Norway launches $117 mln microcredit fund

Article from Reuters and writer Aasa Christine Stoltz.

The Norwegian government, companies and a private investor have formed a $117 million microcredit fund aiming to help people in poor countries out of poverty, although critics have said its interest rates will be too high.

It will be one of the world's biggest funds in the field of microfinance which involves lending small sums of cash to poor entrepreneurs who would otherwise not have access to traditional banking or credit facilities.

Privately owned financial group and initiator Ferd has joined with banking group DnB NOR, insurance company Storebrand, life insurer KLP and the government to set up the 600 million Norwegian crowns ($117.1 million) fund.

The state will contribute 50 percent of the fund, and the other partners the rest, the foreign ministry said.

Dubbed the Norwegian Microfinance Initiative (NMI), the fund will help to provide small loans without collateral to poor people in developing countries, Development Aid Minister Erik Solheim said in a statement on Monday.

It will invest in microfinance institutions by providing capital, loans or guaranties, Ferd said.

"Microfinancing has shown that it actually works, it helps poor people to help themselves," Johan Andresen, initiator, owner and chief executive of Ferd told Reuters.