Apexes: An Important Source of Local Funding

This document discusses the importance of apexes as sources of local funding for microfinance. They increase access to finance and improve the economic livelihood of poor people.

Apexes are financed with public funds or funds from donors from developed countries and play a useful role for microfinance in start-up and nascent financial sector environments. Apexes:

• Help governments signal commitment to inclusive finance and inject significant amounts of liquidity into MFIs;
• Are used by international public funders to jump-start the microfinance sector and coordinate their funding;
• Have become even more attractive to microfinance funders since the global financial crisis;
• Do not expose MFIs to foreign exchange rate risks as they provide local currency funding;
• Proved to be stable and resilient partners that continued to fund MFIs during the crisis;
• Face several challenges, including governance issues and political interventions.

The document states that governments and funders must pay attention to apexes' transparency and efficiency. CGAP plans to further analyze and document the necessary conditions to make apexes more efficient funding vehicles for funders and governments.