DZ BANK MICROFINANCE FUND HELPS PEOPLE TO HELP THEMSELVES

The DZ BANK microfinance fund was established by employees in the year 2000 to support microfinance institutions, mainly in African countries, through bank guarantees. It also invests in companies that provide credit and private equity to microfinance institutions. The guarantees are issued by DZ BANK and backed by the DZ BANK microfinance fund. DZ BANK’s guarantees allow or make it easier for the microfinance institutions to access refinancing loans from local commercial banks.

These institutions grant microloans to people who run small businesses but do not have access to conventional banks. The institutions also accept savings deposits and make transfers for their customers.

The DZ BANK microfinance fund is managed on a voluntary basis: We use the total fund volume for its designated purpose without applying any administrative charges.

In the year under review, the DZ BANK microfinance fund collaborated with two microfinance institutions in Tanzania and Ghana. Both operate in rural areas and focus on granting microloans to women who run shops / stalls, make food, or work in a skilled trade or agriculture in order to feed their family. In 2017, we are looking to extend the guarantees for the two micro¬finance institutions in Tanzania and Ghana and expand our collaboration with Oikocredit International. Oikocredit is an international, socially minded fund management company that provides finance to microfinance institutions and cooperatives in developing countries. At the beginning of 2016, as the result of a resolution adopted at the general meeting, the microfinance fund contributed part of its fund assets to an investment in Oikocredit International. Going forward, we are looking to issue more guarantees for Oikocredit projects in Africa. In Oikocredit, we have a strong local partner with a great deal of expertise.

At the end of 2016, the DZ BANK microfinance fund had 248 members. DZ BANK’s total contributions to the initiative since it was set up have reached roughly €40,000. 

Previously run as a partnership under the German Civil Code (GbR), the DZ BANK microfinance fund has been a cooperative since 2012, which means that corporations as well as individuals can now make financial contributions to the fund. This enabled DG HYP to join the cooperative in 2014, paying in €10,000.

It was following in the footsteps of DZ BANK, which became a member in 2013 with a contribution of €50,000. Our strategy is for other entities in the cooperative financial network and their employees to also become members of the DZ BANK microfinance fund and support its work.

Small loans to finance economic activities

Many people in Africa are economically active or have good business ideas, but cannot obtain financing from conventional banks because they are unable to pledge the sort of collateral that banks normally require. In addition, some banks avoid the effort and expense of granting small loans in remote towns and villages. As an alternative, these people can take up small loans from microfinance institutions, which grant loans that are specifically targeted at individuals and borrower groups running small businesses. These loans give people the chance to improve their economic situation by their own means. The DZ BANK microfinance fund supports the granting of small loans through the collaboration with microfinancing organizations in Africa.