Washington, D.C. (PRWEB) September 15, 2005
Grameen Foundation USA today announced a new global program that will make as much as $50 million available in credit guarantees to poverty-focused microfinance institutions that provide tiny loans to help poor people to start, sustain or grow very small, self-sustaining businesses.
The GFUSA Growth Guarantees program, developed with Citigroup, was unveiled at the inaugural meeting of the Clinton Global Initiative, a nonpartisan conference in New York City intended to identify immediate and pragmatic solutions to some of the world's most pressing problems, including global poverty.
"Microfinance is an immediate and proven solution to reduce poverty on a global scale," said Alex Counts, president of Grameen Foundation USA and a participant at the historic three-day conference. "The GFUSA Growth Guarantees will guarantee credit to microfinance institutions that typically provide loans of $40 to $200 to poor families, especially women, to start entrepreneurial ventures."
Counts continued: "The GFUSA Growth Guarantees will enable microfinance lenders to assist larger numbers of impoverished people who are determined to lift themselves from poverty by starting businesses of their own. This ground-breaking program is a pragmatic social and economic investment for the future of our planet because it will help millions of people escape poverty."
GFUSA has secured commitments for more than half of the program's $50 million target. The first closing is near and GFUSA seeks to reach its target within the next 12 months. The anticipated $50 million program could guarantee up to US$300 million to be loaned to poor people around the world.
The GFUSA Growth Guarantees program is designed to respond with flexibility to the ever-changing global financial service landscape and the needs of growing microfinance institutions. It will offer a wide range of financing options, including direct lending, bonds and securitizations. The financing options will be customized, by country, to meet local financial regulations.
GFUSA Growth Guarantees will be privately funded in a manner that will pave the way for more private capital to join the movement against global poverty. Bob Annibale, Global Director of Citigroup's Microfinance Group, said: "This program structure is unique because individual donor guarantors don't give their money, but rather offer their credit to establish a pool of guarantees in the form of Standby-Letters of Credit (SBLCs), which support the anticipated $50 million program. Donor guarantors will continue to hold their assets and realize returns on their portfolio while microfinance institutions gain access to increased financial resources." In coordination with GFUSA, Citigroup will facilitate the issuance of the guarantees.
"Through the GFUSA Growth Guarantee program, we will make the resources of the capital markets work for the poor," Counts said. "A recent United Nations report found that 1.2 billion people are living on less than $1 a day and that one child dies from poverty every three seconds. Microfinance is a solution that can improve the quality of life for many of these people dramatically, and statistics show that the loan repayment rate is 99 percent, which is remarkable."
The Clinton Global Initiative Conference was scheduled to coincide with and complement the Millennium Summit of the United Nations General Assembly. The United Nations has already declared 2005 the "International Year of Microcredit."
"Grameen Foundation USA is pleased to participate in this effort by President Clinton to bring together world leaders and a diverse group of organizations and individuals to discuss issues that include the alarming rise in global poverty," Counts said.
About Grameen Foundation USA
Grameen Foundation USA (GFUSA) is a global non-profit organization that combines microfinance, technology, and innovation to empower the world's poorest people to escape poverty. Founded in 1997, GFUSA has established a global network of 50+ partners in 22 countries that has impacted an estimated 5.5 million lives in Asia, Africa, the Americas, and the Middle East.
The Foundation sprang from the Grameen Bank of Bangladesh. Grameen Bank was started in 1976 by an economics professor, Dr. Muhammad Yunus, who was convinced that women could break through poverty by taking tiny loans to start or expand tiny businesses. Today, Grameen Bank serves nearly 5 million borrowers, with 10,000 families escaping poverty every month. As strategic global partners, GFUSA and Grameen Bank share a common vision, knowledge and success models to accelerate the microfinance industry's impact on the world's poorest people. Dr. Yunus, the founder and director of Grameen Bank, is a founding and current board member of GFUSA. For more information on Grameen Foundation USA, please visit http://www.gfusa.org.
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