A week after the meeting between State Counsellor Aung San Suu Kyi and President Obama at the White House, the US government on September 20 kicked off a loan guarantee programme for Myanmar.
The US Ambassador to Myanmar, Mr Scot Marciel, said the US will provide more than US$10 million in loans to more than 5,000 small businesses in Myanmar to grow and create jobs for people across the country.
Mr Marcial said, “State Counsellor Aung San Suu Kyi’s visit to the U.S. illustrated the strong and growing friendship between Myanmar and the United States. The United States is committed to supporting the people of Myanmar and their new government in their pursuit of inclusive economic growth and development.”
The US government will provide the loan through five Myanmar microfinance institutions: ASAMicrofinance (Myanmar) Limited, LOLC Myanmar, Myanmar Development Partners, Pact Global Microfinance Fund and Proximity Designs.
USAID's Development Credit Authority (DCA) guarantee will target micro, small, and medium-sized businesses working in the agriculture sector, including farming, livestock, manufacturing, trade and services. The agreement will help over 5,000 borrowers, the majority of which are women-owned enterprises, access larger loans (up to $5,000, compared to the current average loan size of $200), enabling them to grow their businesses and hire more workers.
Yamin Phyu Myat, the managing director of Myanmar Development Partners, told Mizzima, “There is a guarantee system in the loan programme. If we lend money to high-risk businesses and the businesses fail, the US side has guaranteed that they will also accept/suffer half of the financial losses.”
This loan guarantee program will be accompanied by technical assistance to both the microfinance institutions and the government to ensure responsible and effective lending. On August 29, the Financial Regulatory Department (FRD) in the Ministry of Planning and Finance, released new and groundbreaking directives for microfinance lending that allow microfinance institutions to expand their lending through deposit taking and borrowing from domestic commercial banks. This progressive regulatory change will significantly contribute to economic growth in every state and region.