AGFUND Mulls $5-M Microfinance Bank Here As Asian Regional Hub
Article by: Emmie V. Abadilla
Published: February 27, 2013
As part of its "social business" drive, the Arab Gulf Programme For
Development (AGFUND), a non-profit organization based in Riyadh, will
open a micro-finance bank in the Philippines capitalized initially at
US$5 million and modelled after the Grameen system, announced Executive
Director Nasser B. Al-Kahtani.
AGFUND has successfully implemented seven Grameen initiatives. It
started in 2006 in Jordan, followed by Yemen, two years later, where its
initial $5-million investment quadrupled to $20 million in 4 years.
The Arab development organization also duplicated their micro-finance
projects in Bahrain Syria, Lebanon, Bahrain and in Sierra Leone, Africa.
Now, it is finalizing its micro-finance banking license in Sudan and
Palestine.
Next year, AGFUND expects to start operating its micro-finance bank in
the country, its first Asian site. "We are not limited to Arab
countries. We want to expand Southeast Asia and make the Philippines our
hub in the region," he explained.
AGFUND, which will take 40 percent stake in the venture, plans to put in
USD$2million seed money to be matched by a counterpart investment from
the Philippine government and the private sector.
A couple of months ago, AGFUND's team has completed the feasibility
study for its microfinance bank. Now, it is discussing with the local
chambers of commerce, the Department of Finance and the Bangko Sentral
ng Pilipinas (BSP) for its licensing.
"We we will have a follow-up meeting with BSP on Friday (March 1, 2013)
this week," according to the Executive Director. "The government is very
supportive. Once we get a partner, we will submit our application for a
license."
AGFUND President and Founder, Prince Talal Bin Abdul Aziz, took Grameen
Bank Founder Muhammad Yunus as a strategic partner in the region for its
social business initiative.
Prince Talal, one of the world's leading humanitarians, has undertaken
the personal mission to alleviate the suffering of the poor,
particularly women and children, in developing nations.
The Grameen Bank (GB) of Bangladesh, formally launched in June 1979, is
one of the world's most successful financial institutions banking with
the poor.
So far, in the Philippines, where 56 percent of households still live
under the international poverty line, the Grameen system has been
replicated by at least 27 entities in the past two decades.
Analysts concluded that "any attempt to replicate or expand the Grameen
program should be carried out with great caution."
The analysts maintained it was donor-driven. Internal resource
mobilization proved minimal with inadequate interest rates. The costs,
shared about equally between government and replicators, were
exorbitant. Excessive brokering of low-cost funds also discouraged
people from saving.
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