FINCA INTERNATIONAL INCORPORATED SMALL LOANS BIG CHANGES

FINCA INTERNATIONAL INCORPORATEDSMALL LOANS BIG CHANGES

REGIONAL OFFICE FOR EASTERN EUROPE AND CENTRAL ASIAPRESENTATION

East Agri Conference May 5, 2006 BERLIN, GERMANY

FINCA INTERNATIONAL INC.

FINCA – TOTAL NUMBER OF ACTIVE CLIENTS

Eurasia

95,239

110,024

60,000

70,000

80,000

90,000

100,000

110,000

Nu

mb

er

of C

lien

ts

Eurasia


EURASIA – REGIONAL PERFORMANCE

121%

1.2%

$534

$29,490

59,369

August 2004

117%

1.2%

$457

$18,487

46,851

August 2003

89%

1.1%

$433

$12,671

43,063

August 2002

36,198Total Clients

95%Operational Self-Sufficiency

0.8%PAR > 30 days

$321Average Loan Amount Disbursed

$7,312Total Loans Outstanding ($000)

August 2001

December

2005

95,239

122%

1.38%

$755

$60,640

March

2006

110,024

131%

1.75%

$792

$68,779


21,01119,0396,979

1,908 3,396 4,960

89,01376,200

34,29039,667 41,891 52,390

0%

50%

100%

Aug. 01 Aug. 02 Aug. 03 Aug. 04 Dec. 05 Mar. 06

% o

f C

lien

ts

36,198 43,063 46,851 59,369

16%

78%

6%

46%

25%

41%

Group

Individual

Client Growth

110,024

46%

173 %

EURASIA – CLIENT BREAKDOWN AUGUST 2001 – DECEMBER 2005, YTD 2006

95,239

17%

10%


EURASIA – CLIENTS AUGUST 2001 – MARCH 2006

27,982

35,569

16,811

10,604

6,182 6,127

3,290 3,459

0

3,000

6,000

9,000

12,000

15,000

18,000

21,000

24,000

27,000

30,000

33,000

36,000

Nu

mb

er

of

Clie

nts

Kyrgyzstan Azerbaijan Georgia Armenia Russia Kosovo Uzbekistan Tajikistan

FY01

FY02

FY03

FY04

DEC05

MAR06


EURASIA – GROSS LOAN PORTFOLIO AUGUST 2001 – DECEMBER 2005, YTD 2006

$9,941

$13,295

$10,905

$684$1,314

$6,179

$13,404 $13,057

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

Kyrgyzstan Azerbaijan Georgia Armenia Russia Kosovo Uzbekistan Tajikistan

Vo

lum

e o

f Lo

an

s O

uts

tan

din

g U

SD

'00

0

FY01

FY02

FY03

FY04

DEC05

MAR06


FINCA – Mission

MISSION:

FINCA’S Mission is to reduce poverty

by providing financial services to

economically active, poor families, so

they can raise household incomes,

improve their standard of living, and

create jobs;

and to deliver those services through a

global network of local, self-sustainable

microfinance institutions.

FINCA International, Inc.


Rural loan product overview

Objectives for FINCA’s Rural Lending Products:

• To expand the market for FINCA’s services and enable FINCA to better fulfill its mission by serving (poor) people marginalized by existing financial services that are mainly geared toward trade & services in urban areas.

• Develop and implement credit products and other finance products that answer the needs of the (poor) rural population, so that they can be provided with financial services in a profitable, sustainable manner.

Rural lending - OBJECTIVES



RLP Azerbaijan progress overview:

• June 2003 – Launch of the product in Southern Area of Azerbaijan

• January 2004 – first RLP group was inaugurated in Western Area of Azerbaijan

• October 2004 – FINCA Azerbaijan started to market RLP in North-East of the country

• Currently RLP is being marketed in overall operational area of FINCA Azerbaijan

• As of April 2006, F/Azerbaijan servers more than 17,000 active borrowers with its RLP program, which amounts to approximately 50% of total clients


Current Branch Network FINCA

Azerbaijan



RLP Terms – FINCA Azerbaijan

• Interest rate: 3.5% per month

• Other fees: 2%

• Grace period: none

• Repayment frequency: monthly

• Pre-inauguration Two meetings+disb

period: within 10 days

• Loan security: group solidarity

• Other: cash collection service in the villages provided by FINCA

• Group size: min. 8 – no maximum

• Min. loan size: 45 AzM/50USD

• Max. loan size: 1,000 AZM / 1,100 USD

• Maturity: 6-12 months

• Currency: USD or AZM

• Loan use:– Farming

– Livestock purchase

– Trade in animals and ag products



F/Azerbaijan: Share of RLP product in overall clientele

SCG46%

RLP50%

IL4%


RLP Tajikistan progress overview:

December 2005 – Launch of the product in the Khatlon region in Southern Tajikistan

As of April 2006, F/Tajikistan servers approximately 1,000 active borrowers with its RLP program, which amounts to 22% of total clients (share is steadily increasing).

We expect the RLP share to reach similar proportions to FINCA Azerbaijan (i.e. more than 10,000, and around 50% of total clients) within the next two years.

FINCA Tajikistan


RLP Terms – FINCA Tajikistan

• Grace period: max 2-3 months, depending on loan term

• Repayment frequency: monthly

• Pre-inauguration 2 meetings+disb

period: within 10 days

• Loan security: group solidarity

• Other: cash collection service in the villages provided by FINCA

• Group size: 7 (5) – no maximum

• Minimum loan size: none

• Maximum loan size: 1500 SMN (500 USD)

• Maturity: 3-12 months

• Currency: SMN

• Interest rate: 3% per month

• Other fees: 2%

IL16%

GL 62%

IRL0%

RL22%

Active Clients by Product FINCA Tajikistan


Credit analysis

• Credit analysis includes all household income and expenses

• In case of problems with the main crop, there should be an alternative cash-flow for loan repayment

Modification for “tomato grower loans”:

• Borrower must have a business which is operating in rural areas and connected to producing tomatoes.

• Borrowers must have contract with “Geha Food”


Plans for the future 1 – CREDIT PRODUCT

• To investigate and design a new, individual rural lending product• To pilot and launch the new rural lending product during 2006

• Features: – Stronger focus on product cycles– Focus on financial analysis of financed ag project – but not only! – Larger loan amounts; grace periods – Need for collateral

• Sustainability of the product must be guaranteed Excellent portfolio quality required Efficient delivery mechanism required

• Issue: availability of loan capital, especially in local currency assistance from investors/donors?

FINCA INTERNATIONAL INC.Plans for the future 2a –

FINANCIAL SERVICES

• To investigate and design delivery mechanisms for the provision of financial services to rural areas that will greatly improve the efficiency of financial services to the rural population, and thus greatly improve their access to financial service

This refers to

– Servicing credit products,

– Offering savings/deposits

– Offering other financial products, such as remittances


Plans for the future 2b – FINANCIAL

SERVICES

• Ideas:

– Mobile teller units (bank on wheels)

– Use mobile phone technology for payments

– For credit: use hand-held computer devices for data gathering

• Issue: limited financial resources for investigation and implementation

A proven track record of sustainable development, impact on poverty, and increased outreach

The ability to rapidly scale up new programs and impact the lives of hundreds of thousands of poor entrepreneurs around the world

A range of investment opportunities across programs and regions

FINCA – conclusion: what FINCA offers

Documents

FINCA INTERNATIONAL INCORPORATED SMALL LOANS BIG CHANGES