Locfund Next

Development impacts

• Private sector consolidation/innovation

  Financing the expansion of a unique Microfinance Investment Vehicle (MIV) that mostly offers short and medium term loans in local currency to Tier II and III MFIs, that are active in countries and areas where the level of financial inclusion remains critical - about one fourth of the population do not have access to any financial services.

  Helping to formalise and strengthen MFIs thanks to Locfund Next's expertise and experience, deep knowledge of the market and impact mindset, as well as through its Technical Assistance Facility with a focus on digital transformation, digital inclusion and climate-related trainings.

  Supporting the digital transformation of MFIs - including digital process as well as digital products and services - that is a key component of Locfund Next value adding role to investees and a clear priority of its Technical Assistance Facility.

• Financial inclusion

  Objective to ultimately serve 114 MFIs and reach at least 200k end-clients, with a priority on BoP through a strong focus on un(der)served groups i.e. target at fund level of minimum 50% women and 40% rural end-clients). In 2022, 48 MFIs funded and 120k end clients reached - mostly loans to microenterprises with an average loan size around USD 1,100.

  Depending on their sophistication, the supported MFIs also provide other financial services, such as deposit, savings and payment services to their clients, which improves microenterprises and individual's access to a wider range of financial products.

  Promoting social performance management as Locfund Next is encouraging MFIs to perform a social assessment.

• Food security & rural development

  Financing MFIs with a strong rural outreach with a target at fund level of minimum 40% of rural end-borrowers i.e. reached in 2022 with 53% rural end-borrowers.

• Gender

  2X eligible on both direct and indirect criteria with 38% of women in senior management, 48% of women in the workforce and policies and procedures to support women in the workplace, and a fund portfolio composition tilted towards MFIs specifically or disproportionately benefiting women i.e. corporate social target to reach at least 50% of women end‑clients.

  With its commitment towards gender-lens investing, Locfund Next has been designated as a 2X Flagship Fund Commitments and signed a Memorandum of Understanding (MoU) with BIO and other DFIs by which the fund commits to implement additional measures to support the recruitment, retention, and career development of women employees, as well as to reach at least 50% of women end‑clients.