International Finance Corporation (IFC), a private sector arm of World Bank Group, has invested US$23.5 million (about Bt736 million) in four microfinance institutions (MFIs) in Myanmar, and is eager to invest more this year.
Vanessa Vizcarra Bianchi, IFC’s lead of financial institutions advisory services for Mekong Region, said in an exclusive interview that the organisation would invest in three or four more MFIs by the end of this year.
According to the statistics, there are more than 170 MFIs in Myanmar. The selection of strong partners therefore plays a crucial role in IFC’s plans for responsible finance, she said.
“Myanmar has a list of excellent players in terms of microfinance. When it comes to investing in some of them, it is really hard to decide which one, as there are so many good players in the market,” she said.
Before IFC decides to invest in a company, it usually learns about development impacts, including job creation and benefits to rural communities, to make sure financial inclusion and growth generation. Additionally, it usually observes if a particular institution has a clear mechanism, enough capacity to address potential challenges and proper measures on risk management. It also investigates who is behind that institution, she explained.
“Every time we work with a partner, we need to make sure what are development impacts and how they are related to this market. It is really important because one of our mandates is creating market strategies. Our strategy is to create the market,” she said.
“One of the key things is to work very closely with the management of institutions in order to make sure they are really committed to do responsible finance. The other thing is much related to specific capacity of the regulator.”
During the interview, Vizcarra Bianchi revealed three plans IFC would urgently undertake.
“Firstly, we will continue investing in our strong partners. Secondly, we need to continue generating capacity because it is one of the major priorities in microfinance in this market. Thirdly, we will help microfinance institutions overcome their funding challenges,” she said.
According to the expert, IFC has been working on its microfinance programme in Myanmar since 2014 in cooperation with the regulator and several institutions. Part of its investment goes to specific advisory programmes in which institutions must be committed to responsible finance.
IFC has been offering a week-long training programme on responsible finance for government staff and MFIs since October last year, in collaboration with Myanmar Microfinance Association. To date, it has trained 150 participants, one-third of who are civil servants while the others work for nearly 50 MFIs.
Trainings conducted in Yangon, Mandalay and Nay Pyi Taw would continue this year, aiming for more female participants in upcoming courses.
Vizcarra Bianchi said IFC also partnered with LIFT, a multi-donor trust fund, to introduce responsible finance principles and sound practices in Myanmar. She said the $3.6 million cooperation project is meant to be working with sectoral and institutional levels.
“At the sectoral level, the programme includes working with MFIs to support their development as well as capacity building for institutions and the government. At the institutional level, we have been getting into specific advisory programmes to create the market and generate development,” she said.
She said IFC had invested in $4.6 million in technical assistance for microfinance, 15 to 20 per cent of which went to responsible finance through a series of training, workshop and supporting strategies. The organisation would reinforce its advisory initiatives to enhance the capacity of financial institutions and mitigate lending risks at the industry level. It would also engage with the Financial Regulatory Department and MFIs to adopt client-protection principles.
Additionally, IFC has been supporting the development of a national credit bureau to promote credit information sharing among the lending institutions. Ongoing efforts have been made to develop a secured transaction system that would allow small and medium enterprises to access finance based on movable assets.
“Nothing is quick here. It is a work in progress which needs to be continued and reinforced,” said Vizcarra Bianchi.