Bank Ltd. - $4 million
Centenary Rural Development Bank - $3 million
Micro/Agriculture – Total $15 million - Loan Portfolio Guarantees (4)
A second guarantee in Uganda, structured in 2005, is an agreement with four Ugandan banks designed to encourage the banks to provide affordable credit to eligible borrowers in the rural sector, up to $15 million.

ZAMBIA (5)

Barclays Bank Zambia PLC - $6.5 million
Finance Bank Zambia, Ltd. - $5 million
Agriculture – Total US $5.5 million - Loan Portfolio Guarantees (2)
To encourage lending to the agricultural sector using warehouse receipts as collateral, USAID provided 50 percent credit guarantees to local commercial banks for lending against ZACA warehouse receipts.. USAID also supported bank and agriculturalist sensitization and training, warehouse management instruction, warehouse certification, and grades and standards testing—to ensure warehouses are properly managed and collateralized commodities securely stored.
For farmers and traders, stored commodities can now be leveraged into cash, allowing access to financing for new supplies or additional stock. With local banks entering new rural markets and agricultural producers gaining greater price stability by storing their grain, rather than selling it at harvest time, wealth is shifting to smaller farmers and traders.

Barclays Bank Zambia PLC
Stanbic Bank Uganda Ltd.
SME – Total US $12 million - Loan Portfolio Guarantees (2)
In 2006, USAID structured a competitive guarantee between two banks, Barclays and Stanbic, who were each guaranteed $2 million in loans made to underserved small and medium enterprises. The remaining $8 mil will be competitively utilized amongst the two banks to ensure that the money mobilized by the guarantee reaches the entrepreneurs who need it.

Stanbic Bank Uganda Ltd.
Housing – US $12 million - Loan Guarantee
This guarantee, also developed in 2006, guarantees a loan made by Stanbic to the Lilayi Housing Project, a new low-cost housing and mortgage market development project bringing over 5,000 units of housing. The guarantee will enable low and middle income Zambians to access home mortgages to purchase houses in this development.

AFGHANISTAN

Bank Alfalah
Agriculture -- US $20 million Loan Portfolio Guarantee
The first DCA guarantee in Afghanistan was developed in 2008 with Bank Alfalah to guarantee $20 million worth of loans to small and medium sized enterprises operating in the agriculture value chain. The goal of the guarantee is to increase available financing for licit agribusinesses in Afghanistan. The guarantee, together with significant technical assistance at the enterprise and enabling environment levels, will help make value-added crops more competitive with poppy cultivation as a source of income.

BANGLADESH

Prime Bank Ltd.
Energy/Small and Medium Enterprises - US $1.1 million - Loan Portfolio Guarantee
The loan portfolio guarantee to Prime Bank encourages lending for businesses interested in setting up operations that will increase the use of CNG, as a clean and alternative vehicle fuel in the transportation sector. Businesses include, but are not limited to, the importation and installation of CNG refueling stations for various vehicle types, the establishment of CNG workshops, and the importation of CNG conversion kits to convert vehicles that run on liquid fuels to CNG. The loans are expected to provide debt financing for capital investment in the CNG sector to supplement equity infusion from private entrepreneurs. HSBC and Prime Bank Ltd will administer the credit financing out of these funds up to $3.5 million. USAID covers 50 percent of the total principal debt each bank has in its portfolio of loans for CNG businesses. These guarantees will aid in improving the air quality of Dhaka City and other areas.

INDIA (3)

Karnataka - Water & Sanitation Pooled Fund
Water - US $23 million - Bond Guarantee
In India, USAID is using a guarantee for the issuance of an infrastructure bond to encourage private investor participation in local development projects. Proceeds from the bond offering will be used to improve and expand provision of water and sewerage services in the Bangalore Metropolitan Area. The municipal bond market remains underdeveloped; the Karnataka bond issuance is the second pooled municipal bond in the marketplace. The project will increase transparency and efficiency in the allocation and mobilization of resources and improved access to clean energy and water in 8 municipalities. The guarantee provides the investment opportunity to increase capital market financing of large capital infrastructure projects. It stimulates investor interest in municipal bonds, builds technical experience and knowledge in municipal financing, and creates the potential for the development of a secondary market.
Partial funding for the project will be raised by the private placement of non-convertible 15-year bonds. The bonds will be issued by a public trust established solely for the purpose of assisting these and other municipalities in gaining access to market borrowing for infrastructure development. Repayment of these funds will fall to the municipalities.

Tamil Nadu - Water & Sanitation Pooled Fund
Water - US $6.4 million - Bond Guarantee
A pooled financing mechanism has been set up to provide a cost-effective way for villages, towns and cities in the Indian state of Tamil Nadu to implement much-needed water and sanitation projects. This bond guarantee supported the creation of the “Water and Sanitation Pooled Fund” (WSPF), which will on-lend $6.4 million to multiple municipal water and sanitation projects. The funds raised by the bond issuance are disbursed as sub-loans to the participating municipalities for these projects.

One example is the township of Valasaravakkam, with a population of 26,260, which has no adequate water supply system, relying on open and bore wells and three above-ground tanks, connected to 11 miles of piping. This system provides an estimated 2 liters of water per person per day. This is one of a number of innovative partial credit guarantee projects in India that have given access to financing for water and sanitation projects to benefit the urban and rural poor. It is the first to incorporate many of the aspects of the U.S. model of state revolving funds.

Yes Bank
Energy - US$ 20 million - Loan Portfolio Guarantee
India’s power sector is characterized by antiquated technology, inefficient facilities, and financially strapped companies. USAID is supporting the development of the energy and environmental sectors by focusing on both energy supply and demand. USAID is providing Yes Bank with a 10-year, US$ 20 million loan portfolio guarantee to increase financing of small-scale renewable energy, energy efficiency, and water conservation management projects by small and medium enterprises (SMEs). The guarantee is structured to encourage investments in select activities that reduce the severe power crunch. To ease power usage, Yes Bank can use the guarantee to cover investments in water conservation and management as well as the manufacturing of energy-efficient products. The guarantee also supports increased energy production through the use of solar, biomass, hydro, and wind-generated power.

ICICI Bank
Housing/Infrastructure – US $7.6 million - Loan Guarantee
In 2006, USAID guaranteed a US $5.7 million loan from ICICI Bank to SPARC, an Indian NGO involved in slum upgrading, in order to fund a major slum redevelopment project in Mumbai known as Oshiwara II. In 2008, the guarantee was modified to increase the guarantee to $7.6 million. This project is designed to help address the housing needs of low income households affected by a major infrastructure improvement project, providing up to 2,470 available housing units.

INDONESIA

Bank Danamon
Small and Medium Enterprises – $16.4 million - Loan Portfolio Guarantee
In addition to the many persons in Indonesia who were directly affected by the tsunami and earthquakes of December 2004 and March 2005, there are hundreds of thousands of people who have been economically affected by those events. As people turn to microenterprise activities to generate income during the country’s rehabilitation phase many people are in need of microfinance services. USAID/Indonesia has designed a one-time revolving loan portfolio guarantee of USD $8.2 million (for a total guarantee of $16.4 million) for Bank Danamon, a progressive commercial bank that focuses on micro, small, and medium enterprises, to increase the availability of financial services and loans to such businesses around the country, with an emphasis on those affected by the natural disasters. In the short-term, the guarantee will facilitate access to credit for those businesses economically affected by the tsunami and in the medium-term will help address increased demand for microfinance services in Aceh and Northern Sumatra. To expand its microfinance-related financial services and enter new sectors, Bank Danamon’s microfinance arm, DSP, will target micro and small borrowers and expand its client base, lending, for example, to fisherman, small street vendors, farmers, and agro processors and will expand DSP’s services nationwide. More broadly, USAID’s guarantee supports work to expand economic growth and employment opportunities and revitalize livelihoods in Indonesia, with an emphasis on the Aceh and North Sumatra regions as part of the US Government’s Indian Ocean Tsunami Relief, rehabilitation, and reconstruction efforts. USAID/Indonesia is already providing substantial technical assistance to borrowers and businesses by forging industry clusters and linkages, providing business development services, and strengthening the policy and regulatory environment.

KAZAKHSTAN (2)

Kazkommertsbank
Energy - US$1.3 million - Loan Portfolio Guarantee
USAID worked with Kazkommertsbank, a local financial institution, to on increase financing available for energy and energy-related projects. This guarantee helps increase access to commercial investments by partially guaranteeing (up to 50%) loans up to 5 years. It also encourages participating financial institutions to enter a new type of financing for which training will be offered in conjunction with the program.

Lariba Bank
Housing - US$1 million - Bond Guarantee
To support the development of mortgage lending and a secondary mortgage market in Kazakhstan, USAID is providing a 50 percent principal guarantee on a US dollar-indexed $1 million mortgage-backed bond issued by Lariba Bank. Once the bond is paid off, a new, four-year, $1 million bond will be issued under similar terms. The pilot bond issuance is designed to demonstrate that banks can finance mortgages, building a portfolio and then sell off the mortgages by issuing a mortgage bond, such as the one mentioned above. This gives banks the opportunity to re-lend and build a portfolio of mortgages for servicing while capturing a positive spread between the sale price of the note and weighted average coupon of the originated portfolio.

KYRGYZSTAN (2)

Bai Tushum
Water - US $1 million - Loan Portfolio Guarantee
This guarantee expands access to potable water in rural Kyrgyzstan where an estimated 50% of villages do not have a functioning water system. Most of the existing systems are in poor condition due to severe deterioration of water supply infrastructure. USAID/CAR’s partial loan portfolio guarantee (50%) to Bai Tushum, a leading Kyrgyz microfinance institution, to guarantee loans to CDWUUs to finance the initial cash contribution for the World Bank/Asian Development Bank-funded water infrastructure upgrade projects.

Kompanion Bank
Kyrgyz Investment and Credit Bank
Education – US $1.5 million Loan Portfolio Guarantee
$1.5 million in guaranteed financing will be lent by two financial institutions, Kompanion Bank and Kyrgyz Investment and Credit Bank through a loan portfolio guarantee developed in 2008. The loans will go to students who need financing to pay vocational and university educations. Technical assistance will ensure that students who pursue higher education acquire skills that will enable them to get jobs after graduation and contribute to Kyrgyzstan’s productivity.

PHILIPPINES (3)

Local Government Unit Guarantee Corporation (LGUGC)
Infrastructure/Urban - US $25 million - Loan Portfolio Guarantee
This 1999 guarantee covers a portfolio of loans originated by private sector lenders to municipalities, provinces and other Local Government Units (LGUs) to finance infrastructure projects. The loans will be covered by a primary guarantee from the Local Government Unit Guarantee Corporation (LGUGC), a private domestic financial institution whose goals are to encourage the flow of private capital to creditworthy municipal infrastructure projects. USAID's guarantee has been essential to the credibility of the LGUGC with the local private financial sector, whose investments in the guarantee fund are the most important factor in the fund’s long-term sustainability.

Local Government Unit Guarantee Corporation (LGUGC)
Water - $37.5 million –Loan Portfolio Guarantee
Following on the first LGUGC guarantee, USAID/Philippines in 2008 designed a follow-on $12.75 loan portfolio guarantee with LGUGC that will mobilize $37.5 million in private lending to water districts in the Philippines for water infrastructure projects. These projects will provide access to clean water and sanitation, particularly benefitting the poor and improving health outcomes. This and the previous LGUGC guarantee support the Clean Water for People Initiative, a US Government initiative being undertaken with the Government of Japan.

Opportunity Microfinance Bank
Health - US $750,000 - Loan Portfolio Guarantee
USAID developed a loan portfolio guarantee in 2003 to the Opportunity Microfinance Bank on its loan portfolio for loans made to midwife clinics that are franchise members of the social franchise known as the Well Family Midwife Clinics Partnerships Foundation (the "Partnership"). The funds for borrower loans come from two sources: bank funds plus a trust fund to be established by the Partnership. To ensure quality control and, where necessary, coaching for borrowers facing financial challenges, guaranteed loans are only be made to midwife clinics who are franchisees in good standing.

SRI LANKA

Lanka Orix Leasing Company (LOLC)
SME - US $3 million- Loan Portfolio Guarantee
In 2006, USAID structured a lease portfolio guarantee with a financial leasing company.  The guarantee mobilizes enough financing for 150 equipment leases, including tractors and transportation vehicles.  This innovative use of DCA enables the leasing company to reach down-market to those in need of financing who might no be able to afford LOLC’s standard down payment requirements. 

TAJIKISTAN

Agroinvest Bank
Agriculture  - US $5 million- Portable Guarantee
Agroinvest would like to attract longer term capital in order to expand their agricultural loan portfolio.  The bank will use the proceeds of its 2007 USAID guaranteed loan to on-lend to producers, agri-business intermediaries, private wholesalers, processors and retailers of agricultural products. The DCA will be a catalyst to demonstrate new ways of doing business in the financial market and will mobilize needed private financing for working capital and capital investments in the agriculture sector.  The guarantee is augmented by technical assistance to borrowers under the Aglinks program. 

VIETNAM (2)

Asia Commercial Bank - US $5 million
Eastern Asia Commercial Bank - US $5 million
Small & Medium Enterprises - Total US $10 million - (2) Loan Portfolio Guarantees
These loan portfolio guarantees from 2003 establish agreements with two local private banks in Vietnam in support of increased lending to local private small and medium enterprises (SMEs). Traditionally, the Vietnamese state-owned commercial banks have directed their lending to big state-owned enterprises as a target group of clients, leaving most SMEs to the private banks. For their part, private banks have followed a policy of collateral-based lending that requires the borrower to pledge substantial collateral in return for a loan. The guarantee will encourage those banks that are developing their lending skills as well as expand access to financing within the SME sector. These guarantees are also intended to support USAID/Vietnam’s goal to enhance the environment for increased trade and investment.

EGYPT (2)

Commercial International Bank
Water - US $40 million - Loan Portfolio Guarantee
This 2003 guarantee is designed to expand and improve water and wastewater service delivery to underserved areas of Egypt, by facilitating utilities’ capacities to initiate private sector provision (PSP) of services. Through this USAID guarantee, $40 million in loans is made available from Commercial International Bank to locally-based businesses to provide water and wastewater services on a contracted basis. This project is expected to offer lower-cost septic tank evacuation services to 50,000 Egyptians living in outlying areas, currently without piped wastewater systems. It will also lower the cost and increase the accuracy of water meters, translating to lower water bills for 200,000 families and businesses. In addition, it will provide cheaper and more extensive pipe maintenance and better customer service for a service area of three million customers.

Citibank Egypt
Information Communications Technology (ICT) - US $34 million
Loan Portfolio Guarantee
In 2007, USAID structured a guarantee was designed to enable Citibank Egypt to increase working capital loans to ICT firms. The ICT sector is a fast-growing industry, contributing to economic growth and employment.

JORDAN

Bank of Jordan
Small and Medium Enterprises – $5 million - Loan Portfolio Guarantee
Small and medium enterprises (SMEs) are among the most active creators of new jobs and economic activity in developing economies. Growth in this sector is, however, typically inhibited by undercapitalized enterprises and limited access to external financial resources. A credit guarantee from USAID, designed in 2005, is being used to complement established technical assistance programs that focus on strengthening small and medium-sized businesses, supporting increased trade and expanding investments by the banking industry. The guarantee is intended to augment the development impact of USAID’s programs by increasing SME financing of working capital and medium and long-term financing for capital investments in, for example, equipment and technology. A senior Bank of Jordan official stated that the guarantee has allowed the Bank to more aggressively target the SME market by extending loans to new customers who lack a credit history and to current clients who lack sufficient collateral for requested loan amounts.

MOROCCO (13)

Société Générale Marocaine des Banques (SGMB)
Microfinance - US $10 million - Loan Portfolio Guarantee
In Morocco, USAID is providing a 50 percent guarantee to one of the country’s largest commercial banks, Société Générale Marocaine des Banques (SGMB), to encourage $10 million in new lending to four Moroccan microfinance institutions (MFIs). While SGMB is aware of the potential business opportunities in lending to MFIs, the lack of MFI credit history had discouraged them from lending to the sector. The guarantee allows USAID to share the risk with SGMB to encourage lending to participating MFIs. MFIs will use the funds to make new loans to creditworthy microenterprises in Morocco, enabling the MFIs to grow their loan portfolios while serving an expanding client base of micro entrepreneurs. The guarantee enables SGMB to develop a credit history with and understanding of the MFIs, and eliminate such restrictive conditions in the future, even without a guarantee. As a result, the guarantee operates as a demonstrative tool enabling banks to experience the financial viability of microfinance institutions first hand, and support, by extension, a large group of micro entrepreneurs.

Dâr ad-Damâne (DAD)
Infrastructure - US $3 million - Loan Portfolio Guarantee
Local Government Units (LGUs) in Morocco are required to provide their own financing for projects undertaken at the local level. Currently, LGUs do not have access to private sector financing. Preliminary studies indicate that the banking system currently funds only 7 percent of LGU needs in spite of current excesses in liquidity. Without access to financing, the LGU’s efforts to act decisively and effectively to improve inhabitants’ quality of life are seriously constrained. To address this issue, USAID’s mission in Morocco is providing a partial re-guarantee of a portfolio of loans covered by Dâr ad-Damâne (DAD), a local private-sector guarantor owned by a consortium of mostly private banks. Loans eligible for re-guarantee by USAID involve private-sector financing from DAD’s banks to qualifying community-based service delivery projects.

BMCE
Housing/Mortgage - US $5 million - Loan Portfolio Guarantee
This facility provides low-income households with access to affordable “social” housing based on incentives by promoting investments from BMCE in the housing sector, improving access to financing for housing by low-income households, and improving the living conditions of urban low-income households.

Zakoura (5)
Housing - US $2 million – Portable Guarantee (1)
Morocco suffers from a severe housing deficit with roughly 750,000 units needed to fill this void. Current Moroccan law prevents microfinance institutions from lending for home improvement or housing purposes, therefore the housing sector lacks reliable sources of both public and private sector financing. Several institutions are lobbying the Ministry of Finance for a waiver to allow direct lending for housing development.

To address the need for financing products targeted to the lower end of the income spectrum, USAID has forged strategic partnerships between commercial banks that have the legal authority to engage in housing credit and microfinance institutions that understand the requirements of lending to the lower-income strata in Morocco.

This portable guarantee promotes investments from commercial banks and microfinance institutions in the housing sector, increases access to financing for housing by low-income households, and improves the living conditions of urban low-income households. The guarantee allows a willing commercial banks to expand their client-base using the sector-specific expertise of Zakoura while bringing needed capital into the low-income housing sector.

Microfinance - US $5 million - Portable Guarantees (4)
Zakoura provides credit to the most underprivileged populations of Morocco, especially women. The institution works in both rural and urban areas. To support Zakoura’s ongoing operations and to expand access to micro-credit, USAID has extended four portable guarantees to Zakoura that will allow the institution to approach private lenders to access capital for on-lending to clients. The additional loan capital is intended to strengthen Zakoura’s operations by supporting the diversification of its funding sources.
Al-Amana (4):

With Banque Populaire (1)
With SGMB (2)
With BMCI (1)
Microfinance/Housing - US $10 million - Portable Guarantees (4)
To support the ongoing operations of al-Amana and to expand access to micro-credit in Morocco, USAID extended a portable guarantee to al-Amana to help it access financing of microenterprises across the country. Al-Amana shares risk with the lending bank and bears partial responsibility for any defaults by the borrowers and receives compensation on a performance basis. This form of strategic partnership, made possible by this credit enhancement, allows the commercial banks to expand their client-base using the sector-specific expertise of al-Amana while bringing needed capital into the low-income housing sector as well.

Fonds d’Equipment Communal (FEC)
Infrastructure - US $4.7 million - Loan Portfolio Guarantee
If current trends continue, Morocco is projected to become a water deficit country by 2020. USAID’s mission is focused on improving water resource management by strengthening policy, regulatory, and institutional frameworks; promoting adoption of improved technologies; and broadening public participation for environmental improvements, including urban sanitation. This loan portfolio guarantee supports these objectives by expanding FEC’s capacity to finance eligible projects and by promoting investment from commercial banks into local development activities as well as improving access to financing for sanitation infrastructure projects by local governments. The guarantee is unique, allowing FEC to transfer a portion of the guarantee to local private banks with a credit rating equal or better than FECs.

WEST BANK/GAZA

ALBANIA (2)

Raiffeisen Bank Albania
Small and Medium Enterprises – $12 million - Loan Portfolio Guarantee
Micro, small and medium-sized enterprises are the driving force for Albania’s economic growth. However, their growth has been impeded by a lack of access to commercial financing. Banks have been reluctant to lend to private enterprises that cannot meet their collateral requirements, which can exceed 150 – 200 percent of the loan requested. USAID provided a guarantee to Raiffeisen Bank Albania that will partially cover up to $12 million in new loans to productive or service-oriented micro, small and medium-sized businesses. The aim is to encourage Raiffeisen, and, by example, other banks, to expand lending beyond their large and well-established clients to smaller Albanian businesses needing access to commercial sources of credit for investment in, for example, technological innovations and production inputs. Over time, the guarantee is intended to improve access to affordable commercial credit and promote the development of smaller businesses, supporting their ability to compete in domestic and foreign markets and, more broadly, facilitating Albania’s integration into global markets.

Raiffeisen Bank
National Commercial Bank
Infrastructure – US $13.5 million Loan Portfolio Guarantee
USAID/Albania designed a loan portfolio guarantee in 2008 with two financial institutions, Raiffeisen Bank and National Commercial Bank, to mobilize a total of $13.5 million in lending to Albanian municipalities, following the February 2008 passage of the law granting municipalities the ability to borrow from private commercial banks. The guaranteed loans will be used to finance infrastructure projects undertaken by these municipalities. USAID/Albania’s Local Governance Program will ensure that municipalities acquire the skills necessary for obtaining and repaying loans, enhancing their commercial viability and making them attractive customers to Albanian banks.

ARMENIA (6)
Cascade Credit
Small and Medium Enterprises - $12 million - Bond Guarantee
Restrictive lending policies by Armenian banks have hindered local businesses from seizing new investment opportunities. Even financial institutions like the start-up, Cascade Credit, have had difficulty obtaining credit. USAID is providing a bond guarantee to Cascade that will the new company issue bonds to generate capital that will be used to finance small and medium-sized Armenian exporters. The guarantee will make Cascade’s bond offering more attractive to potential investors by covering up to 50 percent of their investment, up to a total of $12 million, in case of default. The bonds, once issued, will be tradable on the Armenian Stock Exchange, increasing investment options for investors in the local capital market.

Anelik Bank - US $1.5 million
Converse Bank - US $1.5 million
INECO Bank - US $1.5 million
Agriculture/Small & Medium Enterprises - $4.5 million - (3) Loan Portfolio Guarantees
The purpose of the SME-Finance Support Project (FSP) is to increase access to credit to Armenian small & medium enterprises (SMEs), including agribusinesses. The essence of the FSP is to encourage financial institutions to extend loans to commercially viable SMEs and agribusinesses, which are generally not able to access credit in the formal financial markets due to the high risks and perceived disproportionate transaction costs. The project offers loan portfolio guarantees to three bank and non-bank financial institutions to partially (50 percent) cover losses on loan principal arising from loans extended to qualified borrowers. The project supports increased competition among private-sector businesses.

INECO Bank - US $9 million
Small & Medium Enterprises - $9 million - Bond Guarantee
Inecobank will utilize the DCA Bond Guarantee to secure access to capital and debt financing.  The guarantee will further expand SME financing in Armenia while also developing the local capital market.  Inecobank, working with Armimpexbank serving as the bondholder agent, will do a public placement in Armenia to issue a USD 3 million 5-year bond.  Inecobank is authorized to issue multiple tranches up USD 9 million with no more than USD 3 million outstanding at any one time.  The DCA guarantee will meet not only the increasing investment needs of SME, but also further the development of capital market intermediation in Armenia.

First Mortgage Company – US$5 million
Housing – Portable Guarantee
To enable First Mortgage Company of Armenia to access financing needed to expand mortgage lending, USAID/Armenia in 2008 designed a portable loan guarantee so that the financial institution can access up to $5 million of guaranteed financing. First Mortgage will use this capital to grow its portfolio so that it can re-invest the credit it acquires for housing finance. In supporting the first private residential mortgage finance company based in Armenia, USAID is fostering home improvements for families that otherwise would not have been able to finance upgrades of their apartments and houses.

BOSNIA and HERZEGOVINA (4)

Volksbank BH d.d.
Infrastructure - US $25 million - Loan Portfolio Guarantee
This loan portfolio guarantee secures up to 50 percent of the principal of a $25 million loan portfolio from Volksbank BH to local municipal governments. It enables the bank to finance revenue-generating investments at the municipal level that promote economic and environmental development while strengthening the fiscal autonomy of the participating local governments. Illustrative examples of potential projects include: water (increased capacity, improved meterage, decreased system loss, etc.); wastewater (sewage pipes, treatment facilities, etc.); solid waste (consolidated waste disposal, equipment upgrades, etc.); and other infrastructure projects that support municipal development and where revenue can be segregated, i.e. parking structures.

Volksbank BH d.d. - US $12 million
UPI Bank - US $10 million
Zagrebacka BH Bank - US $9 million
Small and Medium Enterprises - US $31 million - (3) Loan Portfolio Guarantees
In Bosnia and Herzegovina, USAID is working to overcome a major obstacle to private enterprise growth - the lack of financing for the small and medium enterprises, particularly medium and long term financing. Despite growth in deposits and retail lending, banks in BiH are still reluctant to lend to private enterprises. Total bank lending to private enterprises, as opposed to lending to citizens, comprises less than 40 percent of total bank lending, which is fairly low by transition economy and international standards. Domestic lending is an important source of investment and working capital, especially where access to international sources of funds is virtually non-existent. The guarantee covers up to 50 percent of the loan principal provided to enterprises in competitive sectors such as agriculture production and processing, wood processing and tourism, with the objectives to increase economic growth and employment.

BULGARIA (6)

HVB Bank Biochim
Infrastructure – US $15 million - Loan Portfolio Guarantee
Despite recent reforms, credit is still not being extended to many municipalities in Bulgaria, particularly small ones. USAID has provided a guarantee to HVB Bank Biochim, a private commercial bank, to promote investment in municipal infrastructure. USAID’s credit guarantee will partially cover up to $15 million in financing for selected municipalities undertaking critically-needed infrastructure improvements. The guarantee will demonstrate the potential of such investments to the banking sector and may encourage other lenders to enter the market, creating more competition and more favorable lending terms. Small and medium-sized cities’ municipalities will be able to establish a track record of loan repayments while addressing local infrastructure needs. The activity, as a whole, may become a model of infrastructure finance, boosting the impact of Bulgaria’s fiscal sector reforms.

United Bulgaria Bank (UBB)
Energy – US $10 million - Loan Portfolio Guarantee
This project was designed to increase lending by financial institutions to commercially viable municipalities, municipal enterprises, and energy service companies for municipal energy efficiency projects. These municipalities are generally unable to access credit in formal financial markets due to the high risks and perceived disproportionate transaction costs associated with larger infrastructure projects. To support the private sector in extending loans USAID provided the United Bulgaria Bank, a privately-owned Bulgarian bank, with a loan portfolio guarantee covering a portfolio of up to $5 million in loans to partially cover (30 percent) losses in case of default.

Energy - $10 million - Loan Portfolio Guarantee
A second loan portfolio guarantee to the United Bulgarian Bank (UBB) is being used to demonstrate the financial viability of long term project financing for energy efficiency investments. By acting as a catalyst for private financing, the guarantee is helping reduce unnecessary expenditures on energy, improve municipal finances, and decrease greenhouse gas emissions. USAID is also providing extensive technical assistance to help public and private borrowers identify projects, develop their business plans, and prepare loan applications.

First Investment Bank
Small & Medium Enterprises - US $20 million - Loan Portfolio Guarantee
Lack of commercial finance continues to be an obstacle to the development of competitive private enterprises in Bulgaria and, hence, to overall economic and social development in the country. The loan portfolio guarantee is a critical component of the Mission’s comprehensive enterprise development program, serving to stimulate domestic lending and encourage greater financial intermediation. The guarantee is intended to support the mission's focus on accelerating the growth of private enterprises and a more competitive and market responsive private financial sector.

Hebros Bank - US $10 million
Post Bank - US $10 million
Agriculture/Small & Medium Enterprises - $20 million - Loan Portfolio Guarantees
Overcoming the market imperfections that impede lending to agriculture is critical to the development of a viable agricultural sector in the country, thus sustaining economic growth and employment in Bulgaria. In order to address the farmer needs for investment and working capital, USAID/Bulgaria is using a loan portfolio guarantee to lend to the agriculture sector as a means to encourage financial intermediation, job creation, and increased productivity. The guarantee promotes bank lending to agriculture by (1) mitigating perceived risks, prohibitive collateral requirements, and collateral eligibility problems, and (2) building the participating banks’ experience and capacity for lending to farmers and agriculture processors. By promoting bank lending, the guarantee directly supports USAID’s objective to promote improved business climate conducive to private sector needs, economic growth, increased employment and investment.

Nachala Cooperative
Microfinance - US $1.5 million - Portable Guarantee
Nachala Cooperative is a USAID legacy microfinance institution. Nachala will utilize the USAID guarantee, developed in 2007, to secure access to capital and debt financing, which it will use to enlarge its micro-lending operations, thus leading toward full-scale sustainability of the USAID legacy micro-finance program. The DCA guarantee will meet not only the increasing investment needs of micro-enterprises, but also the working capital requirements of small and medium size businesses in Bulgaria.

CROATIA (2)

Erste Bank Rijeka
Agriculture – US $10 million - Loan Portfolio Guarantee
To encourage lending, USAID has provided Erste Bank, a local Croatian commercial bank, with a 50 percent guarantee on up to $10 million in new loans to these agri-businesses. The guarantee encourages the extension of credit based on the cash flows from the new contracts, where, for example, a large agri-processor would enter into contracts with a group of preferred dairy farms (the processor is effectively selecting the suppliers that it believes can succeed in competitive markets). On the strength of assigned contract commitments, the dairies are able to access financing from Erste Bank to use as working capital to improve their facilities or purchase livestock and equipment. In turn, the dairies agree to have the proceeds from their sales sent directly to Erste Bank to repay their lons. Any remaining funds are re-deposited into the dairies’ account at the bank.

Privredna Bank
Housing/Mortgage - US $20 million - Loan Portfolio Guarantee
This guarantee provides Privredna Banka Zagreb, a privately owned Croatian bank, with a loan portfolio guarantee to extend loans to new and current home owners in the war-affected areas of the country. Other banks have shown interest in USAID's credit guarantees may be prospective lenders in the future. The whole activity contributes towards the mission's objective to accelerate the return and reintegration of war-affected populations.

OTP Banka and Jadranska
SME - US $20 million - Loan Portfolio Guarantee
In 2007, USAID structured a co-guarantee with the new regional Croatian development agencies, to add to their credibility and to help them develop Croatian SMEs. With this co-guarantee, Croatian SMEs will be able to borrow the credit necessary to expand, enabling them to support employment and growth.

GEORGIA (3)

Bank Republic
Agriculture - $6 million – Loan Portfolio Guarantee
Most Georgian banks do not lend to businesses involved in agriculture, viewing them as high-risk borrowers. The lack of financing hinders growth in the agricultural sector. USAID has been working to engage the local commercial banks in lending to small and medium-sized agricultural enterprises, offering training, technical assistance and a credit guarantee. The guarantee covers Bank Republic, a private lender, on up to $3.0 million in new loans to smaller agricultural producers to reduce the bank’s risk on a portfolio of loans up to $6.0 million. By covering 50 percent of the principal lent, USAID shares the loss with the bank in case of default. This public-private partnership enables Bank Republic to increase credit available to small and medium enterprises. The experience is intended to demonstrate that investments in the agricultural sector can be profitable when risk is prudently managed, encouraging other commercial banks to finance similar activities around the country. USAID’s work also complements broader efforts to spur economic growth in Georgia, including the recent signing of a Millennium Challenge Compact by the President of Georgia and U.S. Secretary of State, Condelezza Rice. The Compact represents $295 million in funding from the United States for projects, in part, focused on rural business development. The two public-private partnerships have the potential to reach and improve the lives of hundreds of thousands of Georgians.

Constanta Foundation
Microfinance - $1.5 million – Portable Guarantee
In 2006 Constanta, an MFI, sought commercial loans with the most advantageous terms from local and international financial institutions in order to on-lend to Georgia small and micro entrepreneurs. With the guarantee, Constanta secured financing from Oikocredit and was able to use the proceeds to support Georgian entrepreneurs who otherwise would not be able to access credit.

TBC Bank
SME/Energy - $13 million – Bond Guarantee
TBC Bank, the largest bank in Georgia, was able to use a USAID guarantee in 2006 to issue a bond to raise capital to promote SME lending. The entire proceeds of the bond issuance will be used to fund SME and energy loans in Georgia.

KOSOVO

Raiffeisen Bank Kosovo
Agriculture - US $10 million - Loan Portfolio Guarantee
Long term capital, especially in the agricultural sector, is extremely difficult to access in Kosovo. This USAID guarantee, developed in 2006, will be used to guarantee loans to the agriculture/agribusiness sector to enterprises in different sectors such as dairy, livestock, poultry, lamb, animal feed, forage and crops, fruits and vegetables, and other related sub sectors and will range from 12 to 60 months.

MACEDONIA (4)

NLB Leasing – US $4 million
Universal Investment Bank – US $5 million
Microfinance/SME - US $9 million – (2) Loan Portfolio Guarantees
This 2007 guarantee will cover the loan loss on principal of loans made to targeted sectors that include: agriculture and agri-business; textile; manufacturing; information communications and technology; telecommunications; energy; tourism; service industry; tool and die; and transportation and logistics.

NLB Leasing – US $5 million
Universal Investment Bank – US $5 million
Energy - US $10 million – (2) Loan Portfolio Guarantee
As the decentralization process in Macedonia unfolds and the legal framework for municipal borrowing becomes more clear, it is likely that commercial banks will begin lending to creditworthy municipalities.  Lending to municipalities will be slow to start due to the banks’ perceptions about the risks associated with this sector and the municipalities’ lack of borrowing experience.  In the meantime, energy service companies (ESCOs) have been formed and are in a strong position to implement energy efficiency projects on behalf of municipalities under energy performance contracts, which allow them to be repaid through the resulting energy savings.  However, there is no experience in Macedonia in lending for this business model. This 2007 USAID will guarantee $2 million in lending to NLB, $2 million in lending to Universal Investment Bank, and will then allow the banks to compete for the remaining amount through utilization. This will encourage lending to municipalities that are implementing energy efficiency projects.

MOLDOVA (7)

FinCom Bank
Agriculture - US $4 million - Loan Portfolio Guarantee
In Moldova, as in many developing countries, rural micro, small and medium-sized enterprises involved in agriculture, agriprocessing, or service businesses can not access capital from private financial markets. The businesses are often seen as high risk and charged disproportionately high transaction costs. USAID has partnered with FinCom Bank to encourage financial institutions to lend to these types of commercially viable businesses. Together, USAID and FinCom Bank are sharing the risk on up to $4.0 million in new loans from the bank to companies identified as engines of economic growth and employment. Credit financing will enhance the companies’ competitiveness, particularly in export markets, and, ultimately, help reduce poverty in Moldova.

Moldova Agroindbank - US $9 million
Victoriabank S.A. - US $6 million
Micro, Small & Medium Enterprises - US $15 million -
(2) Loan Portfolio Guarantees
USAID has set up two loan portfolio guarantees to support multi-sector lending to micro, small, and medium enterprises through two distinct financial institutions, as a follow-on activity to the successful Micro and Small Enterprise Program. The new guarantees provide the two participant banks: Moldova Agroindbank and Victoria Bank, which expressed interest in using a USAID guarantees to cover a portfolio of loans intended for the SME sector and agriculture producers.

Mobiasbanca - US $4 million
Moldinconbank - US $2 million -
Banca Sociala – US$1 million
Agriculture/Small & Medium Enterprises - US$7 million – (3) Loan Portfolio Guarantees

The purpose of the USAID/Moldova's Credit Enhancement Project (CEP) is to increase access to credit for small and medium enterprises (SMEs) and agriculture producers. The essence of the CEP is to encourage financial institutions to extend loans to commercially viable SMEs and agriculture producers, which are generally not able to access credit in the formal financial markets due to the high risks and perceived disproportionate transaction costs. The project offers loan portfolio guarantees to a variety of bank and non-bank financial institutions to partially (50 percent) cover losses arising from loans extended to SMEs and farmers. The guarantees strengthen the banks’ ability to finance loans to qualified borrowers in the small and medium enterprise and agricultural sectors, thereby promoting lending in both of these sectors. Qualifying projects activities, including investments, are designed to promote small business production and agricultural production in Moldova – especially to improve the productivity of private farmers. Loans may be extended in the local currency, MDL, or in US Dollars.

Rural Finance Corporation (RFC)
Agriculture/Small & Medium Enterprises - US $1 million - Loan Portfolio Guarantee
The Rural Finance Corporation (RFC) is a non-bank financial institution, 99 percent owned by the Savings and Credit Associations, providing direct loans to farmers, is currently receiving assistance from the World Bank and CNFA. A portion of these loans have been granted to farmers to assist them in buying new land, hence promoting the further consolidation of farming land in Moldova. The project also provides portfolio and portable guarantees to the RFC to mitigate risk and enhance liquidity.

ROMANIA

Raiffeisen Zentralbank
Housing - US $7 million - Loan Guarantee
In Romania, USAID identified the housing market as one of its target sectors, recognizing that mortgage lending is critical to the long-term growth and stability of a country's financial sector. Through the use of a partial guarantee, USAID attracted capital from the private sector for this program. With the guarantee, the Romanaian Enterprise Fund (RAEF) was able to ecure a $7 million ten-year loan from Raiffeisen Bank Romania on behalf of Domenia Credit, a new mortgage finance company established by USAID. The loan, combined with the capital provided by RAEF, provided Domenia with the necessary long-term funding to commence operations, once it was formally established and has produced tremendous results in developing Romania's mortgage market.

RUSSIA (3)

Center-Invest Bank
Small & Medium Enterprises - US$6 million – Loan Portfolio Guarantee
The guarantee provides Center-Invest bank with a 50% guarantee on a portfolio of loans made to commercially viable SMEs that might not otherwise be able to access credit in the formal financial markets due to perceived risks of small business lending. USAID is encouraging Center-Invest bank, based in Rostov-on-Don, to expand its SME loan portfolio through its newly opened branches in two neighboring regions - Krasnodar and Volgograd. The program will help the Mission achieve its development objectives to improve access to finance for small and medium enterprises, and improved financial intermediation by Russian commercial banks. In addition, the project will create important synergies among various USAID/Russia projects that support the development of the Russian SME sector and the Russian banking system.

NDB Bank
Small & Medium Enterprises - US $8 million – Bond Guarantee
USAID’s objective is to strengthen the ability of one of the Russian regional commercial banks, NBD Bank, to finance small and medium enterprise development in the Volga Federal District. USAID’s assistance will be provided in the form of 50% risk-sharing guarantee provided to the holders of the bonds issued by NBD Bank. Money received from the public placement of the bond will be designated for further on-lending to small and medium size enterprises in the Nizhniy Novgorod region. The bond guarantee will help capitalize NBD by encouraging it to place its first 2-year RUR200 million bond in the Russian market.

SDM Bank
Small & Medium Enterprises - US $3 million – Loan Portfolio Guarantee
USAID provides SDM bank with a 50 percent guarantee on a portfolio of loans made for micro and small enterprises. Through this program, USAID encourages SDM bank to extend loans through its branch network to commercially viable small and medium enterprises (SMEs) that might not otherwise be able to access credit in the formal financial markets due to perceived risks of small business lending. The program helps mitigate these obstacles and helps SMEs to acquire needed capital to expand their operations, contributing to the growth of this sector and increased employment opportunities in the regions of operation.

SERBIA

Raiffeisen Bank A.D.
Infrastructure - US $10 million - Loan Portfolio Guarantee
In Serbia, there has been a large push for municipalities to provide the infrastructure needed to attract new businesses and expand existing ones. A lack of private financing has made many cities dependent on the central government and international donors while financially stable municipalities have been forced to use cash to maintain their operations. USAID has stepped in to guarantee a portfolio of loans from Raiffeisen Bank A.D. to municipalities, related enterprises and approved partners to increase their access to local capital. USAID’s guarantee partially covers up to $10 million in municipal loans, complementing work already under way to promote private financing for capital improvements. Ideally, the guarantee will increase Raiffeisen’s comfort in making longer-term loans and encourage more municipal lending, creating a healthier market-based relationship between private banks and Serbia’s municipalities.

UKRAINE (2)

UkrSibBank - US $1.5 million
Infrastructure - US $3 million - Loan Portfolio Guarantee
This 2004 project increases communal service enterprises’ (CSE) access to credit for infrastructure improvement in Ukraine. UkrSib Bank makes loans to CSEs for improvements on municipal infrastructure such as water supply, wastewater disposal and district heating. Under the facility, the U.S. government will issue a guarantee on 50% of the net principal loss. The guarantee covers principal only for the loans issued. USAID’s experience with municipal finance indicates that a mid-sized Ukrainian city (population of 200,000-400,000) should be able to service (amortization plus interest) a larger loan from current cash flows than the $100,000 - $200,000 projected for individual credits. Because this is a new market, however, the facility adopts a conservative borrowing strategy until the CSEs establish a track record of successful municipal borrowings. The activity is expected to replicate itself as banks and CSEs reap mutual benefits from loans made under the facility; in time, it is expected that lending volumes will increase on their own, in the absence of U.S. Government guarantees.

Nadra Bank
SME/Agricultre - US $6 million - Loan Portfolio Guarantee
This 2002 project provides Nadra Bank, a privately owned Ukrainian bank, with a partial loan portfolio guarantee to extend loans to small farmers and suppliers. USAID's guarantee has significantly contributed to increased lending by local Ukrainian financial institutions to support the growth of private enterprises and a more competitive and market-responsive private financial sector.

REGIONAL

Banco Mercantil - US $2 million
Banco Lafise - US $2 million
Environment - US $10 million - (5) Loan Portfolio Guarantees
The agribusiness sector in Central America is an important contributor to individual countries’ gross domestic product. Despite its importance for the region’s economies, this sector has been characterized by the use of unsustainable practices and constraints for small and medium size businesses to access private financing and technical assistance. This guarantee provides capital for small and medium enterprises throughout Central America willing to introduce, upgrade or retrofit industrial, agro-business and services processes that utilize cleaner production practices, certification processes and environmental management systems. The guarantee targets small and medium enterprises willing to introduce, upgrade, or retrofit industrial, agro-business and service processes that utilize cleaner production practices, certification processes and environmental management systems. This initiative focuses on providing capital support for enterprises with substantial potential for expansion.

Ecologic Finance
Agriculture - US $4 million - Loan Portfolio Guarantee
This guarantee is being used to enhance the access to trade and investment within Latin America and the Caribbean. EcoLogic Finance operates as a “green” or ecologically enhancing loan fund, affording financing to eco-enterprises located in environmentally sensitive areas of Latin America. Ecologic is developing a portfolio of loans from $10,000 to $200,000 targeted to small-scale producer organizations. These common goals — biodiversity, conservation and inclusive economic development — are achieved through support of production of exportable high-quality agricultural related products.

ProARCA/SIGMA
Environment/Small & Medium Enterprises - $10 million - Loan Portfolio Guarantees
This guarantee provides capital for small and medium enterprises throughout Central America willing to introduce, upgrade or retrofit industrial, agro-business and services processes that utilize cleaner production practices, certification processes and environmental management systems. The agribusiness sector in Central America is an important contributor to the region's gross domestic production. Despite its importance for the region’s economies, this sector has been characterized by the use of unsustainable practices and constraints for small and medium size businesses to access private financing and technical assistance.

DOMINICAN REPUBLIC

Banco Ademi
Agriculture/SME – US $10 million - Loan Portfolio Guarantee
USAID/Dominican Republic developed a loan portfolio guarantee in 2008 to mobilize $10 million in financing targeted to Dominican micro, small, and medium enterprises (MSMEs) along the agricultural value chain. This guarantee with Banco Ademi will increase access to longer-term credit.

COLOMBIA (2)

Banco de Bogota
Financiera Finamerica
Microfinance – US $26 million - (2) Loan Portfolio Guarantees
Two separate loan portfolio guarantee agreements developed by USAID/Colombia in 2008 stimulate micro lending in targeted municipalities that are home to vulnerable populations and receive technical assistance from USAID. The agreements, one with Banco de Bogota and the other with Financiera Finamerica, guarantee a total of $26 million.

ECUADOR (3)

Banco ProCredit, SA
Microfinance - US $5 million - Bond Guarantee
Microfinance is a small but fast growing sector of the banking industry in Ecuador. It has the potential to increase economic development as well as a more equitable distribution of income. Banco ProCredit, an aggressive commercial bank focusing on micro credit, received a USAID bond guarantee to help it tap private financing from the local capital markets by issuing their own bonds. USAID’s guarantee will cover investors on up to 50 percent of the $5 million bond offering, thus reducing the risk to investors purchasing the bonds. This bond issue is the first of its kind in Ecuador focused on microfinance. It will, in time, develop the bank’s reputation in the country’s financial markets as a commercially viable and creditworthy institution. And by effectively expanding the bank’s financial services to low income groups USAID’s guarantee should help lead to both greater financial equity and economic growth in Ecuador.

Banco Solidario
Microfinance - US $7.4 million - Loan Portfolio Guarantee
Following the use of a portable guarantee, described above, USAID signed a loan portfolio guarantee agreement with Banco Solidario to guarantee loans to micro- entrepreneurs located in coastal and/or rural areas. The guarantee facilitates the expansion of Banco Solidario's financial services and the development of a loan product to address unmet demand by Ecuadro's poorest citizens. USAID’s guarantee supports the development an effective, dynamic, and efficient microfinance industry in Ecuador.

Banco Procredit (ProCredit Bank in Albania)
Microfinance - US $5 million - Loan Portfolio Guarantee
USAID is providing a partial credit guarantee for the principal on up a $5 million loan from ProCredit to Sociedad Financiera Ecuatorial (SFE). USAID is using the guarantee to support Sociedad Financiera Ecuatorial (SFE) efforts to become a commercial bank that will support full financial services for microentrepreneurs and have the ability to capture resources from public and institutional investors to on-lend for microfinance purposes. SFE will borrow $5 million from ProCredit Bank in Albania to increase working capital, to continue geographical expansion/presence, and to facilitate the conversion of SFE from a regulated finance company to a regulated bank with full ability to accept savings and deposits. The guarantee provides 50 percent coverage of repayment on loans from ProCredit for five years with a three-year grace period. USAID’s maximum contingent liability will be $2,500,000. SFE will create a reserve account equal to one amortization payment in the quarter previous to its due date. This loan structure will give SFE greater flexibility to revolve ProCredit’s loans by on-lending proceeds to micro enterprises. Additionally, SFE will be able to expand their service area and develop new financial products to capture savings from the public at large. Through its SALTO contract, USAID/Ecuador will continue providing technical assistance during SFE’s transition from regulated finance company to commercial bank.

EL SALVADOR (3)

Banco Salvadoreño – US $ 8 million
Banco ProCredit - US $ 4 million
Small & Medium Enterprises - US $12 million – (2) Loan Portfolio Guarantees
Restrictive lending practices by private banks prevent many small and medium-sized enterprises (SMEs) from obtaining credit. High collateral requirements and short repayment periods double or triple the costs of small business loans compared to those for large businesses. To help SMEs in El Salvador, USAID is partially guaranteeing loans made by two local commercial banks, Banco Salvadoreño and Banco ProCredit. This allows the banks to offer small businesses medium and long-term loans, increase loan amounts and reduce their collateral requirements. As a result the two banks have made up to $12 million available to lend to this underserved market. The banks’ increased investments have development impacts for both sides of the loans. Small business has access to medium-term financing and larger loans, giving them capital at lower interest rates. For the banks, USAID’s risk-sharing motivates them to modify their credit policies, strengthen their loan operations and better serve an expanding group of customers.

AMC
Apoyo Integral
Housing – US $4.8 million Loan Portfolio Guarantee
USAID/El Salvador in 2008 designed a loan portfolio guarantee of $4.8 million with two banks, AMC and Apoyo Integral, to enable low-income borrowers to use remittances to obtain housing loans. The guarantee is strengthened by complementing technical assistance to Microfinance International Corporation, a US-based broker that has a Global Development Alliance with USAID.

GRENADA

Royal Bank of Trinidad & Tobago
Small & Medium Enterprises - US $4 million - Loan Portfolio Guarantee
In September 2004 Hurricane Ivan devastated the island of Grenada. Businesses damaged by the storm were unable to obtain private capital because of inadequate collateral. Part of USAID’s response to the country’s reconstruction efforts was a partial guarantee on up to $4 million designed to increase the private financing available from the Royal Bank of Trinidad & Tobago (RBTT). Businessmen can now obtain financing and speed re-development of the country’s economy. The loans are helping businesses to renovate, reemploy people, and offers a productive private sector future investment opportunities.

GUATEMALA (3)

Genesis Empresarial
Microfinance - US $5 million - Bond Guarantee
Genesis Empresarial is a rural business development consultancy with extensive experience financing and providing technical assistance. USAID created a partnership with Genesis to take advantage of their experience with integrated community development and income-generation activities at the micro level in Guatemala to facilitate access to financing among micro entrepreneurs, particularly in rural areas. USAID established a bond guarantee with Genesis Empresarial to support the issuance of pagarés (promissory notes) to increase their working capital, expand to new departments with the opening of nine new branches, and lower interest rates to their customers. Genesis is focused on increasing its market share by expanding in to new under-served rural markets and offering more competitive interest rates to its customers.

Banco del Café
Small & Medium Enterprises - $25 million – (2) Loan Portfolio Guarantees
To promote rural lending, USAID provided two loan portfolio guarantees to Banco del Café, an established Guatemalan bank with a strong rural presence. The bank has made a strategic decision to grow its microloan business, and the bank president views the guarantee as the right tool to support this new initiative. USAID’s objective is to increase rural household incomes and food security, with special emphasis on small farmers and microentrepreneurs. The guarantees also supports improving the management of urban growth in targeted areas, in particular the expanded and equitable delivery of urban services in selected market towns.

GUYANA

Institute for Private Development
MSME – US $5.8 million Loan Portfolio Guaranatee
USAID/Guyana in 2008 developed a loan portfolio guarantee that will mobilize $5.8 million to be loaned by the Institute for Private development. The guaranteed loans will be targeted at Guyanese micro, small, and medium enterprises (MSMEs) in the prodctive sectors. Businesses involved in agriculture, aquaculture, manufacturing, wood products, and eco-tourism are able to access these guaranteed loans.

HAITI (4)

Sogebank
Société Financière Haitienne de Développement, S.A. (Sofihdes)
Small & Medium Enterprises - US $5 million - (2) Loan Portfolio Guarantees
A USAID loan portfolio guarantee to Société Financière Haitienne de Développement, S.A. (Sofihdes) is helping increase medium-term lending to productive sectors in Haiti. The guarantee supports a long-time partner that is serving a unique niche in the market. Sofihdes is a development finance corporation that has the mandate and expertise to offer medium-term loans to sectors that will generate employment and contribute to the country’s economic growth. USAID/Haiti is using the guarantee to support the continued growth and expansion of Sofihdes for up to US$2 million in new loans made during the transition to a new government.

USAID is also using a loan portfolio guarantee to stimulate economic growth and employment generation during a period of political transition. Through a risk sharing partnership with Sogebank, USAID is facilitating lending of up to US $3 million to sectors that Sogebank deems have employment and growth potential, including textile manufacturing, fruit and vegetable export, micro and very small enterprises involved in various services, art, handicrafts, and light manufacturing.

Sofihdes
Acme
MSME – US $6 million (2) Loan Portfolio Guarantee
USAID/Haiti in 2008 developed two loan portfolio guarantees to stimulate lending to micro, small, and medium enterprises (MSMEs) in the productive sectors, including agriculture, textiles, and manufacturing. The guarantees will spur lending to businesses that produce jobs and productivity in Haiti, leading to economic growth.

HONDURAS (4)

Covelo Foundation
Small & Medium Enterprises/Microfinance – $2 million - Loan Portfolio Guarantees
Fundacion Covelo, a Honduran microfinance institution, gives loans to micro-and small-sized enterprises engaged in non-traditional agriculture, wood products, specialty coffee, or light manufacturing. With an existing $1 million guarantee from USAID, Covelo has made 132 loans totaling half a million dollars. No claims have yet been reported. Following the success of this test of the financial markets’ interest in lending to agribusinesses, Covelo designed a $2 million loan portfolio with a second USAID guarantee. This includes technical assistance to borrowers growing non-traditional crops and doing small-scale food processing. Emphasis is placed on appropriate irrigation technology, international standards of quality control, and financial budgeting.
Atlantida Bank - $ 3 million

Covelo Foundation - $ 1 million
Small & Medium Enterprises/Microfinance – $4 million - Loan Portfolio Guarantees
In Honduras, USAID is using two loan portfolio guarantees to target lending by two financial institutions for micro, small and medium enterprises in need of access to financing, especially in agribusiness, light industry/manufacturing and tourism. These targeted sectors and enterprises provide significant economic growth opportunities, especially considering employment, investment and export potential.
One of the entities, Atlantida Bank, is a large commercial bank with significant loan portfolios and local branches throughout Honduras, in both urban and semi-urban areas. Despite its size, it does not lend extensively to small businesses. The second institution, a non-governmental organization (NGO), operates as both an apex and retail microfinance institution. It is predominantly focused on activities that increase the access of credit to micro and small enterprises. However, the NGO, Covelo Foundation, has a limited capital base to extend its portfolio of loans to allow for larger loan sizes with longer maturities to its increasing small business clientele, while maintaining competitive market-based interest rates. Loans to firms operating in these sectors are covered under the loan portfolio guarantees, although the final decision to extend credit remains with the two lending institutions.

Banco De Occidente, S.A
Infrastructure - $5 million- Loan Portfolio Guarantee
This project, in the short term, provides a line of credit to targeted municipalities in Honduras that is currently unable to obtain financing for infrastructure development from the private sector. In the long-term, this project will help introduce local public finance to financial markets and support the development of a municipal finance system in Honduras by demonstrating that local governments are sound and viable credit recipients capable of managing and implementing municipal-financed infrastructure projects. In addition, the market for this service is expected to develop sufficiently so as to provide lower-cost, long-term financing for environmentally friendly infrastructure projects.

JAMAICA(5)

National Commercial Bank of Jamaica Limited
Small and Medium-sized Enterprises - US$5 million - Loan Portfolio Guarantee
Many small and medium-sized businesses in Jamaica are underserved by local financial institutions. These entrepreneurs include women- and family-owned and operated businesses, as well as those with limited collateral, intermittent cash flows and longer maturity loan needs. One of Jamaica’s leading financial institutions, the National Commercial Bank of Jamaica Limited, is using a guarantee from USAID to expand its current lending guidelines to provide loans for these groups anywhere on the island. USAID’s guarantee will cover up to US$5 million in loans by NCB to small and medium-sized enterprises, including key competitive industries and sectors in agriculture, tourism, arts and culture, information and communications, education, and manufacturing. These sectors have been identified by the Government and private sector of Jamaica as key to the country’s international competitiveness. They need to be strengthened in order for Jamaica to participate fully in trade agreements, including the Caribbean Single Market and Economy, Free Trade Area of the Americas, and the World Trade Organization.

Jamaica National Building Society
Housing/Small & Medium Enterprises - US $8.5 million - Loan Portfolio Guarantee
USAID, in partnership with Jamaica National Building Society (JN), is stimulating lending (1) for a new loan product to enable poor Jamaicans to secure formal land title and (2) to micro, small, and medium-sized businesses affected by Hurricane Ivan by providing JN with a 50 percent guarantee covering up to $8.5 million in new loans. With the guarantee, JN has developed a new product to help eligible households bridge the financial barrier and obtain formal title to their land. This new product expands on Jamaica’s national campaign to increase land titling for its citizens. JN can offer loans of approximately US$700 for approved applicants to finalize and obtain title. This new product, to facilitate the conversion of property from an informal asset into a working asset, is the only product available in the market.

Royal Bank of Trinidad & Tobago Ltd. - Jamaica
Environment - $5 million - Loan Portfolio Guarantee
This guarantee facilitates lending for two general purposes: 1) Small and medium-sized hotels and manufacturing firms for environmental retrofitting projects including the installation of new and improved equipment for energy efficiency and water conservation and 2) Small and medium-sized enterprises for a range of activities including business expansion, fixed asset improvement, working capital, and equipment purchases.
This project improves the development impact of USAID to increase financing to the micro and small business sector, and assists the Government of Jamaica (GOJ) in its efforts to improve the overall business environment in Jamaica. Loan portfolio guarantees provide an excellent support to complement ongoing programs to strengthen the SMME sectors. Using a loan portfolio guarantee, USAID, working together with the selected local commercial bank/s, brings in the necessary investments to stimulate the growth of SMME. The guarantee together with current USAID projects will result in sustained economic growth in these sectors. Without expanding sustainable economic opportunities for MSMEs growth, the goals of many USAID/Jamaica programs may not be met. It is an essential component of USAID/Jamaica’s mission. Additionally, it will further cement USAID’s commitment to the GOJ implementation of its competitive strategy for the private sector.

Jamaica National Building Society
National Commerce Bank
MSME – US $8 million Loan Portfolio Guarantee
In 2008 USAID/Jamaica structured two separate loan portfolio guarantees with Jamaica National Building Society and with National Commerce Bank. The guarantees will mobilize $8 million in loans targeted to micro, small, and medium enterprises (MSMEs). One specific group to be targeted is businesses that are recovering from disaster, especially important in a country frequently affected by hurricanes.

MEXICO (2)

Union Progreso - Wells Fargo
Micro/Small Enterprise - $1 million - Loan Guarantee
Expired - This project sought to increase the amount of capital available to Unión Progreso to provide microfinancing to marginal groups and the poor residing in rural Chihuahua. The guarantee supported USAID’s objective to increase microenterprise development, which strengthens the institutional base for sustainable microenterprise growth by supporting Mexican initiatives. The project also peripherally supported environmental preservation and energy conservation.

FinComún
Micro/Small Enterprise - $2.5 million - Loan Portfolio Guarantee
Expired - This guarantee was designed to solidify the institutional base for sustainable microenterprise growth, including strengthening the management of financial services and promoting mechanisms to meet the needs of microenterprises. By stimulating increased market-based lending by FinComún to microenterprises, the $2.5 million guarantee helped to demonstrate the existence of a large, profitable market for such financial services.

NICARAGUA (5)

FINARCA - $2.5 million
BanPro - $2.5 million
Health - US $5 million - (2) Loan Portfolio Guarantees
In Nicaragua, USAID has set up a loan portfolio guarantee to support private health care providers known as Empresas Medicas Previsionales (EMPs). By structuring the the guarantee to foster competition among local financial institutions, USAID hopes to increase lending to these health facilities at attractive terms. These two loan portfolio guarantees increase access to working capital and equipment investment for targeted health service providers by sharing the risk on new loans with two local financial institutions, FINARCA and BanPro. USAID included the two banks to foster competition, which it believes will lead to more attractive loan terms for end borrowers. Each of the financial institutions begins with a ceiling of $1 million. When that ceiling has been reached, the financial institution can request an increase from USAID until the overall guarantee ceiling of $5 million has been utilized. Through this competitive approach, USAID hopes to encourage utilization.

FINARCA - $10 million
BanPro - $10 million
Small & Medium Enterprises - US $20 million - (2) Loan Portfolio Guarantees
COncurrent to the guarantees described above, USAID set up a series of loan portfolio guarantees to increase access to working capital for small and medium-sized businesses working in light manufacturing, agriculture, tourism, aquaculture, and service industry; and export processing zone (EPZ) construction. Services eligible for loans under this program include those that provide services to exporting companies or companies that supply exporters. USAID/Nicaragua seeks to support business clusters where each firm plays a role in developing and selling products for export. USAID/Nicaragua hopes to maximize potential synergies among the borrowers in specific clusters, particularly between small and medium-sized enterprises that have the potential to become exporters and/or suppliers to exporters of goods and services.

Bancentro
Micro/Small Enterprises - $5 million - Loan Portfolio Guarantee
The lack of commercial financing in Nicaragua continues to be an obstacle to the development of new sectors and also hinders the successful recovery of historically profitable sectors emerging out of recent crises such as the El Niño phenomenon and Hurricane Mitch. The loan portfolio guarantee is a critical component of the Mission’s economic growth program, serving both to stimulate domestic lending to new or under-served sectors, and encourage rural development.

PANAMA

Banco Panameño de la Vivienda (Banvivienda)
Education - US $5 million - Loan Portfolio Guarantee
In Panamá, USAID extended a guarantee to Banco Panameño de la Vivienda (Banvivienda) to create a new loan product for students attending Universidad Interamericana de Panamá (UIP). The guarantee will enhance a pilot structure designed to develop a private sector student loan product. First, Banvivienda will extend up to $5 million in loans to UIP’s students. Banvivienda will be responsible for underwriting and servicing the loans. UIP will dedicate 20 percent of the tuition charged to students in the loan program to a reserve fund. The fund will take a first loss position. Once it has been depleted, USAID will share 50 percent of additional loss of principal with Banvivienda.
USAID’s guarantee facilitates access to financing for lower to middle-income students who are interested in pursuing a university-level education. The investment in professional training in careers that complement the U.S.- Panama Free Trade Agreement will help Panama take full advantage of market strengths and develop new trade opportunities. USAID’s partial guarantee is intended to demonstrate the profitability of student loans and encourage similar long-term private financing from other local commercial banks.

PARAGUAY

Banco Regional
SME – US $3.5 million Loan Portfolio Guarantee
Paraguay’s first loan portfolio guarantee, with Banco Regional for $3.5 million, was developed by USAID/Paraguay in 2008 to stimulate lending to small and medium enterprises (SMEs). SMEs in Paraguay face difficulty accessing longer-term credit. Guaranteed loans will have a tenor of at least two years, encouraging the SMEs to make capital investments necessary to grow and expand business operations.

PERU (8)

Edpyme Confianza - $2 million
CMAC Piura - $6 million
CMAC Sullana - $6 million
Microfinance - $14 million – (3) Loan Portfolio Guarantees
Although agriculture in Peru may be a viable business sector, its businesses cannot find the investments to help them expand and grow. Local financial institutions are reluctant to make longer-term loans preferring to focus on working capital lending with shorter timeframes. To address issues of poverty throughout Peru, USAID has set up loan portfolio guarantees with three financial institutions: Edypme Confianza, CMAC Piura, and CMAC Sullana. USAID’s loan portfolio guarantees diminish the risk perceived by financial institutions and encourage longer-term lending to even the smallest micro enterprises with fewer than 10 workers. These guarantees encourage financial institutions to lend in targeted geographical areas and improve access to credit for micro, small and medium-sized enterprises in rural areas--especially the underserved agro-industrial sector.

Banco de Credito
Environment - $2 million - Loan Portfolio Guarantee
This activity provides a local bank with a loan portfolio guarantee to provide capital for small and medium enterprises in Peru willing to introduce, upgrade or retrofit industrial processes that utilize cleaner technologies. End-of-pipe projects are also be eligible, provided that the corresponding projects could generate positive cash flows for the debtor, for instance, in avoiding pollution fines or penalties from the government, or in new sales generation to international clients requesting operative environmental standards. The activity promotes and supports the development of sustainable financing mechanisms for cleaner production and directly contributes to USAID’s ongoing environmental initiatives.

FOGAPI
Micro/Small Enterprise - $2 million - Loan Portfolio Guarantee
" Increasing Microfinance for the Poor Activity”, or IMPACT, is a five-year USAID/Peru program designed to foster the growth and sustainability of microfinance institutions (MFIs) by providing MFIs with technical assistance, training, specialized services, and funding. Over the years, IMPACT has played an important role in the growth of village banking MFIs; the transformation of credit non-governmental organizations (NGOs) into EDPYMEs (a type of financial institution specialized in microcredit), and the expansion of important industry-wide services such as credit history reports and financial procedure transparency. The guarantee supports the extension of guarantees by FOGAPI, a guarantee fund for small industries, to banks working with the microfinance sector. The guarantee connects small and micro entrepreneurs with much-needed capital by encouraging FOGAPI to offer guarantees to unregulated microfinance institutions and thus build confidence between credit NGOs, EDPYMEs and commercial banks.

San Martin Rural Savings - $6 million
Senor de Luren Rural Savings & Loan - $4 million
Los Liberatores de Ayachucho - $2 million
Agriculture – US$ 12 million - (3) Loan Portfolio Guarantees
In support of USAID’s mission-wide taskforce on Alternative Development in Peru, three guarantees are being used to expand the availability of financial resources from various private-sector sources to finance the development of well-structured and organized crop production value chains. The sources of private capital include rural savings and loan banks, buyers, and input suppliers. USAID's Poverty Reduction and Alleviation (PRA) program in Peru organizes and facilitates closed-market transactions between these financing sources and small-scale agriculture producers in the Alternative Development Zones by creating upfront buyer-producer contracts, i.e. “contract farming”, with an underlying need for external financing to support the producer's operational costs, predominantly as working capital. Loans guaranteed by USAID are exclusively available to crop producers participating in the PRA value chain program.