Project detail - Kiva Refugee Investment Fund II

Who is our prospective customer?

KRIF II, or the Kiva Refugee Investment Fund II, is a debt fund dedicated to providing loans to Tier II and III microfinance institutions (MFIs) that serve refugees, internally displaced persons (IDPs), impacted host communities, and populations at risk of forced migration. The fund targets MFIs globally that are seeking to expand services to these vulnerable groups. This is Kiva’s second initiative focused on refugee financing, building on the success of KRIF. The fund is managed by Kiva Capital Management, LLC (KCM), a subsidiary of Kiva Microfunds (Kiva), a US-based public charity best known for the Kiva.org crowdfunding platform.

What is our funding objective?

FMO is providing a USD 5 million loan to KRIF II from the MASSIF fund to pioneer refugee financing in partnership with Kiva. The loan will be used to deploy private debt investments to Tier II and III MFIs that serve refugee populations. This investment allows FMO to gain valuable insights into this segment, which is expected to grow due to climate change and global instability. Through this participation, FMO aims to help scale the refugee finance market and improve livelihood opportunities for forcibly displaced persons.

Why do we want to fund this investment?

FMO’s loan aligns with its long-standing commitment to support forcibly displaced populations. This initiative represents a pioneering opportunity to develop sustainable financial solutions for a growing and underserved group. FMO’s involvement is expected to mobilize additional capital into the sector and support further development. It also offers a valuable learning opportunity to refine approaches across diverse country contexts. This investment qualifies for the Reducing Inequalities (RI) label.

What is the Environmental and Social categorization rationale?

The investment is categorized as Category C, reflecting limited environmental and social (E&S) risks and impacts from FMO’s investment alone. The primary risks relate to adherence to customer protection principles, which are not formally part of FMO’s E&S categorization. However, given the vulnerability of the target population and the varied contexts in which MFIs operate, additional considerations apply. The fund manager, KCM, is well-equipped to monitor and engage with MFIs to ensure adherence to international best practices in client protection. FMO analyses risks from different perspectives and assessments. In the case of microfinance investments, the E&S classification is typically low because the exposure generally is limited to retail and micro-entrepreneurs. The risks that might come with microfinance investments, such as, among others, over-indebtedness, transparency of interest rates, and responsible pricing, are covered by FMO in other assessments such as the Client Protection Principles (CPPs). In case of high contextual risk, a human right assessment can be carried out.