The Bangladesh-based NGO completed the transition of its lending-only microfinance institution into a deposit-taking bank in order to expand its services in Uganda’s rural areas.
“Poor rural women, who are our primary customers, really want savings and deposits,” BRAC’s Shameran Abed told ImpactAlpha. “Sometimes the people they’re saving from are the male members of their families.”
With 163 branches and 220,000 borrowers, BRAC had become one of the largest microfinance institutions in Uganda with about $50 million in outstanding loans.
The transition took three years and required BRAC to divest majority control. DEG, the German development finance institution, Chicago-based Equator Capital Partners and Amsterdam-based Triple Jump each took 17% stakes. Enclude Capital Advisory, now owned by Palladium, ran the auction and structured the deal, a first for BRAC.
Other microfinance institutions that have converted to banks have generally moved up-market; Abed said BRAC aims to continue making $50 loans to poor women in remote areas.
“If we can pull it off, that will be quite new,” he said.
Next up for conversion: BRAC’s Tanzanian microfinance institution.