ACDI/VOCA Reaches Financial Services Milestone: $1 Billion in Loans Disbursed
This month ACDI/VOCA and its partner financial institutions hit a significant milestone: Disbursements topped $1 billion in loans helping to create new economic opportunities for people who cannot access commercial credit—rural residents, small farmers, and owners of microenterprises and small businesses.
“Increasing access to financial services is about helping more people grow their businesses and increase their incomes,” says Fred Smith, ACDI/VOCA senior managing director of financial services. Reaching $1 billion total credit extended represents more than 625,000 loans to small-scale farmers and entrepreneurs—nearly 40 percent women, he adds.
Working with farmers and rural communities for more than 45 years, ACDI/VOCA understands from the ground up how important credit is to expanding peoples’ economic opportunities. ACDI/VOCA experts like Smith also know firsthand the varied challenges institutions face in delivering financial services to farmers.
“We have helped develop more than 20 financial institutions over the past two decades that help small-scale farmers and enterprises expand their businesses in a variety of ways,” Smith says. “Today, nine of these financial institutions we founded serve more than 100,000 customers with combined portfolios of more than $200 million. Now that’s a sustainable return on investment.”
Linking People to Markets, Better Livelihoods
ACDI/VOCA brings a unique market orientation to the full spectrum of micro, small and medium-sized enterprise (SME) lending that reflects its commitment to empowering people to succeed in the global economy. By helping people manage their cash-flow constraints and invest in economic opportunities, we bring benefits to families, communities, and national and regional economies.
A Woman Farmer in Kyrgyzstan
Partners like Bai Tushum in Kyrgyzstan provide micro and small loans to many family businesses that other microfinance institutions miss, including small farmers like Cholpon. With her $780 loan, Cholpon (pictured at top left) was able to buy young bulls, which she reared and later sold at market for a profit. With that money, she bought three milk cows; four loans later, she has a dairy farm and sells milk, cream, sour cream and butter. Her original annual income of $150 has increased by five times.
ACDI/VOCA helps these microenterprises develop and establish linkages with processors, transporters, warehouse facilities and buyers along value chains leading to larger markets with greater economic opportunities and rewards for their labors.
A Small Print Shop Owner in Iraq
In Northern Iraq, Soran, a print shop owner in Erbil, used money he borrowed from Al-Thiqa to purchase a Heidelberg “Speedmaster” offset printing press and a generator to power it. By increasing the quality and quantity of his print products, he is able to provide valuable information and communications services to a nation that is struggling to rebuild itself.
“Because of the Al-Thiqa loans, I’ve been able to develop my business,” says Soran, who now employs 17 people, including three of his brothers.
Soran and other small business owners need accessible financial services to expand their businesses, and compete and survive in ever-changing markets. These SME businesses are widely recognized as the engines of economic growth and job creation in most countries. In developing countries with emerging financial markets, they often have very few financial options. Family resources are limited and commercial lenders generally cater to the needs of larger companies with developed businesses that offer collateral and lower risk.
A Large Fruit Processing Plant in MENA
As businesses and economies grow, small businesses rely on, and sometimes grow into, medium-sized enterprises that need larger loans. One of our partners in the Middle East and North Africa region, for example, filled such a need by providing a $4.3 million construction and equipment-purchasing term loan to an entrepreneur to build a state-of-the-art fruit juice concentrate processing plant. As a critical lead firm in a very large value chain, the processing plant has opened a whole new market to local farmers. Over time, up to 100,000 farmers will have a new market supplying fruit to the local plant for juice processing.
$1 Billion Strong and Growing
“We help build financial institutions that fill a credit need for business owners and farmers,” Smith says. “Another way to look at this is that we’ve helped build a global financial services industry for micro, small and mid-sized players that is $1 billion strong and growing.
“Our experiences and the expanding businesses in the various countries where we work speak volumes about the financing gap and huge opportunities that exist in emerging markets,” Smith adds. “By meeting this development challenge head-on and piloting innovative solutions to close the financing gap, we help develop the latent economic potential that small and medium-sized enterprises bring to economic growth and the business of reducing poverty.”
Learn more about ACDI/VOCA’s Financial Services programs.
