IFC helps BFL increase lending to women-owned businesses
IFC helps BFL increase lending to women-owned businesses
International Finance Corporation (IFC), a member of the World Bank Group, has signed an investment and advisory services agreements with Banque Franco-Lao (BFL) to boost financing to small and medium enterprises (SMEs) owned by women in Laos.
The agreement was signed in Vientiane on Thursday by BFL Managing Director Mr Guillaume Perdon and IFC's Head of Office Mr Phongsavanh Phomkong, witnessed by senior bank officials and representatives from the Lao Women's Business Association.
It is hoped that the deal will enable BFL to provide much-needed funds to help women expand their businesses and create more jobs for them.
In Laos, women own 31 percent of small and medium enterprises but only 16 percent have a loan or overdraft because they tend to use savings or informal funding to fulfil their financing needs, and this hampers the growth potential of their businesses, according to a press release.
“BFL is seeking to grow its loan portfolio to Lao women-owned SMEs but lacks adequate experience to assess the risk profile of the asset class in the Lao market,” said the Managing Director of BFL Mr Guillaume Perdon recently.
With IFC's support, BFL – set up in 2008 by French bank Bank Populaire and Lao bank BCEL – aims to triple its women-owned SME loan portfolio from US$13.5 million in 2014 to US$37 million in 2017.
Under the agreement, IFC will provide a risk guarantee for BFL's portfolio of loans to women SMEs in Laos; the facility is expected to reach US$10 million, with BFL and IFC sharing the potential risk arising from BFL's future portfolio of credit to women's businesses.
According to the agreement, IFC will also help BFL to assess its risk growth strategy, supporting the lender in tracking and monitoring loans provided to women businesses, which make up 46 percent of the bank's portfolio, and their financial behaviours.
Meanwhile the IFC's Office Head Mr Phongsavanh Phomkong said, “The agreement between IFC and BFL is an innovative way to mobilise funding from private banks to support small and medium enterprises in Laos.”
He noted that this was the first financing facility with a specific focus on women enterprises in Laos and it will also help to expand access to credit for women-owned businesses to support their growth and generate more jobs.
The combined investment and advisory services to BFL comes from the Women Entrepreneurs Opportunity Facility – seeded by IFC and the Goldman Sachs Foundation.
It is the first-ever global finance facility dedicated exclusively to financing small and medium businesses owned and run by women in developing countries and aims to enable 100,000 women to access capital.
