In 2000, the cooperative Alterfin, in collaboration with its development cooperation partners (including the NGO platform 11.11.11, Oxfam Solidarité and SOS Faim), created the non-profit organisation Alterfin Guarantee Fund. Its role is to support partners in the South that lack sufficient guarantees or require financing in local currency, by providing guarantees or currency hedging solutions, in order to facilitate their access to financing and hence the development of their activity.
Unlike the cooperative, this fund is supplied entirely by donations. Currently, the Guarantee Fund has EUR 1.71 million; of this total, EUR 837,862 is used as collateral against the risk of default, thus facilitating the granting of financing to a dozen partners. The remainder of the Guarantee Fund’s capital is used to facilitate currency hedging for a growing number of partners who can now benefit from local currency loans in seven different currencies.
From 2018 onwards, the Guarantee Fund can also be used for an essential new aspect of providing support to partners: financing technical assistance projects. These projects aim to strengthen the capacities of certain partners, to ensure their financial, economic and social viability but also, indirectly, to reduce the risk of non-repayment of their loan. Some needs have already been identified, but financing for this type of project requires additional funding.
Thanks to a partnership with the King Baudouin Foundation, donations to the Guarantee Fund now benefit from a tax reduction. Donations must be at least EUR 40 per calendar year, and the tax reduction amounts to 45% of the amount paid.
The fund ‘Friends of Alterfin Guarantee Fund’ is managed by the King Baudouin Foundation. Donations EUR 40 or more per year made to the Foundation benefit from a tax reduction of 45% of the amount actually paid (Article 145/33 Belgian Income Tax Code).
Facilitating access to credit for an MFI
The Alterfin Guarantee Fund has, for example, provided a guarantee of USD 125,000 to enable the microfinance institution (MFI) PAIDEK in the Democratic Republic of Congo (DRC) to obtain a loan for USD 250,000.
PAIDEK has been operating in the provinces of North and South Kivu since the 1990s. Its mission is ‘to help strengthen the economic fabric and revitalise the popular economy of the Democratic Republic of Congo in general and Kivu in particular, by facilitating access to financial and non-financial services for people who are disadvantaged and excluded from the mainstream banking system’. The MFI is especially targeting micro and small entrepreneurs in Kivu.
Today, PAIDEK reaches nearly 6,000 clients through a network of 9 branches and employs 77 people. The average loan granted is in the range of USD 600 to 800. Despite successive crises in the DRC and Kivu over the last 20 years, the organisation has demonstrated a significant capacity for resilience.
With the help of the loan from Alterfin, PAIDEK will be able to grant more micro-loans to entrepreneurs in Kivu.
Make a donation
If you would like to make a donation to the Alterfin Guarantee Fund, you can transfer your amount into the King Baudouin Foundation’s account: BE10 0000 0000 0404, quoting the following reference: 017/1880/00074.
Picture : (c) SOS Faim
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