New FPM SA fund to provide tailor made financing for MSMEs in the DRC

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Kinshasa, 26 September 2014 – Today the first General Assembly and meeting of the Board of Directors of FPM SA (Fonds pour l’inclusion financière en République Démocratique Congo) takes place in Kinshasa, the Democratic Republic of the Congo (DRC). FPM SA (FPM), a new Fund for Financial Inclusion will support financial institutions targeting small and medium enterprises in DRC. This new financial instrument will complement “FPM ASBL” which has been operating in the DRC since 2007 and focuses on providing Technical Assistance (TA) to Congolese Finance Institutions. More than 50 TA-projects have been carried out so far.

FPM will benefit from capital contribution of the KfW, the German Development Bank, for about 13 Mio. USD, the Belgian Investment Company for Developing Countries (BIO) for 8 Mio. USD, the Dutch Catholic Organisation for Relief and Development Aid (Cordaid) for 4 Mio. USD and the Belgian microfinance fund Incofin CVSO for 100k USD. The objective of the Fund is to provide over 5 years up to US$60 million medium-term credit lines to Congolese financial institutions. These credit lines will be used by the financial institutions to finance micro small and medium enterprises in DRC. Incofin Investment Management, a Belgian specialist investor in rural microfinance will act as the fund advisor for FPM SA, bringing on board its specific experience and knowledge of the financial services market for micro, small and medium enterprises in the DRC.

Improving access to finance for micro, small and medium enterprises

Most Congolese micro, small and medium enterprises (MSMEs) do not have access to financial services as financial institutions are still giving priority to corporate clients. As a result of this lack of access to financial services, most MSMEs develop slowly, stay in the informal sector and are very sensitive to economic and market changes. FPM aims at supporting the development of those financial institutions with a clear mandate and strategy towards small and medium enterprises. As such, FPM will target sustainable and well-governed financial institutions including microfinance institutions, cooperative savings organizations and commercial banks serving MSMEs. By supporting the development of an inclusive financial system in the DRC, FPM will play a role in poverty reduction, job creation and sustainable economic development.

"By supporting FPM we contribute to the strengthening of access to finance in DRC where only 5% of the population has access to financial services, and in particular, MSMEs will benefit. They are an important driver of the local economy and create jobs. This way, broad levels of the population will experience an increase of income ", said Doris Köhn, Member of the Management Committee KfW Development Bank.

“The incorporation of the FPM Fund crowns the work of FPM ASBL, a proven supporter of local entrepreneurship in DRC. The FPM Fund creates access to financial services for small entrepreneurs, allowing them to contribute to the development of their families and region. This crucial role FPM will play in entrepreneurship as the driver of local development is at the core of our mission.” remarked Luuk Zonneveld, CEO of BIO.

"Lack of economic opportunities and high unemployment rates are the most critical determinants triggering civil conflict. When entrepreneurs try to expand and grow their businesses, they often lack professional business skills, access to markets, networks, technology and not the least, access to finance. Our purpose is to promote greater resilience and peaceful development in fragile contexts through the stimulation of MSME’s (micro, small & medium enterprises) in their economic development." Laure Wessemius Chibrac, Director Cordaid Investments.

“As a Belgian fund advisor we are proud to support the DRC country’s microfinance sector. Figures confirm the potential of the sector: the total assets for the MFI sector and cooperatives amounted to only 191 Mio. USD, which is extremely low for a country supporting a population of 75 million”, explained Loïc De Cannière, Managing Director of Incofin Investment Management, which will be acting as fund advisor of the FPM Fund.

Technical Assistance

FPM will closely work together with FPM ASBL to identify and support promising institutions in underserved areas that can benefit from Technical Assistance (TA) to enable them to introduce or expand new technologies (such as mobile banking) or improve their quality of operations. The donors of FPM ASBL include the World Bank / Copirep, KfW, the United Nations Programme for Development (UNDP) / Swedish International Development Cooperation Agency (SIDA) and United Nations Capital Development Fund (UNCDF). Given the fragility of most financial institutions that serve the MSME sector, the availability of TA is crucial for optimizing the social and financial impact of FPM SA.