Dr. Shafiq Dhanani, Indonesia

Growth Guarantees open bank’s eyes to the possibilities of microfinance.

Mitra Bisnis Keluarga (MBK) Ventura is the largest Indonesian microfinance institution (MFI) to target the poorest 25 percent of the population. All of its clients are women, and most are landless laborers involved in petty trade, preparing and selling food, rearing livestock, and growing vegetables.

Despite the opportunities MBK creates for women to move away from poverty, commercial banks have refused to lend the MFI the money it needs to do its work. “In Indonesia, there is no shortage of funds but the formal banking sector is not used to giving to microfinance,” said Dr. Shafiq Dhanani, MBK’s founder.

However, in 2007, Bank Danamon loaned MBK $2.2 million in local currency, making it the first Indonesian MFI to receive financing from a local commercial bank. This loan was backed by a $1.1 million guarantee from Grameen Foundation as part of the Growth Guarantee program.  Because it works to guarantee commercial funding for MFIs like MBK, the Growth Guarantee program has helped open eyes in the commercial banking world and has prompted these banks to see lending to MFIs as an opportunity rather than a risk.

“The Growth Guarantee provided the bank with collateral and helped us to start a relationship with commercial banks,” Dhanani said. “With this new funding, we’re growing by 5,000 clients a month, so it’s very significant. And we’re going to keep doubling our customer base every year.”