Summary of Anticipated Development Impacts
- Increasing financial inclusion: Locfund Next provides local and hard currency financing and other types of financial products and services to MFIs, through which it aims to reach at least 200,000 end clients, including at least 50% women and 40% rural residents. The Fund estimates its indirect impacts to benefit some 2.4 million people in the LAC region. The Fund’s intentionality in servicing the base of the pyramid is also demonstrated in that it tracks, on a quarterly basis, the average size of loans held in its (MFI clients’) portfolio. The Fund targets an average loan size for end‑clients under USD 1,500. Lower average microloan sizes are associated with wider access to financial services, especially for low‑income women borrowers.
- Strengthening capabilities and improving productivity of MFIs and their clients: Locfund Next has a dedicated Technical Support Facility (TSF) which provides MFI clients with assistance on digital transformation, with additional components focusing on gender, ESG and climate change mitigation and adaptation. Improving digital literacy and capabilities in the finance sector is associated with wider financial and digital inclusion, as well as positive spillovers between sectors of the real economy.