Cordaid Investments has delivered on its promise of investing to overcome fragility. This week, we disbursed a loan to Maha Agriculture Microfinance in Myanmar, a country with a high need for social impact and economic growth, especially in rural areas. Once again, Cordaid Investments has acted as a pioneer in supporting growth in rural Myanmar.
(Farmer (left) and loan officer (right). Maha has 22,000 clients of which 100% are located in rural areas. © Cordaid)
Cordaid Investments’ ambition is to invest to overcome fragility. For this reason, 50% of the portfolio is located in countries that are ranked high, such as Myanmar, and very high in the fragility index by Inform (Index for Risk Management).
Rural areas lag behind
Myanmar is considered to be the last frontier market in Southeast Asia. In 2011, the country opened up economically after decades of military regime. Since then, Myanmar has gone through rapid changes. According to a World Bank recent report on Myanmar (Weathering Growing Risks, October 2019), GDP growth is 6.5% in 2018/2019 and the projection for the next year is 6.8%. The poverty rate halved from 48% to 25% between 2005 and 2017. The expectation is that this positive trend will continue. However, the level of poverty is 2.7 times higher in rural than urban areas, and limited agricultural growth suggests that poor agricultural households continue to see slower progress.
Reaching over 100,000 microentrepreneurs
Since 2015, Cordaid Investments Management has been supporting the development of the microfinance market of Myanmar, especially in rural areas. In partnership with LIFT, a multi-donor fund focused on improving lives in rural areas; and MFX, a socially-oriented company that supports impact investing with affordable hedging products, Cordaid Investments disbursed EUR 10 million to 4 MFIs. Our investment reaches over 102,000 microentrepreneurs, including thousands of small farmers in the last three years.
We believe we will be able to partner with other impact investors to further increase our social impact.
Hann Verheijen, Managing Director at Cordaid Investments
Late 2018, LIFT announced a second call for financial inclusion. Cordaid Investments decided to partner again with LIFT and MFX to further support the microfinance sector in Myanmar. For this second round, and in order to reach a higher social impact, Cordaid Investments has crowded in 3 European investors. Together, these 4 organizations will provide funding to 6 MFIs in Myanmar, totaling EUR 8.6 million. “We are excited to work with like-minded investors that aim to support the economic growth in rural Myanmar. We believe that this will be only the beginning and that in the medium term, we will be able to partner with other impact investors to further increase our social impact”, says Hann Verheijen, Managing Director at Cordaid Investments.
This week Cordaid Investments has successfully disbursed the first loan of LIFT’s second round. Luz Leyva, Director of Hedging Services at MFX: “Cordaid Investments is again a pioneer for the LIFT program”. Through the LIFT/MFX partnership, Cordaid Investments will be able to disburse loans in local currency to MFIs in Myanmar.
Accommodating individual needs of rural clients
With the collaboration of Rabo Rural Fund as B-lender, Cordaid Investments provided funding to Maha Agriculture Microfinance. Maha is a tier 2 microfinance institution that operates in 8 regions across the country. It has 22,000 clients, of which 100% are located in rural areas and 50% are women. Maha designs its products to accommodate the individual needs of rural clients. For example, the MFI offers farmer loans with more than 200 types of sub-loan products, depending on the crop type, geography and season.
Jan Postmus, Senior Investment Manager at CIMBV, “Maha is an MFI with a strong social mission, focused on rural areas and specifically smallholder farmers. With our loan, they will be able to further expand their portfolio in rural areas. We are simultaneously working on 5 deals with other MFIs. We estimate to disburse them in the coming months”.
With this second round of loans, Cordaid Investments will increase its social impact and further support the economic growth in rural Myanmar. For more information about our work in Myanmar, please contact us on [email protected] or have a look at the following articles: