MFX is a socially-oriented company that supports impact investing with affordable hedging products and risk management education.
MFX, created in 2009, gives impact investors the ability to protect themselves against the risk of currency movement. Using hedging, currency risk can be taken out of the impact investment value chain, thus creating a more stable, secure impact investment business model.
Starting in 2005, a group of microfinance organizations – lenders, investors, raters, networks, and foundations – came together to seek an answer to the problem of currency risk which was a growing threat to the microfinance industry. This group initiated and funded a project to allow the industry to move toward a local currency lending model that would better align with its mission of supplying stable financing to institutions operating at the base of the pyramid.
In 2009, MFX Solutions (MFX) was born as an organization dedicated to providing microfinance lenders with accessible hedging instruments in nearly all emerging and frontier markets while eliminating the burden of collateral. The founders’ vision was to create a full-service industry initiative, providing microfinance funds and institutions with both hedging products and the training needed to use them effectively. MFX partnered with government agencies, foundations, international development institutions and the private sector to bring this vision to life through a unique multi-stakeholder model.
In 2015, MFX saw that many of the currency risk problems faced by microfinance were also holding back other sectors with similar missions of eliminating poverty, addressing climate and expanding access to heath and housing. MFX expanded its model to meet this growing need becoming the first hedging facility dedicated to serving Impact investors of all types. In all, MFX has hedged around $5 billion in impact loans in developing countries covering more than 55 currencies. Its education programs have trained hundreds of MSME lenders on managing market risk and how to run a hedging operation.
MFX believes that when currency and market risks are managed effectively, development lending can reach more entrepreneurs at the bottom of the pyramid, more sustainably, at a lower cost. Better access to foreign exchange hedging tools and financial education can therefore have a profound effect on global poverty.