ACCION Gets Brazil’s President approval to Launch New Microfinance Institution in Amazonas

Microfinance Focus, Jan 26, 2010: ACCION International, global microfinance company, announced yesterday that Brazilian President Luiz Inacio Lula da Silva has approved its application to establish ACCION Microfinancas, a new microfinance organization in the state of Amazonas in Brazil’s remote northern region, according to a press release.  It was in Recife, Brazil that ACCION first initiated the concept of microlending, in 1973.

Joining ACCION as an equity partner in the new venture is the Multilateral Investment Fund (MIF) of the Inter-American Development bank (IDB), which will assume an 18.1 percent stake.  Private investor Luiz Felipe D’Avila and other private investors will assume a total of 8.5 percent.  ACCION will hold 73.4 percent of the organization.
ACCION Microfinancas will begin operations in Manaus, the largest city in Amazonas, with plans to extend services to cities throughout Brazil’s northern region.  The northern region, comprising seven states with a total population of about 14.7 million, is home to an estimated 1.9 million microentrepreneurs, only 8 to 10 percent of whom have received any kind of loan from a bank or microfinance organization.

“We are particularly excited by the prospect of extending financial access in Amazonas, one of the most underserved regions of a country where microfinance, overall, remains nascent,” said Michael Schlein, President and CEO of ACCION.  “This underscores our commitment to deliver such services to some of the developing world’s most needy regions, and follows closely on the announcement of our investment in Saija Finance, a microfinance startup in Bihar, India.”

ACCION Microfinancas plans to apply new approaches and innovations in microfinance to best serve the needs of Amazonas microentrepreneurs.  These include employing a credit scoring and a cash flow-based credit assessment model; making use of Brazil’s innovative correspondent banking system to partner with banks and extend services through retail stores and other outlets; and deploying payment technologies such as PDAs, prepaid bank cards and cell phones.

In addition to conventional working capital loans, ACCION Microfinancas envisions diversifying its product offering over several years to include products such as lines of credit, credit cards, longer-term fixed-asset loans, financial education and, eventually, microinsurance products through alliances with insurance companies.
“ACCION’s new operations in Amazonas will be serve as an incubator for new approaches to credit underwriting, create new partnerships that extend access to services, develop innovative technologies, and diversify financial product offerings,” said Tomas Miller, senior investment officer at the IDB’s Multilateral Investment Fund.  “The MIF is proud to be a partner in this new venture.”

Private investor Luiz Felipe D’Avila added, “Stimulating entrepreneurship through microfinance is one of the most efficient ways to help people out of poverty.”

ACCION will provide intensive management support in the initial years of ACCION Microfinancas’s operation, deploying ACCION staff in key management positions as part of a plan to develop local capacity for long-term management of the institution.

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