On December 15, 2017, the Prime Minister of Timor-Leste, Dr. Mari Alkatiri, in the presence of Alexandre Leitão, European Union Ambassador, signed a “letter of no objection” for a European Investment Bank (EIB) 2 million euro investment in the microfinance company, Kaebauk Investimentu no Finansas (KIF).
For each financing by the European Investment Bank in Timor-Leste, EIB needs a formal “letter of no objection” by the Government. This procedure was agreed in the Cotonou Agreement, which is the agreement between the European Union and the Government of Timor-Leste. The operation in question is a 2 million euro loan to Kaebauk Investimentu no Finansas (KIF), resulting from its parent company Tuba Rai Metin(TRM), which also ensures the operation.
The KIF Company obtained a license from Central Bank of Timor-Leste in March 2016, it has 22 branches in Timor-Leste and a considerable number of loans in agriculture and education. Their target areas are education, the EIB investment and the agricultural and housing sectors. Association with microfinance operations is very important to the European Union, particularly in the agriculture and forestry areas.
KIF should reach 58,000 borrowers during the term of the EIB investment, with the highest impact:
- in the rural population, which represents 70% of the Timor-Leste population and who currently represents 80% of KIF’s clients, namely through agriculture;
- the inequality between men and women is also given particular attention: the client base of KIF is currently composed of 91% of women;
- Finally, the support to young people through student loans.
In his presentation, Prime Minister Alkatiri highlighted the importance of reaching rural populations, allowing them, namely, to have access to small scale financing to improve production factors and equipment as well as the marketing of agricultural products and the agricultural value chain, in order to strengthen rural incomes and their means of subsistence. He also reaffirmed that it is essential to promote women’s participation, expected to benefit from this new instrument, since none better than women to understand the difficulties associated to rural development and no one is better prepared to contribute to accelerate development with their intensive, hard work, based on their experience. The Prime Minister also stressed that this instrument will allow more young people to study and improve their competencies, therefore strengthening economic development opportunities.