The German development Agency KfW and the Dutch catholic development organization Cordaid have jointly launched FPM SA, a refinancing vehicle targeting microfinance institutions and MSME banks in the Democratic Republic of Congo (DRC).

Doris Köhn, Member of the Management Committee KfW Development Bank, said: “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 (micro, small and medium enterprises) 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.”

KfW contributed $13m, whereas Cordaid provided $4m.

In addition, the Belgian Investment Company for Developing Countries (BIO) has contributed $8m to the fund, and the Belgian microfinance fund Incofin CVSO has added $0.1m.

This new financial instrument complements FPM ASBL, which has been operating in the DRC since 2007 and focuses on providing Technical Assistance (TA) to Congolese Finance Institutions.

Luuk Zonneveld, CEO of BIO, said: “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.”

The objective of the Fund is to provide up to $60m medium-term credit lines over a period of five years to Congolese financial institutions.

Most Congolese 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.

Laure Wessemius Chibrac, Director at Cordaid Investments, said: “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 in their economic development.”

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.

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).