Despite credit crunch, church microfinance agency ups lending

A church-backed microfinance institution has increased its field investments by one third, reaching out to poor people often excluded by the commercial banking sector. This comes at a time when financial markets have been battered by the global economic downturn.

In 2008 Oikocredit’s microfinance partners reached 15 million households, both in remote rural and in urban areas,” the Amersfoort, Netherlands-based group said in a recent statement.

Oikocredit was set up as the Ecumenical Development Co-operative Society in 1975 by the Geneva-based World Council of Churches to offer a socially-just means of investment. It is now described as one of the world’s largest private financiers of the microfinance sector.

“In microfinance alone we invested 287 million euros ($459 million Cdn) in small, medium and large microfinance institutions,” Oikocredit noted, reporting on its 2008 performance. It said its total field investments had attained 365 million euros ($584 million Cdn), an increase of 32 percent.

“Our partners continue to support entrepreneurs, enabling them to build a better life for themselves, their families and community. The social performance of our project partners is key to this success,” Oikocredit noted.

The microfinance institution received a boost in February when the Evangelical Church in Germany (EKD), the country’s biggest Protestant grouping, announced plans to increase cooperation, including an agreement to provide Oikocredit with a credit line of up to 5 million euros ($8 million Cdn).

EKD finance officer Thomas Begrich described Oikocredit as a partner, “that provides grassroots and sustainable support for the economies of developing countries”.

Oikocredit says Africa has a special place in its long-term development strategy. In 2008, the institution increased investments in Africa to 52 million euros ($83 million Cdn), an increase of 5 million euros compared to 2007. It is exploring opportunities to expand financing activities in Africa, with a possible focus on Mozambique and Nigeria.

The agency says its capital comes from about 500 churches and church-related organisations, and about 30,000 individuals grouped in support associations. Investors receive an annual dividend of about 2 percent.