AFD provides TA funding for 1.8 million EUR to Rural Impulse Fund II, the 120 million EUR microfinance investment fund that has been launched by Incofin Investment Management in 2010. Together Incofin and AFD aim to improve financial and social performance of rural microfinance institutions in developing countries.  

AFD partners with RIF II to increase aid effectiveness in rural regions

Rural Impulse Fund II (RIF II) invests in microfinance institutions targeting rural areas in developing countries. RIF II’s main objective is to improve the outreach and impact of rural MFIs while providing a fair financial return to shareholders. In parallel to the fund, Incofin created a technical assistance facility , to which the French Development Agency (AFD – www.afd.fr)  has decided to contribute 1.8 million EUR. AFD is the main implementing agency for France’s official development assistance to developing countries. AFD strongly believes in creating working relations with various international aid actors and investors to maximize the coherence and effectiveness of its initiatives, in this case in rural areas.

Tailor-made technical support after thorough needs assessment

The RIF II TA facility primarily aims to support the overall development of targeted microfinance institutions by improving operational, strategic, financial and organizational aspects. In addition, it promotes innovation in rural microfinance, including product design and outreach methodologies, and best practices in social performance management and governance. TA projects are being sourced and launched by Incofin IM after thorough TA needs assessment. To identify TA needs and adequate TA interventions, Incofin makes use of its Counterparty Risk Score Tool to identify financial and organizational weaknesses within the microfinance institutions RIF II invests in or considers investing in. At the same time, it also sources areas of improvement in social and environmental performance based on its in-house developed ECHOS©-tool.    

AFD and RIF II aligned on type and geographic location of TA interventions

RIF II makes investments in all countries on the on DAC-list of OECD. With its contribution, AFD wants to support TA interventions for RIF II MFIs in the Priority Solidarity Zone  as defined by the French government, being the ACP, Mediterranean and Indochinese regions. The AFD contribution will fund TA interventions sourced and initiated by Incofin IM in the areas as defined by the objectives of the RIF II TA facility. The TA interventions funded by AFD will be implemented in the period 2012-2014.

Loïc De Cannière, CEO of Incofin IM on the cooperation with AFD: “From the outset, it became clear to us that AFD’s team and board perfectly understood our approach. AFD’s support is a catalyst that will enhance the fund’s objectives with respect to rural outreach and impact.”

Marie-Laure Garnier, Head of AFD’s Financial Institutions Division, on the cooperation with Incofin: “Incofin’s engagement in rural microfinance is quite unique. With AFD’s support, Incofin will provide rural microfinance institutions the full range of tools that they need to develop in a sustainable way, from technical assistance grants to equity investments.”