Our commitment to microfinance

Clifford Chance uses its position as a leading global law firm to support initiatives in microfinance.

What is microfinance?

Microfinance gives access to financial services to individuals who do have access to the traditional banking sector. Microfinance enables the poor to develop self-sufficient businesses and has already helped to lift millions of people out of poverty.

Microfinance is an emerging field, which relies on microfinance institutions (MFIs) operating through a range of legal vehicles including non-governmental organisations, co-operatives, non-bank finance companies and banks. Inclusive, accessible financial systems encourage economic growth in societies and help the poor to participate in that growth.

How does microfinance work?

MFIs offer financial services such as microcredit, savings, insurance, money transfers and other financial products targeted at poor and low-income people.

Microcredit has been the most common and widespread microfinance service. Microcredit involves MFIs providing small loans to poor people, taking little or no collateral. The risk of lending with little or no collateral is typically offset by methods such as lending to a group of people with group liability for repayment, or gradually increasing loan sizes and giving access to future loans if present loans are repaid fully and promptly. Interest rates are higher than mainstream banking interest rates, the average global microfinance interest rate being around 35%.

The microfinance industry is expanding, with low repayment default rates. To further expand their scale and scope, MFIs need access to local currency loans from or supported by international commercial banks, who are critical intermediaries in the global flow of capital. In this context, Clifford Chance has used its expertise and position as a leading international banking and finance firm to support the development and gradual expansion of the microfinance industry.

Our involvement in microfinance

Our microfinance practice includes over 200 lawyers located in Clifford Chance offices across Europe, the Americas, the Middle East and Asia. Our international presence has allowed us to combine the highest legal standards with local expertise, and our microfinance practice involves many of the leading practitioners in key areas including banking, capital markets, corporate, litigation, derivatives, regulatory, employment and tax.

Our microfinance experience

In a unique worldwide initiative with our clients, we have used our expertise and close relationship with financial institutions to benefit local communities through microfinance projects.

Please see below examples of our microfinance experience around the globe:

Advising Minlam Microfinance Offshore Master Fund LP in connection with a US$1,500,000 term loan to FINCA Tanzania Limited.
Advising Grameen Creative Labs in relation to starting up a trust and new microfinance institution as well as a venture capital fund in Columbia.
Advising on the first public issuance of securities by Banco do Nordeste do Brazil, whose Crediamigo program was recently ranked first by Microfinanzas Américas.
Working with Citigroup and Citi Microfinance on the development of a unique product to help microfinance institutions gain access to large-scale commercial bank funding by providing a user-friendly, multi-jurisdictional legal template, resulting in a model agreement that meets international documentation and credit standards and can be used in both common and civil law jurisdictions.
Acting as international transaction counsel on the IPO of an Indian microfinance company.
Advising and representing Citibank on a US$100 million OPIC framework agreement pursuant to which OPIC guarantees a percentage of loans made to designated microfinance institutions.
Advising a consortium formed by Netherlands Development Finance Company (FMO), Norfund and Standard Chartered Bangladesh on a US$55 million loan to BRAC, Bangladesh’s largest microfinance institution.
Advising International Finance Corporation and the Trustees of Omidyas-Tufts Microfinance Fund in relation to the establishment of Access Microfinance Holding A.G., a Microfinance Institute set up in association the European Investment Bank and KfW Bankengruppe.
Advising Credit Suisse as arranger on a microfinance securitisation of local currency loans to Finca's affiliates in 8 countries.

Together with Citigroup, Clifford Chance was a co-founder of Microfinance Club UK and is an active member and continuing sponsor of its events.

Awards and Recognition

In recognition of our work:

We were awarded the 2007 Financial Times Award for Legal Innovation in Corporate Social Responsibility.
We won the award for CSR Project of the Year at the British Legal Awards on 26th November 2008 for the broad range of pro bono activities undertaken in the last year that have been targeted at improving access to finance.
The most influential awards recognising responsible business has re-accredited Clifford Chance with a 2010 Big Tick at the Business in the Community awards.