MasterCard, IFC partner on African micro-finance

Bank partner devoted to developing the private sector and The MasterCard Foundation will spend millions of dollars so more impoverished Africans can get loans and other financial services, The Associated Press reports.

At a Johannesburg news conference on Monday, officials from the International Finance Corporation (IFC), which is part of the World Bank group, and The MasterCard Foundation said they would spend $37.4 million over five years to support banks and other institutions across Africa that provide small loans, a strategy known as micro-financing.

People around the world have used such loans to lift themselves out of poverty by starting or expanding small businesses, sending children to school or buying fertiliser for subsistence farms.

The MasterCard Foundation was established with funds from MasterCard Worldwide in 2006 and operates independently of the company, The Sydney Morning Herald explains.

The IFC-MasterCard Foundation project, the IFC's largest with a private foundation, also targets banks and communications companies that help mobile phone users send and receive money and get access to other banking services. Mobile phones have meant people in remote rural areas and urban slums, where banks have been reluctant to build branches, can still get banking services.

The IFC, which started investing in micro-finance programmes in Africa in 1997, estimates only between 5% and 25% of African households have bank accounts or other relationships with financial institutions, Yahoo News writes.

Reeta Roy, president and CE of The MasterCard Foundation, said she and the IFC were seeking to radically expand access to banking for Africans at a time when their continent's middle class is expanding and political stability is growing.