Global Compact International Yearbook 2009

Deutsche Bank
The microfinance
revolution has only
just begun
Microcredits have proven to be powerful instruments in the fight against poverty.
However, they will reach their full impact only if they manage to limit their reliance
on the charitable sector.
By Hanns Michael Hölz
“The genocide brought the destruction
of my parents’ retail shop“, Nsengiyma
Gilbert from Rwanda explains. “It ended
in ruins and in the brutal killing of my
father. After the war, I dropped out of
school, crisscrossed Kigali in search for a
job to no avail. Then the idea of selling
milk to a nearby kindergarten school
near my home came to me. However,
the earnings from this business were
not enough to buy me a refrigerator and
enable me to rent a bigger place to start a
restaurant,” Gilbert says. “I tried to get a
loan from other banking institutions, but
the conditions were a little too harsh and
couldn’t provide an immediate solution
to my desperate situation. That’s when a
friend of mine told me about RML quick
loans,” he explains.
RML is the abbreviation of Rwanda Microfinance
Limited, a company founded
in 2004 in order to provide loans to
low-income salary earners and microentrepreneurs.
RML provided Gilbert
with a business loan of about $500, and
things improved. He bought a refrigerator
for his dairy products and moved
to a bigger place that he turned into a
restaurant. The income generated from
his restaurant business helped him build
a decent home for his mother. “This
business has served as a lifeline for me
and my family‘s financial and social
livelihood. Now my aged mother will
no more spend sleepless nights when it
rains,” he affirms. With additional support
from RML, Gilbert plans to expand
his business.
Supporting early-stage microfinance
institutions (MFI)
RML is part of Micro Africa, an East African
microfinance group based in Nairobi,
Kenya. In mid-2006, RML had not
yet reached operational self-sufficiency
and had a total loan portfolio of half a
million dollars. But then the Deutsche
Bank Start-up Fund provided a letter of
credit in the amount of $100,000, which
secured a Rwandan franc loan from a
local lender. Since receiving the loan,
RML has become profitable and now
serves over 1,400 clients with a portfolio
of over $1.4 million.
The Deutsche Bank Start-up Fund, which
is supported by the Deutsche Bank Americas
Foundation and CORDAID, a Dutch
NGO, seeks to identify start-up microfinance
institutions (MFI) in underserved
markets with strong management. Capitalized
through grants and soft funding,
it provides flexible financing to support
portfolio growth and works to build
governance and financing capacity. Like
all the other microfinance instruments
developed and used by Deutsche Bank,
the Start-up Fund does not lend to the
final borrowers, but gives financial and
logistics support to microfinancing institutions.
By transferring capital and
know-how, it strengthens regional economic
structures and networks in order
to stabilise developing countries.
A powerful instrument in the fight
against poverty
Microfinance, the extension of very small
loans to those who lack collateral or a
credit history, is proving to be a revolutionary
model in enabling people to rise
from poverty. It is based on the recogni-
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Global Compact International Yearbook 2009