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Microfinance Investment Funds (Part I)
19 Nov 2005, Goodman, P.
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Creating a centre of excellence in microfinance investment funds at Luxembourg

This paper describes the proposals for improving microfinance investment funds (MFIF) in Luxembourg.

The paper highlights the features of MFIF including:

Existence of specific corporate structure;
Perception as an investment vehicle for social and commercial investors;
Exclusion of donor institution, foundations and development finance institutions as MFIFs.

The paper presents the existing information on MFIF as follows:

Existence of 41 MFIF with:
- Total assets worth € 981 million;
- Total microfinance portfolio worth € 542 million.
Sources of funding for MFIF from:
- Development finance institutions;
- Other MFIFs.

With regards Luxembourg, it discusses the status of MFIF as

Existence of 3 MFIF with:
- Total assets worth € 105 million;
- Microfinance portfolio worth € 70 million.
Plans of setting up 8 investment vehicles dedicated to microfinance by the end of 2005.

The paper states the following recommendations for creating Luxembourg as centre of excellence in microfinance:

Creation of quality label for MFIF;
Exemption from the Luxembourg tax for MFIF investing in microfinance;
Tax benefits for tax payers investing in MFIFs;
Organization of microfinance investment forum every year to share information on best practices and innovations;
Promotion of Luxembourg as the financial centre for microfinance by increasing marketing efforts.

The paper concludes by stating that the time is ripe for Luxembourg to establish itself as centre of excellence in the field of microfinance.


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Journal Volume/Pages:
17

Publisher(s):
Luxembourg Round Table on Microfinance