Oxfam Novib Fund
Oxfam Novib is a Dutch donor organisation and the founder of Triple Jump. The Nederlandse Organisatie voor Internationale Bijstand, or Oxfam Novib for short, was set up on 23 March 1956, and is a member of Oxfam International. Oxfam Novib fights for a just world without poverty.
History and Mission
The Oxfam Novib Fund (ON Fund) for investment in microfinance was established by Oxfam Novib (Oxfam Netherlands) in 1997. The fund is owned and funded by Oxfam Novib. In 2007, the fund management was transferred to Triple Jump.
The ON Fund mainly finances Tier 3 MFIs which show significant potential to grow. MFIs should have a social mission and should service low-income groups, particularly women, people living in rural areas, and other marginalised groups such as minorities and refugees. In general, the Oxfam Novib Fund finances MFIs, with a higher risk profile, that have the potential to ‘jump’ to other more commercially oriented funds with a lower risk profile once a certain scale has been achieved.
The majority of MFIs are younger microfinance institutions. In some cases the fund may support other initiatives (e.g. initiatives related to renewable energy) in line with the Oxfam Novib mission. Accordingly, the fund acts as a catalyst for other investment funds.
Fund size: By the end of 2012 the fund has grown to EUR 47 million and provides loans to 84 institutions.
Oxfam Novib Fund
Oxfam Novib Fund portfolio outstanding by region, December 2012
Oxfam Novib Fund portfolio outstanding by currency, December 2012
The fund offers loans, subordinated debt, and guarantees for portfolio expansion. Loans can be in hard or local currency.
Loan amounts: Loan amounts range from EUR 250,000 to EUR 1.5 million. The average amount outstanding per client is EUR 510.000.
Interest rates: Interest rates charged are near-market.
Currency: To avoid placing the burden of exchange rate risk on the investees or its clients, the ON Fund provides the majority of its loans in local currency. By December 2012, 61 % of investments were granted in local currency, 31% in US dollars (mainly in Latin America, where economies are dollarized), and 8% in Euros (mainly in Eastern Europe).
In most cases, the fund takes on the currency risk. Currency losses are limited due to the highly diversified portfolio. For higher risk currencies, the fund may choose to hedge through a specialised company.