MULTILATERAL INVESTMENT FUND MIF

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MULTILATERAL INVESTMENT FUNDMIF

• Pioneering Private Sector Development in Latin
  America and the Caribbean

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MIF - A Unique Instrument

• Conceived in early 1990s to support wave of
  privatization and economic reform sweeping
  through Latin America and the Caribbean
• Created to help bridge gap between theory and
  realities of transition to market economy
• Built to test new ideas and catalyze reform

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Broad and flexible mandate to

• Support market reforms
• Build workforce capabilities and skills standards
• Broaden economic participation of smaller
  enterprises

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Structured to Innovate

• Wide range of grant, investment and other
  financial instruments
• Acts directly with private sector as well as
  governments
• Pilots new development approaches and then shares
  lessons learned

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830 million in over 520 projects

• Co-financing from partners brings total to 1.3
  billion at work
• resources have been primarily directed to less
  developed countries

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MIF focuses on Core Activity Areas

• Microenterprise
• - Innovation partnerships program
• - Regulatory and supervisory framework
• - Strengthening microfinance institutions
• Financial sector and capital markets
• - Capital market development
• - Market transparency measures
• - Regulatory reform and supervision

• Small businesses
• - Streamlining regulations
• - Innovative business relationships
• - Eco-efficiency
• - Quality management
• - Financing options
• - Information technologies
• - Skills standards and credentialing
• Market functioning
• - Regulatory framework
• - Facilitation of trade and investment
• - Labour market modernization

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Instruments
Financial Investments 48 projects US210mm
committed
Non-reimbursable Grants 54 operations in
financial and capital markets US 71million
approved
Small Enterprise Investment Facility
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Technical Assistance Grants

• Targeted initiatives that pilot new approaches
  or play catalytic role
• Local partnership
• Sustainable, with demonstration effect
• MIF resources must be critical to outcome
• Focus on sharing lessons learned
• Average grant size 1-1.5 million

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Financial Sector Reform

• Market Transparency Measures
• Accounting and Auditing Standards
• Regulatory training and consolidation of
  financial sector supervision
• Capital Market Development
• Harmonization
• Clearance and Settlement
• Removal of Barriers

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Capital Market Development Projects
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Investments - Microfinance

• Has enabled NGOs to become regulated financial
  sector institutions and grow beyond donated funds
• MIF now has 13 such investments in its portfolio
  plus equity participation in three leading funds
  Profund, Lacif and Gateway
• Financed majority of microfinance activity in
  Latin America and the Caribbean
• Portfolio reaches over 740,000 clients

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Investments Equity Funds

• MIF is the leading investor in creating new
  formal risk capital vehicles for small business
  in the region 35 funds
• 27 funds fully organized and partially disbursed.
  A total of 290 entrepreneurs are supported
  through MIF funds about one quarter of these
  companies are startups.
• Funds target small business and start-ups that
  otherwise cannot access long-term risk capital

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SEIF Microfinance Portfolio
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SEIF Investment Fund PortfolioDecember 2002
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List of Institutional Co - Investors
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Goals and Early Results

• Goals in promoting equity as a development tool
• Grow promising companies
• Attract foreign capital
• Promote technology
• Encourage development of local fund management
  experience
• Promote good governance
• Provide hands on assistance
• Promote culture of equity investment
• Rates of return

• What has happened over past five years
• 1. Path to profitability is difficult
• 2. Private capital has briefly retrenched
• 3. Has occurred
• 4. Emerging core of investment fund managers
• 5. Now an awareness of the issue
• 6. Obstacles to growth and profitability remain
  high
• 7. Still not widespread
• 8. Rates of return still too early to tell.

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Strategy for MIF in Current Environment

• Long term financing, entrepreneurial development
  are needed now more than ever, in LAC
• But, private investment will be scarce for some
  time - work with other partners (governments,
  development agencies) and find areas of overlap
  with private sector interest.
• Work to improve business environment
• Continue promoting evolution of industry