Portland’s Mercy Corps is using a $19.4 million grant from the Bill and Melinda Gates Foundation to create a microloan program for small businesses in Southeast Asia.
The grant will help Mercy Corps purchase a bank in Indonesia to finance the microloan program. It is expected to help 16 million people in Indonesia by 2011. If successful, the central bank could ultimately assist 45 million people in Indonesia and the Philippines out of poverty during the next 10 years.
“Bank of banks is expected to revolutionize the way microfinance works in Indonesia and beyond,” said Neal Keny-Guyer, Mercy Corps’ chief executive officer. “With support from the Bill and Melinda Gates Foundation, the bank will help make affordable savings, credit and other financial services available to many more poor people. This will help them take hold of their financial futures, and it will have a profound and lasting impact on their lives.”
The Gates foundation is providing Mercy Corps Project MAXIS (Maximizing Financial Access and Innovation at Scale) with $19.4 million to fund the growth of microfinance institutions that work primarily with the poor. Although Indonesia has one of the largest microfinance sectors in the world, the economy has been hurt due to extreme poverty with nearly half of the population living on less than $2 a day.
The bank will receive a total of about $33 million from the Gates foundation and other investors.
Mercy Corps has helped similar microfinance institutions in struggling economies such as Afghanistan, Bosnia and Mongolia.