Microfinance Multidonor Trust Fund

  • Date of agreement: Bilateral Trust Fund Approval, July 2009
  • Current volume of the fund: Euro 15 million
  • Financial contributors: Government of Spain (Euro 15 million)

Background and Objectives

To support the implementation of the AfDB's Private Sector Development Strategy by providing technical assistance and capacity building programs for microfinance institutions (MFI) and related industry sectors.

  • Retail institutions (microlevel): create, broaden and deepen a diversified supply side of financial services to the poor. This will be a multifaceted activity that could involve training programs, capacity building/consultancy and knowledge sharing events.
  • Market infrastructure related operators (mesolevel): promote the strengthening of the market infrastructure so that MFIs can rely upon highquality, sustainable services. Areas of assistance include: technical service providers (auditors, raters, consultants and trainers), financial infrastructure (credit bureaus and collateral registries), networks and professional associations, and wholesale lending institutions.
  • Legal, regulatory and supervision framework (macrolevel): enacting legislation and regulations that support microfinance, enabling innovative delivery mechanisms, cultivating respect for the rule of law, particularly laws concerning the enforcement of loan contracts and collateral, eliminating interest rates caps, fostering savings mobilization while protecting the fiduciary interest of depositors, training and financing supervision teams, support in reporting and information assessment.

Areas of Intervention

The intervention areas were chosen by first carrying out and assessment of the capacity building needs of the microfinance sector in Africa. Donors where consulted to prioritise those intervention areas that match their strategies and take advantage of their collective expertise. As a result of this process, it was decided that the Fund will focus on the following two intervention areas in its first three years of operation.

  • Area 1: Increase transparency within the microfinance sector A lack of transparency in the microfinance industry is a key barrier in terms of the ability of MFIs to raise capital, gain confidence from clients and therefore grow, expand, and deepen their outreach. This intervention area will address retail, market infrastructure and regulatory levels as needed. With in this area of intervention, the Fund will specifically focus on the following subthemes  which were chosen based on potential impact and feasibility of implementation.
    • Area 1:a. Governance: Prepare MFIs to be audited and rated by improving its governance and risk management procedures
    • Area 1.b: Audit and Training: train auditors and raters to work with financial intermediaries in the microfinance sector, support the design of business models that allow for services to be pro vided at a cost MFIs can afford (intervention area(s): transparency
    • Area 1.c: Supervision: support capacity building for supervisory bodies
  • Area 2: Support innovative product development and delivery channels Microfinance market surveys, such as “The Portfolio of the Poor”, show that poor and low income households need a variety of financial services – perhaps greater than less poor segments of clientele. However, in many African countries, MFIs only offer a limited number of financial products and these products are accessible only to certain segments of the population, due for instance to high cost of reaching out to rural areas. This intervention area will support innovation in both product development and delivery to insure increased access to high quality financial product for both rural and urban poor populations. Within this area of intervention, the Fund will specifically focus on the following subtheme:
  • Area 2.a: Rural finance: support the development of inclusive rural finance products, including for instance agrivalue chain financing, mobile and branchless banking to reach out to rural areas while controlling costs, crop/weather insurance, diversification of the credit product range (leasing, warrantage).

These restrictions apply to 90% of the funds committed during the period. As described above, 10% of the yearly committed funding will be set aside to support inclusive financial services and are aligned with the Fund's conditions for eligibility and operating principles.

  • Geographic Areas: The MCBF will provide technical assistance in various areas of Africa. It will support national project as well as multicountry projects in the following regions:

Each Call for Proposals (CfP) will focus on particular sets of countries and areas of intervention.      

Call for Proposal Region Area of Intervention

CfP #1 (2011)


#1: Increase Transparency within the Microfinance Sector

CfP #2 (2012)


#1: Increase Transparency within the Microfinance Sector


#2: Support Innovative Product Development and Delivery Channels

CfP #3 (2013)


#1: Increase Transparency within the Microfinance Sector


#2: Support Innovative Product Development and Delivery Channels

Target Beneficiaries

Eligible beneficiaries include:

  • Retail Financial Institutions servicing poor and low income clients, with a special attention given to women and rural areas;
  • Networks of such institutions;
  • Service providers to such institutions, such as training centers, credit bureaus, audit firms, rating companies, IT firms;
  • Projects aiming at strengthening microfinance regulatory frameworks as well as supervision capacity will be considered as well.

Administration and Governance Structure

The governance and administrative structure is composed of a coordinator, a technical review committee and an oversight committee.

Coordinator: Rafael Jabba, Private Sector Department (OPSM.4) is the Fund Coordinator responsible for receiving and screening financing requests, coordinating the preparation of projects or activities and ensuring their supervision.

Technical Review Committee (TRC): composed by relevant Bank staff and presided by a Vice President responsible for approving all operations submitted by the Coordinator for amounts under US$ 100,000 equivalent and review all proposals over US$ 100,000 which will be submitted to the Government of Spain for approval. Proposals over US$ 1 million will be received by the TRC, and approved by the AfDB Board and the Government of Spain.

Major Activities in 2011-12 / Additional Resources Required

  • Approval of Operational Guidelines (including selection criteria), three year strategic plan and first year work plan by the Government of Spain (April 2011).
  • Launch initial call for proposals by May 2011.
  • Implementation of first batch of projects (Q4 2011).
  • Promotion of the Fund to attract additional partners (ongoing).

Experiences, Challenges, and Ways Forward

Human Resources – support staff needs to be addressed.

Technical Department and Task Manager
Rafael Jabba, Principal Investment Officer, Strategy and Development Service, Private Sector Department
Tel: (216) 7110 2467

Partnerships and Cooperation Unit Focal Point
Belinda Chesire, Senior Cooperation Officer
Tel: (216) 7110 3611