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Microfinance: Investments With a Social Return


The 32nd Annual General Meeting of Oikocredit – one of the leading financiers of microfinance worldwide – decided to pay a dividend of 2% to its members for the 15th year in a row. This may come as a surprise, considering the higher returns some new microfinance funds are promising.

Investors choose Oikocredit for its social vision and are keen on receiving the highest social return while accepting a modest financial return. Oikocredit was created to be a profitable organization but chooses not to maximize its profit for the sole benefit of its shareholders. Profits are geared to service not only investors, but also project partners such a microfinance institutions and cooperatives of farmers. This choice has allowed Oikocredit to grow to the level of sustainability and success reflected by its 2007 key figures: EUR 135 million disbursed to new projects and a total outstanding capital of EUR 277 million.

Despite an impressive increase of 22% in Oikocredit’s net inflow and a total member capital in 2007 of EUR 319 million, the demand for credit continues to outpace supply. The need of the microfinance sector for funding is growing as institutions are heading towards sustainability and growth in outreach. Oikocredit needs more funds, not only to meet this growing demand, but also to develop tools to measure and monitor the sector’s social performance. Measuring social performance and assessing the social vision and true impact of its partners, is and will continue to be Oikocredit’s highest priority in the coming years.

India- rupee loans to avoid exchange risks

Oikocredit has been active in India for over 20 years. In 2004, a local subsidiary was created: Maanaveeya Holdings & Investments (P) Ltd, allowing Oikocredit to provide rupee loans. As a result, the borrowers are no longer exposed to foreign exchange risks. In the past four years, Maanaveeya has built up a portfolio that now holds 32 microfinance partners with a capital outstanding of 1.60 billion rupees (EUR 26 million). Today, Maanaveeya is exploring the possibility to also reach out to businesses such as fair trade organizations.

Fair trade and microfinance

Oikocredit goes beyond microfinance and provides services that also reach organizations aimed at the working poor. In addition to cooperatives of farmers, Oikocredit supports fair trade organizations and producers engaged in fair trade. During the meetings, members of Oikocredit took part in a lively debate exploring the linkage between fair trade and microfinance: a topic particularly interesting to explore in the Indian context where microfinance is booming and fair trade actors are exploring ways to develop new domestic perspectives.

Oikocredit: Oikocredit: private capital for development

Oikocredit is a co-operative financial institution, which is today recognized as one of the largest private funds for microfinance by CGAP. It offers loans or investment capital to microfinance institutions, co-operatives and small and medium sized enterprises in developing countries, aimed at development financing. Oikocredit is privately financed; individuals and organizations invest in Oikocredit shares. Direct members of the co-operative are churches, church-affiliated organizations, project members and Oikocredit support associations; individuals invest through support associations.


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