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					                       Reaching out,
                     reaching further
Annual report 2007

                     inves tin g in pe ople
Participate in Oikocredit

Are you interested in helping to reduce
poverty? In making reliable financial                                                         in ve st in g in pe ople
services available to the poor? Then
you may want to participate in Oiko-
credit. A small investment can go a
long way. Oikocredit offers investors a
high social return and a stable finan-
cial return. Financial performance his-
tory is of course no guarantee for the

future, but joining Oikocredit’s effort
is a guarantee that somewhere in the
world a small step is taken to alleviate

l Individuals can invest through one           6       Report of the board of directors:
of Oikocredit’s support associations
(page 57) or through the International
                                                       Outstanding results and social performance
Share Foundation in the Netherlands
at the same address as the internatio-
nal office (see back cover).
                                             11        Credit Operations:
l Churches and church-related organ-                   Sustainable across the board
isations can become direct members
and can invest directly in Oikocredit                  - Africa
(see back cover).
                                                       - Asia
The text in this publication is not an
invitation to invest nor is it an offer of
                                                       - Central and Eastern Europe
securities and / or financial instru-
ments. That can be made only through
                                                       - Latin America
a formal prospectus where applicable
pursuant to local legislation and in
compliance with applicable legal
                                             19        Membership and Investments:
requirements and is therefore only                     Strong foundation
allowed in certain jurisdictions. For
more information please visit the
website,, or con-         22        Financial statements
tact the support association closest
to you.
                                             57        Oikocredit worldwide: Address information
The Oikocredit annual report 2007
(available in English, Spanish, French,      58        Strategic partners and networks
German and Dutch) and the 2007
project overview (multilingual edition)
are available from the international         59        The Oikocredit team
support office (see back cover).

                                             On the cover: Juliana Danso and family in Ghana, market their products through fair trade company
                                             Divine Chocolate Ltd. (UK) and Divine Chocolate Inc. (USA). Oikocredit has an equity investment in
                                             Divine Chocolate Ltd. (since 2006) and Divine Chocolate Inc. (since 2007).

  The Upland Marketing Foundation (UMFI),

  an Oikocredit partner in the Philippines,

  brings the products of community-based

  enterprises to mainstream markets on

  fair trade terms.

  On the picture: Emy Jollado, cooperative farmer in the Philippi-
  nes and supervisor of a local rice mill. Emy’s cooperative works
  hand in hand with UMFI which is responsible for the marketing
  on fair terms of their organic rice in Philippine supermarkets.
  Oikocredit supports UMFI’s fair trade work since 2005.

Reaching out, reaching further
Oikocredit: private capital for development

Oikocredit is a cooperative financial development institution that offers loans or investment
capital for microfinance institutions, cooperatives and small and medium sized enterprises in
developing countries. Oikocredit is privately financed through the sale of shares. Direct mem-
                                                                                                 Oikocredit annual report 2007

bers of the cooperative are churches, church-affiliated organisations, project members and
Oikocredit support associations; individuals invest through support associations. Oikocredit
pays its shareholders a modest yearly dividend.

                                Five years Oikocredit
                                     In numbers                                                                                                      2007              2006             2005             2004           2003

                                     Members                                                                                                           598               585              582               571          554
                                     Regional offices                                                                                                   11                11               11                11           11
                                     Country representation (outside regional offices)                                                                  23                18               17                15            9
                                     Staff members in fte 1)                                                                                           160               137              122               101           89
                                     Projects in portfolio 2)                                                                                          637               561              467               398          362

                                     EUR million (E)

                                     Member capital                                                                                                  318.8            276.3            241.8             203.5         182.1
                                       Other lendable funds                                                                                            9.8              9.8             12.3              10.7          14.6
                                     Total lendable funds                                                                                            328.6            286.1            254.1             214.2         196.7

                                     Project funding activities in the year
                                      New approvals in the year (at average exchange rates last 5 years)                                             167.0            117.1              85.9              46.6         36.9
                                      Increase % approvals                                                                                            42.7%            36.3%             84.5%            26.3%         20.6%
                                      Cumulative approvals                                                                                           668.1            508.6             391.9            301.6         256.1

                                      New disbursements in the year (at average exchange rates last 5 years)                                         141.9              94.4             69.0              32.6         28.2
                                      Increase % disbursals                                                                                           50.3%            36.8%           111.3%             15.8%         12.2%
                                      Cumulative disbursements                                                                                       523.5            388.2             294.5            222.9         190.1

                                       Repayments in capital in the year                                                                              60.6             38.8              31.5             18.5          12.6
                                       Payment of interest and dividends in the year 3)                                                               36.2             12.1              10.1              8.5           7.7
                                     Total cumulative payments by projects                                                                           327.8            231.0             180.1            138.5         111.5

                                     Total development financing outstanding                                                                         264.5            203.7            163.0             121.0         108.8
                                      As % lendable funds (beginning of year) at average exchange rates last 5 years                                 93.8 %            74.8 %           69.9 %            62.3%         57.5%
                                      Term investments related to the South (development banks,
                                      developing countries, corporations active in developing countries)                                              69.2             71.1             53.7              48.4          32.2
                                     Total outstanding in the South                                                                                  333.7            274.8            216.7             169.4         141.0

                                     Loss provisions (capital plus interest)                                                                         36.0             31.4              29.3             23.0           21.5
                                      As % of project funding outstanding (financed by own funds) 4)                                                13.6%            15.4%             18.1%            20.1%          21.1%
                                      Write-offs charged to loss provisions                                                                            1.3              1.9               1.2              3.5            0.5

                                     Total income                                                                                                     34.5              21.2             17.8             16.0          14.5
                                       Expenses (excluding grant income)                                                                               8.7               7.6              6.8              5.4           4.7
                                      As % of development financing Income                                                                            43.3%            49.7%             55.3%            56.3%         56.6%
                                      As % total assets                                                                                                2.3%             2.4%              2.4%             2.2%          2.1%
                                      Additions to loss provisions                                                                                      7.1              5.6               5.6              4.6          5.5
                                      As % of development financing income                                                                            35.0%            36.6%             45.5%            47.9%         66.3%
                                      As % total assets                                                                                                1.8%             1.7%              1.9%             1.9%          2.5%

                                     Net income                                                                                                       18.9               8.5               6.2              6.7          4.7
                                      Proposed dividend                                                                                                5.8               5.1               4.3              3.8          3.5
Oikocredit annual report 2007

                                   Including staff employed by the regional offices.
                                   Projects in portfolio include project financing outstanding as well as projects currently in the process of disbursement, and excludes repaid, written-off or cancelled projects.
                                   In 2007 the gain on shares sold in Banco Del Desarrollo is included.
                                   A part of our projects are financed by third parties.

The impact of microfinance

Reaching out, reaching further

 “In a global community, everyone would have a       “Empowering the poor with sustainable financial
 lot more if some would accept a little less.        services. That is our mission and it remains as
 Through membership in Oikocredit, we have the       valid today as ever. Microfinance is booming, but
 opportunity to accept a little less in the way of   the need for reliable financial services for the
 financial return and to be part of a worldwide      poor is growing as well. Oikocredit’s approach
 community of shared vision and hope for the         is based on decades of experience and on a
 future. The poor deserve to be served.              widespread network of people and partners.
                                                                                                            Oikocredit annual report 2007

 Through Oikocredit we can offer the very best       They are the key to our success.”
 service based on more than thirty years of
 dedication and commitment to excellence.”           Tor G. Gull, Managing Director

 Jill Martin, President of the board of directors

                                Report of the board of directors

                                Oikocredit in 2007:
                                results and social
                                Oikocredit continues to grow. For this we are grateful
                                because it means we can fulfil our mission and reach
                                out to more and more marginalized people. But growth
                                is not all about financial performance. It is also about
                                how we succeed in reaching people and about the im-
                                pact we have. It is about our social performance.

                                On behalf of the Oikocredit board of directors, we present             Approvals and disbursals
                                the annual report with the financial statements of the society         Together with our partners we maintain rapid growth in ap-
                                for the year 2007. This report highlights the most important           provals and disbursals. In 2007, 256 projects were approved
                                developments during the year. It will be presented for ap-             for a total of E 160 million. Compared to 2006, this is an incre-
                                proval to the annual general meeting in June 2008.                     ase of 20% in the number of projects approved and 36% in
                                                                                                       the amount approved. Disbursals rose considerably: E 135
                                Development financing                                                  million in 2007, an increase of 44%.
                                Our mission is to have a positive impact on the lives of poor
                                people and therefore a monitoring system has been deve-                Quality of portfolio
                                loped to analyse our social and financial performance. We              Loan repayment performance showed spectacular improve-
                                intend to further improve this system and provide technical            ment (see also the upper graph at the next page). The ‘port-
                                assistance funds to promote greater awareness, motivate                folio at risk 90 days ratio’ dropped from 14.8% in 2005 to
                                and offer training to our partners.                                    9.8% in 2006 and to 8% by the end of 2007. The absolute
                                                                                                       amount of delayed payments at the end of 2007 was more or
                                                                                                       less the same as at the end of 2006. Write-offs in 2007 were
                                 “The demand is overwhelming”                                          extremely low: 0.4% of the total portfolio. These results were
                                 “Credit for development has become a very dynamic market, es-         achieved thanks to close monitoring of projects and thanks to
                                 pecially in the microfinance sector”, says Tor Gull. “The market is   the bad debt collection unit working in close cooperation with
                                 growing rapidly as in many parts of the world the demand for          the offices. Further improvements in portfolio at risk should
                                 microfinance capital is huge. Even though the supply of capital       be possible, especially with our non-financial intermediaries,
                                 is growing fast, there simply is not enough to answer the need.       where portfolio at risk is still 24%.
                                 The demand and the maturity of the sector attract a growing
                                 number of commercial financial institutions, because they see         Market studies and focus countries
                                 an opportunity to expand into an interesting market. The pre-         Based on market studies in Bosnia & Herzegovina, Botswa-
                                 sence of commercial banks in microfinance activities has spar-        na, Burkina Faso, Colombia, Honduras, Laos, Moldova and
                                 ked a lively debate: is it a good thing because standard financial    Sierra Leone, we recommended Bosnia & Herzegovina, Bur-
                                 services are coming within reach of poor people, or is it not such    kina Faso, Colombia, Honduras and Moldova as new focus
Oikocredit annual report 2007

                                 a good thing because poor people are being used to generate           countries with a country representative. We will start piloting
                                 profit?                                                               microfinance projects in Sierra Leone and Laos. Botswana
                                 These questions will remain. For Oikocredit it is important to re-    was removed from the list of focus countries; the market stu-
                                 main true to its principles: to effectively reach as many poor        dy showed that a sustainable portfolio is not possible there.
                                 people as possible through projects and partners that share our
                                 belief.”                                                              Term investments
                                                                                                       During 2007 the yield increased considerably due to rising

                                                                                                         Portfolio at risk and write-offs
                                                                                as percentage of total development financing (as per 31 December)

                                                                                                  35.0                                                                           1.0


                                                                            % Portfolio at risk

                                                                                                                                                                                       % Write-offs




                                                                                                   0.0                                                                           0.0
                                                                                                                 2005                    2006                      2007

                                                                                                              PAR 90 MFI’s                                        PAR 90 other sectors
   On the picture: A client of microfinance organisation SEF, The
   Smalll Enterprise Foundation, in South Africa signs her receipt.                                           PAR 90 total portfolio                              Write-offs

   SEF is an Oikocredit partner since 2007.

                                                                             Investment mix Oikocredit invested funds
 “Decentralisation is our strength”                                                                                          (as per 31 December)
 “We started a process of decentralisation and Oikocredit now

 has four regional development centres that can approve loans
                                                                                                                              Development financing:
 up to E 2 million. That is one of Oikocredit’s distinctive characte-                                                         financial intermediaries
 ristics”, says Tor Gull. “Managing growth through a decentralised                                                                 (higher risk)
 organisation is both demanding and safe, because it brings
 responsibility closer to the operations. The organisation grows
 where the actual need is, and that is our guarantee that people
 put their effort where it is needed most.”
                                                                                                     financing:                                                           SRI*:
                                                                                                  agricultural and                                                    commitments
interest rates partly resulting from the credit crisis which star-                                 other sectors                                                    for development
                                                                                                   (higher risk)                                                    financing not yet
ted in the summer. The performance of our term investment                                               14%                         SRI*:
portfolio was below our chosen benchmark which is based                                                                    development banks and
                                                                                                                                                                       (lower risk)
                                                                                                                            developing countries
on government’s bond issues (this benchmark is therefore                                                                         (lower risk)
not affected by the credit crisis). Measured over a longer                                                                          11%
period, our performance is still better than the benchmark.

                               In 2006 Oikocredit established                                                                Development financing:
                                                                                                                             financial intermediaries
                               the 4F-Fund (Fund for Fair
                                                                                                                                  (higher risk)
                               Future). The fund enables a                                                                              47%
                               select group of church-related
investors to participate and to invest in a socially responsible                Development
way with a focus on development. In 2007 we reached an                            financing:
agreement with SNS (a financial institution in the Nether-                     agricultural and                                                                             SRI*:
                                                                                other sectors                                                                           commitments
lands) to present the 4F-Fund to potential investors in the                     (higher risk)                                                                         for development
Netherlands and Belgium. So far investments in the fund                              16%                                                                              financing not yet
                                                                                                                                                                                                      Oikocredit annual report 2007

are below expectations, maybe because the fund was not                                                                                                                    disbursed
                                                                                                             SRI*:                     SRI*:
actively promoted.                                                                                       other sectors        development banks and                      (lower risk)
                                                                                                          (lower risk)         developing countries                          19%

We continue searching for investment opportunities in pre-                                                    2%                    (lower risk)
ferred and development-related sectors. In cooperation with
a financial institution which developed an index of environ-                                                            *SRI = socially responsible investments
mentally friendly companies (especially in clean energy),               ➤

                                screened by Ethibel, we are trying to identify companies to        Expenses
                                be included in the 4F-Fund.                                        Expenses were up by approximately 15%, but decreased as
                                                                                                   a percentage of credit operations income (excluding the
                                There is a further shift of invested funds from term invest-       BANDES transaction) from 50% in 2006 to 35% in 2007.
                                ments towards direct development financing.                        Personnel costs dropped from 2.5% of outstanding develop-
                                                                                                   ment financing portfolio to 2.3%. This is a result of econo-
                                Inflow of capital                                                  mies of scale, but it also demonstrates increased efficiency
                                The gross inflow of new member capital in 2007 was more            and productivity.
                                than satisfactory: E 46.5 million in 2007 (E 36.2 million in
                                2006). Redemptions in 2007 were E 2.7 million (2006: E 0.5         Addition to loan loss provisions
                                million) resulting in net inflow increase of 22% to E 43.8 mil-    In 2007, E 7.1 million was added to the loss provisions, 35%
                                lion in 2007 (E 35.8 million in 2006).                             of development financing income (2006: E 5.6 million), a
                                                                                                   result of the lower ‘portfolio at risk 90 days ratio’. Included in
                                Inflow in the USA                                                  this provision is an extra addition to the loss provision rela-
                                In the second half of 2007, investments in Oikocredit became       ted to the deteriorating political situation in Kenya.
                                available in the United States of America through MicroPlace
                                (a subsidiary of eBay). It is an innovative concept of web-        Results of business units
                                based investing in microfinance institutions. Oikocredit is one    The activities of Oikocredit are divided into the following
                                of two organisations presented on MicroPlace.                      business segments:

                                Other                                                              l   Credit operations (direct project financing);
                                In 2007, we started issuing shares in British pounds, Cana-        l   Term investment portfolio (bonds and shares);
                                dian dollars and Swedish kroner.                                   l   Non-banking activities (model costs).

                                Income statement 2007                                              The results of our business units – in million Euros – for the
                                The enormous growth of our development financing portfolio         last three years (excluding result on sale of BANDES shares
                                led to an increase in related income by 33%, excluding the         and the charge to income of the negative equalisation re-
                                net result from the sale of Banco del Desarrollo shares.           serve term investments) are:

                                The yield on our term investments increased to approxima-                Year           Credit             Term          Non-banking
                                tely 5% by the end of 2007 (2006: 4%), resulting in a decline                         operations       investments     (results added to
                                                                                                                                      (incl 4F-Fund)        funds)
                                in value of this portfolio. As the equalisation reserve for term
                                investments became negative (E 3.2 million at the end of                 2005             1.7              5.1               1.3
                                2007), the decline in value was deducted from the net in-                2006             3.5              5.0               0.5
                                come from the term investment portfolio. Income amounted                 2007             5.6              4.6               2.1
                                to approximately E 2.1 million (2006: E 5 million).

                                Banco del Desarrollo                                               The net result of credit operations improved to around E 5.6
                                In 1988, Oikocredit extended a loan of US$ 500,000 to Ban-         million in 2007 (approximately 2.4% of average outstanding
                                co del Desarrollo (BANDES) in Chile. Later this loan was           portfolio) thanks to portfolio growth, increased efficiency and
                                changed into an equity investment. During the years BAN-           improved quality of the portfolio. For the first time net income
                                DES grew into a large financial institution. The bank has          from credit operations is higher than net income from term
                                always followed its original mission of targeting small and        investments.
                                medium sized enterprises. In 2007, a Canadian bank made
                                a take over offer. The offer was attractive, not only because      The net result of our subsidiary in India (Maanaveeya) sho-
                                of the price, but also because of their commitment to follow       wed a loss of E 52,000 (2006: net income of E 255,000). The
                                the original mission. The main shareholder agreed to sell          decrease in the net result was mainly caused by higher cost
                                and so did other major shareholders, including Oikocredit.         of external financing and higher loss provisions.
                                The tax payable on the result of the transaction was discus-
                                sed with Chilean tax advisors. The Chilean government              Our non-banking expenses were fully covered by grant in-
                                might take a point of view that the gain on selling the shares     come of the Oikocredit International Support Foundation.
Oikocredit annual report 2007

                                has to be taxed with a 35% tax rate. However our tax ad-           The results are added to – or released from – designated
                                visors are of the opinion that a sole tax of 17% is applicable     funds within the Support Foundation.
                                for this transaction taking into account applicable Chilean
                                tax laws and court decisions. The net result, after deduction      Dividend
                                of estimated taxes of 17% on the gain, costs as well as re-        A dividend of 2% will be proposed to the annual general
                                covery of accumulated exchange rate differences, was ap-           meeting in June 2008. In addition to this dividend, we will
                                proximately E 12.6 million.                                        propose to add E 13 million to the general reserve.

    “We are looking for the best outreach”                                Other important developments
    “Most lenders want to work with the same well established
    microfinance institutions. Understandably so, but it does present     Human resource management (HRM)
    a problem”, says Tor Gull, “because as a result some of these         The number of people directly or indirectly employed by
    institutions are flooded with capital. That is why we go out of our   Oikocredit at the end of 2007 (in full time equivalents) was
    way to identify small, young microfinance institutions that ope-      160, including staff of the international support office, the
    rate in isolated areas. Reaching them and working with them can       regional and country offices and country representatives.
    only be successful with a strong and decentralised organisation
    like ours.”                                                           Employment agreements and remuneration of the regional
                                                                          managers were reviewed. An external agency performed
                                                                          benchmark studies in several countries. If and where neces-
                                                                          sary employment agreements were adjusted.
Cash and currency management
Cash, needed to finance the development portfolio, comes                  At the annual general meeting in South Africa in 2007 it was
partly from our own operations and partly from new member                 decided to develop a gender policy. This decision was based
capital and long term loans. Inflow of new member capital is              on the result of two workshops: one at the European Sup-
concentrated mostly in December. Disbursements, however,                  port Association (ESA) meeting in March 2007 in Barcelona
occur throughout the year, and thus cash from operations                  and one at the general meeting itself.
and inflow of new member capital is not sufficient during the
year. Temporary cash needs are solved by credit lines from                IT developments
financial institutions and members, or by selling a part of our           Outsourcing of our business applications (such as e-mail,
term investment portfolio. The proceeds of the sale of Banco              members data system, project tracking system) to a profes-
del Desarrollo were included in the cash balances as at year-             sional data centre is in progress, ensuring that we have
end, leading to temporary higher cash balances.                           improved access to all our systems.

Member capital is mostly in Euros, while most of the capital              The largest part of legal resources goes to ensuring that we
invested is in local currency or in US dollars. This leaves               have adequate documentation for Oikocredit’s loans and
considerable currency risks. By using cross currency swaps,               equity investments. From 2004 until 2007, the number of
options and other instruments, we hedge at least 50% of                   contract transactions doubled. In order to improve efficiency
our US dollar exposure. The decline in the value of the US                and to help us handle growth, we have started a nine-month
dollar versus the Euro accelerated in 2007. Therefore the                 pilot programme to automate contract preparation.
hedged part of our US dollar exposure has been increased
from approximately 50% to around 70%.                                     In 2007, we introduced a system to support project handling
                                                                          and monitoring in a number of regions; other regions will fol-
Committed long term lending in local currency increased to                low in 2008 and 2009. Requirements for gathering the data
E 125 million (E 82 million in 2006). The local currency part             will be finalized and integrated in the system.
of our portfolio will continue to grow as there is strong de-
mand for long term local currency loans. Related currency                 Technical assistance
risks are covered by:                                                     In 2006, it was decided to focus on technical assistance and
                                                                          a coordinator was appointed. A strategy and guidelines for
l    The Dutch Government grant (through ICCO Alliance) for               the technical assistance unit were developed. This resulted
     our Local Currency Risk Fund (E 8.8 million for four years           in a higher number of applications and consequently the
     starting in 2007). With our own contribution from net in-            amount spent on technical assistance rose from E 206,000
     come of E 2.2 million we are able to make additional local           in 2006 to E 320,000 in 2007.
     currency loans worth E 55 million over the next four years.
                                                                          Oikocredit continues to support Terrafina Microfinance (a
l    An investment of US$ 5 million in the Currency Exchange              cooperation with ICCO and Rabobank Foundation) which
     Fund (TCX). TCX is an initiative of FMO, a Dutch dev-                aims to support upcoming rural microfinance institutions in a
     elopment financing institution, enabling institutional len-          number of African countries.
     ders to hedge local currency loans for longer terms and up
     to at least three times the amount invested in the fund.             Partnerships with the Church of Sweden and ING for techni-
                                                                                                                                             Oikocredit annual report 2007

                                                                          cal assistance were pursued and agreements are in the pro-
l    New loan agreements with ING Vysya in India for Rupeeh               cess of being updated.
     500 million (approximately E 9 million), thus eliminating
     our currency risk when financing in local currency in India.         Finalising and approving prospectus
                                                                          A new prospectus guideline was issued to comply with the in-
                                                                          tensified guidelines introduced in 2006. This prospectus had
                                                                          to be audited by and filed with the Authority for Financial Mar-

                                kets (AFM). Approval of that prospectus and of the prospectus     October provided a wonderful opportunity to celebrate our
                                for the International Share Foundation was received in June       remarkable growth. We welcomed many guests from within
                                and July 2007. European passports were issued by the Autho-       our network and especially the mayor of Amersfoort, who
                                rity for Financial Markets (AFM) enabling Oikocredit to issue     symbolically opened our new office.
                                shares in those European countries where we are active.
                                                                                                  Future developments
                                In September and October we modified and updated the              In June 2007, the long term strategy was updated. New
                                prospectus of Oikocredit USA in order to issue Global Com-        highlights are:
                                munity Notes and to include the online offerings through the
                                MicroPlace website. The prospectus has now been registe-          l   Finding new ways of attracting investors to keep up with
                                red in more than forty states of the USA and new states will          the growth rate of operations. Membership structure is
                                be added this year.                                                   being reviewed and streamlined. The organisational struc-
                                                                                                      ture of our Membership & Investment department has
                                Cooperation                                                           been strengthened.
                                The growth and effectiveness of Oikocredit in the field are       l   Increase of our non-microfinance part of the portfolio, by
                                noticed by many development organisations who seek co-                including such objectives in the regional strategies.
                                operation for financial and administrative services. We are       l   Further decentralisation of decision-making in project ap-
                                now engaged in monitoring and administration of funds for             proval and loan documentation.
                                ASN, ICCO, OXFAM / NOVIB, Woord en Daad, KerkinAktie              l   The launch of a Seed Capital Fund in 2008, aimed at ex-
                                and CORDAID. Our joint portfolio with ICCO has grown to               ceptionally risky projects with a big social impact in deve-
                                more than E 21 million in outstanding amount.                         loping countries.

                                Audit committee                                                   2008 and on
                                The audit committee convened twice in 2007, reviewing             We expect growth to continue in 2008, and aim for autono-
                                Oikocredit’s financial statements, semi-annual figures, inter-    mous growth of the development financing portfolio of 15%
                                nal control systems, risk management, social performance          per year. The fair trade campaign this year will boost our visi-
                                management, compliance, our hedging strategy and the im-          bility, especially with the non-microfinance sector. The orga-
                                plementation of recommendations to strengthen our network         nisation is well prepared to cope with growth in all aspects.
                                of support associations. The committee members discussed
                                the audit activities in 2007 with our external and with our in-   We are beginning to reap the fruits of systems to measure
                                ternal auditor and also met twice with the board of directors     and monitor social performance. They deliver a solid profile
                                of Oikocredit. The risk management process and business           of our partners in terms of size, age and outreach. Efforts to
                                continuity are continuously being reviewed.                       get more information on the people reached by our project
                                                                                                  partners will continue and we are conducting impact studies
                                Tax issues                                                        for a number of projects. Information generated should help
                                In 2007, a new law on inheritance taxes was introduced in         us sharpen our profile as a development finance institution.
                                the Netherlands. Oikocredit and its related foundations had
                                to file applications to renew the tax free status in terms of     Conclusion
                                gifts and inheritance taxes. Initially the application was not    We would like to thank our members and stakeholders for
                                approved. A new application was filed with the authorities        supporting us and believing in our ambitions. Their support
                                explaining why our tax free status should be continued.           and understanding are crucial to our success. We also want
                                                                                                  to express our sincere thanks to our committed, hardworking
                                New office (open house)                                           staff. Once again they have shown what a tremendous capa-
                                The international support office moved to a new building in       city the organisation has. Everybody is important in the Oiko-
                                Amersfoort, the Netherlands. An open house reception in           credit chain and therefore everybody deserves our gratitude.

                                                    Toronto, February 2008                                           Amersfoort, February 2008
Oikocredit annual report 2007

                                                           Jill Martin                                                      Tor G. Gull
                                               President of the board of directors                                       Managing Director

We are transcending the traditional

dependence of the South on the North.

Our regional offices are sustainable and

can continue their work with the capital

repayments from the earlier loan cycles.

Northern countries provide the inflow of

new capital, enabling us to go from

strong to stronger.

Credit Operations

                                                                         Oikocredit annual report 2007

On the picture: Evelyn Abadjano is a member of Cuanos Women
Association in the Philippines. She receives a fair price for her
woven baskets purchased by Southern Partners and Fair Trade
Corporation (SPFTC). SPFTC is a fair trade organisation that
engages in food processing and trading of food and non-food
products for small producers and has been an Oikocredit partner
since 2002.

                                Impressive growth

                                across the board
                                Last year we achieved one of our key targets: to
                                deliver sustainable development finance services. In
                                2007, the regional offices generated enough income
                                to cover their own costs and to build provisions for
                                bad debts. Together they provided returns to also
                                cover the dividend Oikocredit pays its shareholders.
                                That is a milestone and it has provided an enormous
                                boost of confidence.

                                Decentralisation                                                        with four new offices (Benin, Moldova, Paraguay and Russia)
                                The regional development centres (RDC) are the next phase               and three new country offices were approved (Bosnia &
                                of decentralisation. Through them we are bringing decision              Herzegovina, Burkina Faso and Colombia). We are acting
                                making and responsibilities closer to the operations. Decen-            much more timely in cases of default and in most offices a
                                tralisation builds on what has been accomplished over more              specially designated staff member is responsible for monito-
                                than fifteen years of regional presence: excellent networking           ring repayment. In other words, while growing we maintain
                                and relationships with project partners, clear strategy and             control. Growth is not affecting quality, on the contrary, we are
                                planning, well established administrative procedures, growth            making sure we continue to reach the right partners.
                                towards sustainable operations, and improved ways to
                                measure outreach. In 2007, the South-East Asia office was               Guarding the right mix
                                accredited to become an RDC.                                            Oikocredit partners in microfinance are cooperatives, com-
                                                                                                        panies, corporations, NGOs, non-bank financial institutions
                                Growth continues                                                        and banks. Within that mix we give priority to young micro-
                                The whole organisation and all offices grew in size, diversity,         finance institutions and start-ups. They have more difficulty
                                sustainability and outreach. Many of the objectives that we             in attracting capital and have a slightly higher risk, but they
                                set for 2007 have been accomplished. Capital in the field was           tend to reach people in the poorer and more remote areas.
                                up 33% (from E 208 million to E 277 million). The number of
                                project partners was up 14%. The office network expanded                Through the years, we have supported producer cooperatives
                                                                                                        and small and medium sized enterprises. Commitment to
                                                                                                        these production partners is important. It stimulates business
                                 Measuring social performance                                           development on a slightly higher level, which is crucial for
                                                                                                        local economy to flourish. At the same time we remain loyal
                                 The issue of impact and social mission is central to supporting the    to the larger and well established microfinance institutions
                                 development of microfinance institutions and to political and finan-   with which we have built a long term relationship. Existing
                                 cial backing for the sector. Oikocredit attaches great significance    partners are becoming larger themselves and are coming
                                 to the social performance of its investments and loans. To mea-        back with requests for additional loans and equity invest-
                                 sure that performance we are piloting the use of the Progress out      ments. The number of partners grew from 561 to 637 and
                                 of Poverty Index (PPI), developed by the Grameen Foundation            the average capital outstanding per partner was up from
                                 and the social audit tool of CERISE.                                   E 206,000 to E 273,000.

                                 The Progress out of Poverty Index allows microfinance institutions     Equity investments
                                 to better determine the poverty level of their clients and is both a   Through an equity investment Oikocredit becomes a share-
                                 management and a measurement tool. It can help determine               holder in a business. It is a level of commitment that we feel
                                 which programmes are most effective and how quickly clients            is crucial to development in certain areas. Equity investment
                                 leave poverty.                                                         requires more active involvement, it comes with a higher risk,
Oikocredit annual report 2007

                                                                                                        but if it succeeds it provides a higher potential for return, both
                                 CERISE has developed an audit tool for evaluating the social per-      financially and socially.
                                 formance of microfinance institutions. A questionnaire (and guide
                                 for its use) complements the evaluation of the financial perfor-       In 2006 eight investments were approved for E 5 million; in
                                 mance of the institution. The audit provides knowledge and ‘light      2007 eleven new investments were approved for E 7 million.
                                 touch’ methodologies which are easy to implement.                      The overall portfolio has increased to E 22 million. With the
                                                                                                        growth of our equity portfolio, we are proving ourselves as a

diversified financial organisation offering a range of products       Bandhan in Kolkata:
in response to emerging needs.                                        instrumental in reaching the poor

Trend adjustment takes time                                           Bandhan, ‘Hope for the Poor’, engages in microfinance for eco-
Higher priority given to production partners and fair trade           nomically underprivileged women in Northeast India. They re-
organisations will not immediately produce the sought after           ceived an Oikocredit loan of 100 million Rupees (E 1.75 million)
results. It takes time before the effect of extra focus trans-        in December 2007. Their growth in loan portfolio, efficiency and
lates into additional projects identified, approved and disbur-       outreach is astounding and yet typical for many regions in India.
sed. Their share in total approvals increased to 18.4% (2006:         Outreach to poor women is massive. Bandhan has grown very
13.3%), and capital outstanding in that sector grew with 10%          rapidly over the last two years and has more than 400 branches
(from E 52 million to E 57 million).                                  with almost 2,000 staff members, 800,000 borrowers and a total
                                                                      loan portfolio outstanding of 3.7 billion Rupees (E 65 million).
Outreach                                                              They aim to reach four million borrowers in 2010.
We are steadily increasing our outreach to poor and under-
privileged people. A total of 273 microfinance partners are           Bandhan targets the poorest women. Last year, a project visit
now monitored. Almost a third of them (90) have a predomi-            was made to a group of thirty in Kolkata, all of them women
nantly rural focus, 45% are small-scale microfinance insti-           who had start-up businesses in sewing and trade. They sell fish,
tutions, and 25% give credit mainly to agricultural activities        vegetables, jewellery, spices and chicken. They pay a 20% an-
and related trade and services.                                       nual interest in weekly instalments and they have never defaul-
                                                                      ted. With the credit they are able to buy raw materials for their
                                                                      businesses, invest in a transport cart and show cases for their
        Year        Partners          Total       Estimated           goods and even earn enough to save and have all their children
                    monitored       outreach      Oikocredit          go to school. Women in India have always been oppressed and
                                                                      yet these women show entrepreneurship and self-confidence.
       2006           230          9,189,933       610,568            Access to money has given them awareness of their power.

                                                                      Whenever there are repayment problems, the philosophy of
    (per June 30)     273         11,225,478       719,700
                                                                      Bandhan is not to bring too much pressure, but to find out the
                                                                      reasons. “Ask why there is difficulty in paying and try to under-
                                                                      stand!” Bandhan also developed a programme targeting the hard
Social performance                                                    core poor and a programme for micro enterprise development. It
Social performance management (SPM) is considered im-                 became evident during the visit that this organisation will be in-
portant, but resources for it continue to be limited. Never-          strumental for Oikocredit in reaching out to many poor women.
theless, 2007 was a banner year for SPM:

l   A survey was conducted to ascertain the level of SPM
    awareness and practice among fifty-three microfinance
l   A report was presented to the annual general meeting in
    South Africa, covering outreach, age, portfolio scope and
    rural-urban focus of our microfinance partners. A prelimi-
    nary report of the PALFSI (a project partner in the Philip-
    pines) Impact Assessment was also presented.
l   The Philippine office and the Peru office started pro-
    jects to measure social performance. The Uruguay office
    piloted the use of the audit tool CERISE with two partners
    in Argentina.
l   A training on the Progress out of Poverty Index (PPI) was
                                                                                                                                           Oikocredit annual report 2007

    conducted in the Philippines. Four of our partners there
    have started a pilot, to be completed in 2008.
l   Since June 2006, we have steadily collected financial and
    outreach data on our microfinance partners. Our database
    now includes financial and outreach data of 92% of our
    microfinance partners, enabling us better to track our out-
    reach.                                                        ➤   Credit officer of Bandhan at the weekly collection meeting.

                                On the picture: This woman farmer in Ghana markets her    Technical assistance
                                produce to local and international markets through the    Technical assistance enables our partners to make the most
                                Savannah Farmers Marketing Company (SFMC). Oikocredit     of the money they invest. That is added value and it sets
                                loans help expand the reach of the SFMC.                  Oikocredit apart from many other players in the field. Assign-
                                                                                          ments range from a simple training to a more comprehen-
                                                                                          sive package of capacity building. For example, PEARL, a
                                                                                          microfinance institution in Uganda, received delinquency
                                                                                          training and corporate governance training. Over the past
                                                                                          few years we offered technical assistance in almost forty in-
                                                                                          stances. It enables us to strengthen the ties with our part-
                                                                                          ners and to enhance the impact they have with their work.

                                                                                          Global Credits Unit and fair trade
                                                                                          After three years, the Global Credits Unit manages partner-
                                                                                          ships with twenty-two microfinance projects in twelve non-
                                                                                          focus countries (in the Caucasus, Central Asia and Africa)
                                                                                          and ten fair trade partners (in Europe and the United States
                                                                                          of America). By the end of 2007, total portfolio outstanding
                                                                                          reached E 22 million. Portfolio quality is excellent, with port-
                                                                                          folio at risk standing at 1%.

                                                                                          In 2007, outreach was expanded to Tajikistan. With a new
                                                                                          representative in Kyrgyzstan, the unit will further expand
                                                                                          operations in Central Asia. At the same time it will focus on
                                                                                          increasing partnerships in new countries in Africa.

                                                                                          A new partnership with People Tree in the United Kingdom
                                                                                          was established. The partnership started with a loan of
                                                                                          £ 500,000 (approximately E 680,000) in July 2007 and
                                                                                          has been expanded to an equity investment. Our goal is to
                                                                                          double our fair trade portfolio by the end of 2008, with new
                                                                                          loans extended to both fair trade importers reached by
                                                                                          our Global Credits Unit and producers located in our focus

                                                                                                          10 countries with highest capital
                                                                                                         10 countries with highest capital outstanding
                                                                                                                                 (per 31 December,
                                                                                                                                (per 31 December, 2007)2007)




                                                                                         � E millions



Oikocredit annual report 2007




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                                                                                                            On the picture: Joyce Molele at work in
                                                                                                            her business – making tubs – started
                                                                                                            with the help of the Small Enterprise
In the continents

                                                                                                            Foundation (SEF) in South Africa.

                                                                                                            Ghana, increased visibility
                                                                                                            Operations showed increased visibility
                                                                                                            through loans approved to two micro-
                                                                                                            finance institutions (totalling E 1.57
                                                                                                            million) and two commercial banks
                                                                                                            (totalling E 3.4 million), specialised in
                                                                                                            lending to small and medium sized
                                                                                                            companies. This year we aim to shoul-
                                                                                                            der economic revival and to pilot acti-
                                                                                                            vities in Sierra Leone. We will initiate
                                                                                                            a study in Nigeria to evaluate future
                                                                                                            possibilities in that country.

                                                                                                            Côte d’Ivoire, revival
                                                                                                            Our fight against poverty is only viable
                                                                                                            when there is peace. In Côte d’Ivoire a
                                                                                                            new stability seems to settle in. After
                                                                                                            four years of standstill, two new appro-
                                                                                                            vals signal a come back. The comple-
                                                                                                            tion of the market for the women co-
                                                                                                            operative COCOVICO in Abidjan is a
                                                                                                            landmark for our involvement in the

                                                                                                            The microfinance sector in Benin is fa-
                                                                                                            cing a general repayment crisis. Once
                    A difficult, but successful year                                                        the crisis is overcome, lending opera-
                                                                                                            tions are expected to increase again.

                    Africa                                                                                  At the same time, two Oikocredit part-
                                                                                                            ners, PAPME and PADME, fully repaid
                                                                                                            their loans for a total of E 3.5 million.
                                                                                                            New, subsequent loans and equity in-
                    Developments in Africa remain a reason for hope and concern. Western                    vestments did not materialize.
                    Africa is finding its way out of the economic consequences of the mili-
                    tary crisis in Côte d’Ivoire, while Kenya in Eastern Africa suffered an                 South Africa, successful shift
                    eruption of chaos and violence.                                                         In June last year, the Pretoria office
                                                                                                            hosted the annual general meeting.
                                                                                                            South Africa is a country of enormous
                                                                                                            contrast. Grinding poverty and exube-
                    In 2007, the continent achieved econo-      rage growth of 33% and therefore the        rant richness exist right next to each
                    mic growth of above 4% for the fifth        share of Africa in Oikocredit’s total       other.
                    consecutive year, but poverty is still      portfolio dropped from 19% in 2006 to
                    widespread. All twenty-two countries        17% in 2007.                                The shift to microfinance proved to
                    in the world classified by the United Na-                                               be successful for this office, a total of
                    tions as ‘low human development’ are        Kenya, insecurity                           E 3.3 million was approved, varying
                    in sub-Sahara Africa. More than 40% of      In 2007, Oikocredit extended new and        from direct loans to equity and prefe-
                    the people there are living on less than    follow-up credit to microfinance institu-   rential shares.
                    US$ 1 per day, mostly in rural areas. It    tions and production projects. After the
                                                                                                                                                        Oikocredit annual report 2007

                    is of vital importance that they can find   December elections, the human trage-        We joined hands with Tembeka, a so-
                    support from microfinance institutions.     dy and violent tensions had an adverse      cial investment fund in Cape Town that
                                                                effect on all aspects of Kenya’s econo-     provides loans for small enterprise de-
                    In these circumstances, growth of the       my and that of its neighbours. It shows     velopment. With SIDI, a French organ-
                    portfolio continues, money in the field     how situations can change almost over-      isation for development investment,
                    increased to E 47 million (2006: E 38       night, even in seemingly stable coun-       Oikocredit is planning to become the
                    million). Well below the Oikocredit ave-    tries.                                      major shareholder in Tembeka.

                                                                                                                         On the picture: Kalayathi (on the right) is
                                                                                                                         voluntary centre leader in her village in India.
                                                                                                                         She runs a grocery store and a sweet shop
     In the continents

                                                                                                                         which she built with loans from Activists for
                                                                                                                         Social Alternative – Grama Vidiyal (ASA GV).
                                                                                                                         ASA GV is a partner of Oikocredit since 2005.

                                                                                                                         sed by the Reserve Bank of India. It
                                                                                                                         was therefore decided to increase
                                                                                                                         Maanaveeya’s capital to the required
                                                                                                                         levels (US$ 50 million equity by 2009).
                                                                                                                         This way the threat was turned into
                                                                                                                         an opportunity, allowing us to respond
                                                                                                                         to the enormous demand for finance.
                                                                                                                         By the year end, plans were approved
                                                                                                                         to prepare Maanaveeya for upscaling
                                                                                                                         with additional manpower and an
                                                                                                                         adapted organisational structure. We
                                                                                                                         have started investing in a number of
                                                                                                                         young microfinance institutions with
                                                                                                                         good potential for outreach and deve-

                                                                                                                         Philippines, social performance
                                                                                                                         The regional office in the Philippines
                                                                                                                         assisted partners in their objectives
                                                                                                                         to measure social performance. Oiko-
                                                                                                                         credit sponsored training activities to
                                                                                                                         introduce two measurement tools: the
                                                                                                                         Social Return on Investment (SROI)
                                                                                                                         and the Progress out of Poverty Index
                                                                                                                         (PPI). The Philippines serve as one of
                                                                                                                         two countries for pilot implementation
                                                                                                                         of the PPI.

                                Sustainable success                                                                      Laos and Vietnam,
                                                                                                                         careful approach

                                Asia                                                                                     We will initiate pilot projects in both
                                                                                                                         Laos and Vietnam to find out what
                                                                                                                         can be achieved there. However, the
                                                                                                                         lack of democratic structure in these
                                A milestone year. Asia remains one of the world’s most dynamic eco-                      countries may present difficulties in
                                nomic regions. Most of our capital approved is being absorbed by micro-                  reaching the people who actually need
                                finance.                                                                                 our services.

                                                                                                                         Central Asia,
                                                                                                                         extending outreach
                                In India, operations showed tremen-         for Asia to reach 20% of the total port-     Our target was to reach more non-
                                dous growth. The portfolio there was        folio, for the simple reason that two        focus countries through the Global
                                up 77% to E 19 million. In South-East       thirds of the world’s poor live in that      Credits Unit. In Tajikistan, Georgia,
                                Asia, the regional office was promoted      region. In 2007, we achieved that goal:      Azerbaijan and Armenia that approach
                                to a regional development centre. It        capital in the field in Asia grew to 22%,    is working well. In Pakistan and Sri
                                achieved a growth of 57%, to E 24           also thanks to activities in the Cauca-      Lanka, however, it remains very diffi-
                                million.                                    sus and Central Asia.                        cult to get any kind of operation off
                                                                                                                         the ground due to supply of cheap mo-
Oikocredit annual report 2007

                                The office now has the fourth largest       India, strong foundation                     ney and recurring set-backs caused
                                portfolio (9% of Oikocredit’s overall       for the future                               by natural disasters and insecurity.
                                portfolio), with 103 partners in Cambo-     In its third year Maanaveeya, Oiko-
                                dia, Indonesia and the Philippines. The     credit’s subsidiary in India, has steadily
                                portfolio quality significantly improved,   built its operating systems, production
                                with portfolio at risk at 8.9% (down        and credibility. While Maanaveeya was
                                from 15.5% in 2006). Our target was         growing, new constraints were impo-

                                                                                                           On the picture: More than 4,300 people
                                                                                                           in Albania are creating work with
                                                                                                           microcredit from the Partneri Shqiptar
In the continents

                                                                                                           ne Mikrokrediti (PSHM). Oikocredit
                                                                                                           supports PSHM with a loan since 2005.

                                                                                                           Nearly a quarter of the active popula-
                                                                                                           tion seeks employment abroad and
                                                                                                           transfers money home to support their
                                                                                                           families. Through the new office we
                                                                                                           hope to make a difference and improve
                                                                                                           the lives of disadvantaged people in
                                                                                                           Moldova. The partnership with Micro-
                                                                                                           invest was intensified by an equity in-
                                                                                                           vestment of more than E 900,000. The
                                                                                                           institution is specialized in small loans
                                                                                                           to rural farmers and micro entrepre-
                                                                                                           neurs, who generally have the least
                                                                                                           access to loans to develop their busi-

                                                                                                           Ukraine, late start
                                                                                                           At the end of 2007, Oikocredit made
                                                                                                           four new loans to small and medium
                                                                                                           sized credit cooperatives in Ukraine,
                                                                                                           totalling E 1 million. We opened a
                                                                                                           country office in 2004, but due to cum-
                                                                                                           bersome registration procedures with
                                                                                                           different Ukrainian institutions, we did
                                                                                                           not manage to conclude loan contracts
                    Majority of partners in production and trade                                           until now. With these results, however,
                                                                                                           the programme in Ukraine is bound to

                    Central and Eastern                                                                    expand rapidly.

                                                                                                           Russia, Moscow office

                    Europe                                                                                 A new country manager and a new
                                                                                                           loan officer joined the Moscow office
                                                                                                           in 2007, strengthening our presence
                                                                                                           and our possibilities. Even though the
                    After many years of hardship during the transition period, living condi-               Russian economy experiences acce-
                    tions for ordinary people in Central and Eastern Europe are improving.                 lerated growth, inflation is high, and
                    Many countries in the region are going through an industrial revival, and              in many rural and agricultural areas
                    the broad economic outlook is favourable.                                              people are struggling to make a living
                                                                                                           and the need for microfinance services
                                                                                                           is great.

                    Oikocredit’s involvement is still grow-     As a country joins the European Uni-       Bosnia & Herzegovina,
                    ing at a fast pace. In 2007, E 29 million   on, Oikocredit’s involvement in that       focus country
                    in new loans and equity investments         country diminishes. Even though the        In June last year, Bosnia & Herzego-
                    was approved and disbursed. The in-         need for microfinance is still great, we   vina was approved as focus country. A
                    crease was large, particularly in Rus-      do not envisage new focus countries        new country office there is planned for
                    sia and in Bosnia & Herzegovina.            to be selected in the future.              early 2008. Studies were conducted to
                                                                                                           identify small and medium sized com-
                    The majority of Oikocredit’s 127 part-      Moldova, new country office                panies as potential partners through
                                                                                                                                                       Oikocredit annual report 2007

                    ners are active in production or trade;     Oikocredit selected Moldova for its        local microfinance institutions.
                    most of them are agricultural coopera-      seventh and newest country office in
                    tives in Bulgaria and Romania. With         Central and Eastern Europe. Moldova
                    the loans our partners can invest in        is a small country bordering Romania
                    their business, renew machinery and         and Ukraine. It is the poorest country
                    improve the living standards of their       in the region where 80% of the popula-
                    cooperative members.                        tion lives on less than E 50 per month.

                                                                                                                      On the picture: With loans from the Instituto
                                                                                                                      de Desarrollo del Sector Informal (IDESI),
                                                                                                                      the Falcon family has built a fifteen hectare
     In the continents

                                                                                                                      hydrangea flower farm in rural Peru,
                                                                                                                      employing more than twenty people.
                                                                                                                      Oikocredit supports IDESI since 1997.

                                                                                                                      Later in the year Colombia was ad-
                                                                                                                      ded to the list of focus countries. The
                                                                                                                      Colombian Central Bank is exercising
                                                                                                                      strict controls over cross border finan-
                                                                                                                      ce in an effort to combat money laun-
                                                                                                                      dering. Oikocredit is acknowledged by
                                                                                                                      the Central Bank as a foreign financial
                                                                                                                      institution authorized to act as loan
                                                                                                                      institution in Colombia.

                                                                                                                      Uruguay, new development
                                                                                                                      Oikocredit puts emphasis on direct
                                                                                                                      projects in production and service sec-
                                                                                                                      tors, and last year saw an inspiring
                                                                                                                      number of approvals: nearly E 22 mil-
                                                                                                                      lion through the Uruguay office. In view
                                                                                                                      of increased demand expected, a new
                                                                                                                      country office was opened in Paraguay
                                                                                                                      in 2007.

                                                                                                                      Argentina, social performance
                                                                                                                      The social impact of our investments
                                                                                                                      is key to our success (see also pages
                                                                                                                      12 and 13, social performance man-
                                                                                                                      agement). In Argentina, two microfinan-
                                                                                                                      ce institutions were assessed using
                                                                                                                      CERISE’s social performance audit
                                                                                                                      tool, to determine whether they have
                                Consolidation                                                                         the means to attain their social objec-
                                                                                                                      tives. Both showed positive results. In

                                Latin America                                                                         2008 the CERISE’s method will be used
                                                                                                                      for assessments in Bolivia and Brazil.

                                                                                                                      Peru and Ecuador, upheavals
                                Latin America maintained its elevated economic growth based on im-                    On August 15, 2007, an earthquake hit
                                proved world market prices for agricultural and natural resources and                 the south-central coast causing wide-
                                on new jobs generated in the formal sector.                                           spread damage and considerable loss
                                                                                                                      of life in the smaller provincial cities
                                                                                                                      south of Lima. Oikocredit was well
                                                                                                                      placed to assist its partners, offering
                                The share of Latin America in Oiko-         context of a national corporate social    emergency lines of credit. The regio-
                                credit’s portfolio decreased to 40% of      responsibility project by the Costa Ri-   nal office in Peru is set to become a
                                total capital in the field. Disbursements   can government. The project allows        regional development centre.
                                reached a record E 51 million.              Oikocredit to be present in an impor-
                                                                            tant process going on in the country.     In Ecuador, the government imposed
                                Costa Rica, diversification                                                           limits on rates that can be charged on
                                Development of the country is picking       Honduras and Colombia,                    micro enterprise loans and new taxes
                                up, which can be seen by the number         new focus countries                       were introduced on microfinance ope-
Oikocredit annual report 2007

                                of banks offering credit in Costa Rica.     In June 2007, Honduras was selected       rations. Oikocredit had to adjust some
                                Over the past year, we have diversified     as a new focus country. It is a very      of its standard provisions to help part-
                                to other sectors than just microfinance     poor country with two thirds of the       ners deal with these new rules.
                                institutions, such as housing, educa-       population living below the poverty
                                tion, transport and fair trade organisa-    line. During the year a number of pro-
                                tions. Three case studies of fair trade     jects were started and we aim to open
                                organisations were carried out in the       up a country office in 2008.

Oikocredit is a unique organisation.

No other institution in microfinance

has the same solid member base.

We believe our concept has enormous

potential, because Oikocredit is not

just about money. It is about making

sure we reach the people who need

our services, about helping people to

make the most of the invested capital.

For our members Oikocredit is about

social return on investment.

                                              Oikocredit annual report 2007

and Investments                          19
                                Competitive market
                                                                                                   Investing through saving

                                Strong foundation                                                  Cooperation between the local support association and their
                                                                                                   Raiffeisenbank in South Tyrol, Italy, resulted in a new pro-
                                                                                                   duct that was piloted last year: a savings account. Indivi-
                                                                                                   duals can open a special account with the bank. Their
                                Once again our members and support associations                    savings in that account are invested in Oikocredit shares
                                proved to be a strong and reliable foundation. In                  by the bank. This offers people the opportunity to support
                                2007, net capital inflow increased by 24%, outperfor-              Oikocredit on a regular basis with small monthly amounts.
                                ming our target of 15%. In today’s ever more com-
                                petitive market for capital that was a remarkable per-             Through this new facility Oikocredit hopes to reach the
                                formance. Developments last year proved that our                   people who prefer not to invest in shares. Many have insuf-
                                organisation can adapt to changing times and rise to               ficient affinity with shares or find dealing with shares too
                                meet the challenges that face the poor.                            complicated. A special savings account can offer them a
                                                                                                   way to support a cause they feel is important.

                                Competing for capital                                              The pilot in South Tyrol was successful and as a result the
                                Oikocredit has shown a remarkable surge ahead during the           board has approved the special savings account as a new
                                past year. Vigorous growth of all our operations reflects our      product for Oikocredit. In 2008, we will explore the possibi-
                                determination to reach the poor with financial services and        lity of a similar product in the Netherlands.
                                capital. On all continents. But as our financing of projects
                                grow, so does our need for inflow of new capital.                  MicroPlace: web-based investing
                                                                                                   To approach the market in the United States of America and
                                Oikocredit is not the only organisation asking people to invest.   to open up an entirely new channel which might have a
                                The microfinance market is strong and developing at unpre-         stronger appeal to young people, Oikocredit has entered into
                                cedented speed. Other institutions sometimes offer investors       a partnership with eBay subsidiary MicroPlace. It is a web-
                                a more attractive financial return and so generate a pull on the   based investor platform offering people the possibility to
                                market. In those circumstances it is of vital importance that      select microfinance investments on the internet.
                                Oikocredit focuses on development and social impact.
                                                                                                   The coming period will show how many new investors can
                                Strengthening the network                                          be reached through MicroPlace and also how effective web-
                                As planned, we opened two new support associations: one            based investing is as a tool in finding new investors.
                                in the United Kingdom and one in Spain. At the same time
                                we worked on improving the quality and performance of all          National support managers
                                support associations. Further professionalisation is a key         Our effort to improve our effectiveness and efficiency in dif-
                                development. Under the name SAturn a review was carried            ferent countries also focuses on a stronger national repre-
                                out and areas for improvement were identified. Last year           sentation. Some of the support associations function on a
                                implementation was started and steps have been taken to            regional level. That is where their strength lies. But the re-
                                improve efficiency. This coming year the division of tasks         gional focus leaves a gap at the national level. Contacts with
                                and responsibilities between the international support office      national media, national representation of the International
                                in the Netherlands and the support associations in the field       Share Foundation, expanding the network of support asso-
                                will be worked out and improved methods of annual plan-            ciations, all require expertise at a national level.
                                ning, budgeting and setting of targets will be introduced.
                                                                                                   Following the example of our set up in the United States of
                                During the past year all involved have realised that there is      America, Oikocredit has appointed a National Support Mana-
                                indeed a need for closer cooperation. Shared services – for        ger for the United Kingdom. In 2008 we hope to do the same
                                example for share administration – can provide benefits for the    in France and in Sweden. This development is in keeping
                                investors, the support associations and Oikocredit as a whole.     with our aim to decentralise national investor management.

                                Often improvements are seen as a choice between centrali-          Pro-active
                                sation and decentralisation. Oikocredit is trying to do both:      The past years we have focused on gearing up the organ-
                                centralisation of services, support and national coordination,     isation to meet future demands. Changing from a largely
                                while maintaining decentralised local investor relations.          reactive policy to a more pro-active one, involves looking at
                                                                                                   all our relations with a fresh view to find new opportunities.
Oikocredit annual report 2007

                                Marketing, a new tool                                              In this process the department for Membership & Invest-
                                To meet the challenge on the capital market, a marketing           ments has grown too. Since last year, there are five people
                                manager has been appointed to structure and improve our            employed in the department.
                                approach of new countries, investors or new target groups.
                                Through a professional marketing effort Oikocredit hopes           The coming years we intend to expand our effort in promo-
                                to become more active and effective in drawing new and             ting socially responsible investment. It is our aim to broaden
                                younger people to our cause.                                       and strengthen our cooperation with the churches. There is

                                                                                                  Source of member capital
work to do in spreading information and in education, to
                                                                                                   (per 31 December, 2007 - total E 318.8 million)
keep attracting new loyal investors and potential investors.
In May 2008, we will organise a conference on the special
relationship between churches and socially responsible in-                                            Support associations (incl. local churches
vestment. By doing so, we are confident we can build and                                                 and church-related organisations)
professionalise our network.                                                                                            81%

 SHGW Foundation, member since 2006

 Valuable partners
                                     SHGW Foundation (Stichting                                International Share
                                                                                                                         Churches and
                                     Het Groene Woudt) aims to                                    Foundation &
                                                                                                project members
                                     stimulate income improve-                                                           organisations
                                     ment and diversification in
                                     rural areas in e.g. Tanzania,
                                     Kenya, Indonesia and India.
                                     The foundation targets three
                                     sectors – agriculture, industry
                                     and fair trade – and supports                                  Membership per region
                                     activities such as dairy pro-
                                                                                                         (per 31 December, 2007 - total 598)
                                     cessing, bio fuel processing,
                                     reforestation, grading / stora-
                                     ge of apples and the produc-                                                                     Africa
                                     tion of organic green tea.                                Western Europe                         19%
                                     In Oikocredit, SHGW Foun-                                      35%
                                     dation has found a valuable
                                     partner in reducing poverty                                                                                    Asia
                                     and in creating new sustaina-
                                     ble businesses. Together we                          Middle East                                           Australia &
                                     believe that the poor have the                          1%                                                 the Pacific
                                     strength to build their own
                                     lives. What they need is sup-                        South          North          Central &              Central America /
 port in the form of loans to increase their economic productivity.                      America        America       Eastern Europe              Caribbean
 That is more effective than grants.                                                       7%            12%                2%                        6%

 Sylvain Vergobbi, member since 2007

 Acting for human dignity                                                                             Member capital and
                                                                                                     development financing
                                        As I earn my living, it seems to
                                        me that I have a responsibility
                                        in the use that is made of my                    350

                                        savings. These days much is                      300
                                        said about the negative effects
                                                                           E millions

                                        of unrestrained capitalism and
                                        about the people who are                         200
                                        excluded from the world’s in-
                                        creasing wealth by globaliza-
                                        tion. I want my savings to be                    100
                                                                                                                                                                   Oikocredit annual report 2007

                                        invested in such a way that                       50
 they can really serve development, that’s why I chose Oikocredit
 in 2007 and joined the support association CAR in France. More-












 over, I have been ‘seduced’ by its ecumenical orientation. Through
 tangible and practical action, Christians as well as non-believers
                                                                                        Member                Development financing       Development financing
 find each other in a value that really matters: human dignity.
                                                                                        capital                     approved                   outstanding

                                                                      Mission statement

                                                          Oikocredit is a worldwide cooperative

                                                            society. It promotes global justice by

                                                                 challenging people, churches and

                                                       others to share their resources through

                                                           socially responsible investments and

                                                          by empowering disadvantaged people

                                                                                                      with credit.

                                            Financial statements
Oikocredit financial statements 2007

                                                     On the picture: A field officer of the Samayapuran branch of
                                                     Activists for Social Alternative – Grama Vidiyal (ASA GV) in India.
                                                     ASA GV provides microcredit through village banking. ASA GV is
                                                     a partner of Oikocredit since 2005.

Financial statements
Years ending December 31, 2007 and 2006

The financial statements are expressed in Euros (E). As of December 31, 2007, US$ 1 dollar equals E 0.685636
(31/12/06: US$ 1 equals E 0.757633).

Summary of accounting policies

Description of the organisation                                    l   The Oikocredit International Share Foundation (“Share
Oikocredit Ecumenical Development Cooperative Society                  Foundation”) was established on March 10, 1995, in
U.A. (the Society) was established in 1975 in Rotterdam,               Amersfoort, the Netherlands, according to the laws of the
the Netherlands, and possesses corporate status according              Kingdom of the Netherlands. The duration of the Share
to the laws of the Kingdom of the Netherlands. The Society             Foundation is unlimited. The main purpose of the Share
is owned by its members throughout the world: churches,                Foundation is to provide investment possibilities in
sub-divisions of churches, councils of churches, church-               Oikocredit for non-church bodies, such as banks and
related organisations, project members and support asso-               development organisations and for individuals in coun-
ciations established by individuals and local parishes.                tries where no support association exists.
                                                                   l   The Oikocredit International Support Foundation (“Support
The duration of the Society is unlimited. The objective of the         Foundation”) was established on March 10, 1995, in
Society is to mobilise resources from members as well as               Amersfoort, in accordance with the laws of the Kingdom of
from third parties, mainly in developing countries, and to             the Netherlands. The duration of the Support Foundation is
channel the proceeds thereof to development projects in                unlimited. The main purpose of the Support Foundation is
order to raise standards of living in the developing countries         to mobilise grant funds to support non-banking activities
of the world.                                                          such as technical assistance, etc., and “model costs” of
                                                                       Oikocredit. “Model costs” are costs no financial institution
The Society has its international support office in Amersfoort,        of this size would incur, but which are an integral part of the
the Netherlands, and has regional offices in the following             Oikocredit cooperative model. The board of the Support
locations: Abidjan, Côte d’Ivoire; Accra, Ghana; Hyderabad,            Foundation has decided to allocate some of these costs to
India; Lima, Peru; Manila, the Philippines; Montevideo,                their account (category A) and to endeavour to raise funds
Uruguay; Nairobi, Kenya; Pretoria, South Africa; San José,             to subsidise part of the remaining costs. (category B).
Costa Rica; Mainz, Germany.
                                                                   Category A costs are:
It has country representatives operating outside regional of-      l 100% of external technical assistance to project partners;
fices in Argentina, Benin, Bolivia, Brazil, Bulgaria, Cambodia,    l 100% of consultants hired for regional offices;

Chile, Ecuador, El Salvador, Guatemala, Indonesia, Mali,           l 30% of corporate communication costs;

Mexico, Moldova, Nicaragua, Romania, Russian Federation,           l 30% of fund development and member relations costs;

Paraguay, Senegal, Slovak Republic, Tanzania, Uganda and           l 100% of members travel costs to annual general meeting

the Ukraine.                                                         (subject to certain conditions);
                                                                   l 50% of technical and organisational assistance to support

The offices in Costa Rica, Ghana, Indonesia, Kenya, the              associations.
Philippines, Tanzania, Uruguay and South Africa are incor-
porated as legal entities and are therefore subsidiaries. Due      Category B costs are:
to the immateriality of the assets of these subsidiaries, it has   l The “development” activities of the regional offices: target
been decided to include these assets as if they were owned           is to raise 20% of the total costs of the offices;
by branch offices.                                                 l Fund development and member relations Europe: besides
                                                                                                                                         Oikocredit financial statements 2007

                                                                     the 30% that is directly charged to the Support Foundation,
The office in Hyderabad, India, is registered under the name         the target is to raise another 30% in subsidies and grants;
“Maanaveeya Holdings & Investments Private Ltd.” and is            l Corporate communication costs: besides the 30% directly

included in the consolidated financial statements of Oiko-           charged to the Support Foundation, the target is to raise
credit.                                                              subsidies and grants for another 30% of these costs;
                                                                   l Technical and organisational assistance to support asso-

Oikocredit Ecumenical Development Cooperative Society                ciations: besides the 50% charged directly to the Support
(“Oikocredit”) has related foundations which support the             Foundation, the target is to raise subsidies and grants for
activities of Oikocredit:                                            another 50% of these costs;

                                       l   Costs related to annual general meetings and board mee-        Investments in group companies
                                           tings: target is to raise subsidies for 50% of these costs;    Investments in group companies are valued at net asset
                                       l   Costs related to general, finance and administration expen-    value.
                                           ses: target is to raise subsidies for 5% of these costs;
                                       l   Incidental costs: to be decided on a case-to-case basis.       Tangible fixed assets and depreciation
                                                                                                          Tangible fixed assets are stated at cost. Expenditure for addi-
                                       The Support Foundation also manages local currency risk            tions, renewals and improvements are capitalised; expendi-
                                       funds. The funds are available to offset the risk of currency      tures for maintenance and repairs are charged to expenses
                                       losses on Oikocredit loans disbursed in local currencies.          as incurred. Upon retirement or disposal, the cost and accu-
                                       When loans have been granted in Euros but are being                mulated depreciation are eliminated from the accounts and
                                       repaid in the local currencies of the beneficiaries, accumu-       the resulting gain or loss is included under expenses.
                                       lated losses / profits on the difference between the value of      Depreciation is computed using the straight line method for
                                       local currency loans – including interest – and the actual         financial reporting purposes over the estimated useful life of
                                       value of local currency repayments and interest received by        the respective assets.
                                       Oikocredit in Euros, will be charged / credited to available
                                       local currency risk funds within the Support Foundation at         Term investments in bonds and shares
                                       the moment the local currency loans are fully repaid or writ-      It is the policy of the Society to maintain a certain portion of
                                       ten off. We refer to note 4 of the consolidated financial state-   its available capital in term investments to provide safety (out
                                       ments for further information.                                     of a risk management point of view) and operating income.
                                                                                                          The Society implemented a strategy of active management
                                       Project funding                                                    of the term investments. The term investments in bonds and
                                       Project funding outstanding is valued at face value taking         shares are valued at market value. Realised and unrealised
                                       into account the exchange rate at year-end or rates of the         gains and losses during a financial year are taken to the
                                       relevant hedging contracts. Project equity investments are         equalisation reserve for marketable securities. As a conse-
                                       valued at the lower of cost or market value. In the absence        quence, the balance of this reserve can be positive or nega-
                                       of a regular market for investments, valuation is based on         tive. If the balance of the equalisation reserve is negative,
                                       best estimates of market value. Allowances against the risk        the negative balance will be charged to the income state-
                                       on recovery of the investments are made in the same man-           ment. At the end of each financial year, the realised and
                                       ner as with other project funding.                                 unrealised gains and losses during the year on the market-
                                                                                                          able securities are amortized over the average maturity of
                                       Provision for possible losses on project funding                   the portfolio at the end of each year. The amortizations for
                                       The Society’s provision for possible project funding losses        each year are charged to or released from the equalisation
                                       is based on an evaluation of the risks of the current project      reserve to investment income. With this system the Society
                                       funding portfolio (loans, guarantees and equity investments)       aims to account for a relatively constant stream of invest-
                                       in terms of present conditions. The calculation of the loss        ment income over the duration of the investment portfolio,
                                       provision comprises the following layers:                          avoiding that the annual changes in the market value cause
                                                                                                          material fluctuations in investment income.
                                       l   A provision for “country risks” calculated per country in
                                           which the project is based;                                    Deviations on book 2, title 9 of the Dutch
                                       l   A specific provision per project, based on the aging of pay-   Civil Code
                                           ments overdue – only applied if this risk is higher than the   The annual accounts are prepared in accordance with book
                                           provision for country risk in which that project is based;     2, title 9 of the Dutch Civil Code. As in past years, the ex-
                                       l   A specific provision for non-performing projects and pro-      change fluctuation gains or losses are accounted for as a
                                           jects that are not overdue – only applied if higher than the   direct addition to or set off against the (restricted) exchange
                                           provision for country risk in which that project is based.     fluctuation reserve within the Society’s equity. The Society
                                           This provision is calculated based on management’s risk        considers that this treatment of foreign currency gains or
Oikocredit financial statements 2007

                                           assessment of, and experience with, these kind of pro-         losses provides more adequate information on its profitabi-
                                           jects.                                                         lity. Although such treatment may depart from international
                                                                                                          generally accepted accounting principles or legal regulati-
                                       This provision for project funding risks is deducted from          ons, the Society finds justification for this departure in article
                                       loans and interest outstanding in the balance sheet. Write-        362.4 (book 2, title 9) of the Dutch Civil Code.
                                       offs are charged against this loss provision. Additions to or
                                       withdrawals from the allowance for project funding risks are       Translation of foreign currency
                                       included in the determination of net income.                       Transactions in foreign currencies are translated at current

rates (if hedged: against the rate of the hedging contracts)    cess of foreclosure or being written off and where the value
in effect at the date of transaction.                           of the securities does not exceed the amounts due to the
Non-settled foreign currency denominated monetary assets
and liabilities, as well as US dollar denominated member        Grant contributions
capital at balance sheet date, are translated to Euros at       Designated grants are included as income in the year in
year-end rates. For net currency exposure that has been         which such grants are received.
hedged, the related assets and liabilities are translated at
the rates of the hedging contracts.                             Taxes
                                                                The tax authorities in the Netherlands have exempted the
Gains or losses resulting from conversion during the year,      Society from corporation tax provided that the Society com-
as well as year-end translation of foreign currencies into      plies with certain conditions, all of which were complied with.
Euros together with results from hedging contracts which        The tax authorities also have exempted the Society from
were settled during the year are directly added to or set off   capital tax. No tax will have to be withheld on dividends dis-
against a restricted reserve in the Society’s equity. The       tributed by the Society to its members. Up to 31 December
income or costs related to hedging are taken up as opera-       2007 the tax authorities also had exempted the Society from
ting expenses and are released / charged over the duration      gifts and inheritance tax. The Society is currently in discus-
                                                                                                                                  Oikocredit financial statements 2007

of the hedging contract.                                        sion with the tax authorities to determine whether the ex-
                                                                emption can be continued under new legislation in effect as
Income and expense recognition                                  from 1 January 2008.
Income from investments, expenses, outstanding project
funding, management fees and time deposits are recogni-         Changes in classification
sed as accrued. The Society does not accrue or invoice          Prior year figures have been reclassified where necessary
interest for projects that are considered “non-performing”.     for comparative purposes. These reclassifications have no
Non-performing projects are projects which are in the pro-      impact on the results.

                                       Balance sheet                                       (before appropriation of net income)

                                       Notes                                                                                      31/12/07   31/12/06
                                                                                                                                   E ,000     E ,000
                                            LONG TERM ASSETS
                                       1    Development financing:
                                            Project funding:
                                            Approved                                                                              334,566    263,694
                                            Less: - not yet disbursed                                                             (74,441)   (64,283)
                                                                                                                                  260,125    199,411
                                            Investments in group companies                                                           4,303      4,280
                                            Total development financing                                                           264,428    203,691
                                            Less: - loss provision                                                                (31,068)   (27,630)
                                                                                                                                  233,360    176,061

                                       2    Term investments: development banks,
                                            developing countries, companies active in
                                            developing countries with particular beneficial impact                                 69,152     71,122

                                       2    Term investments: other                                                                48,713     52,008

                                       3    Tangible fixed assets                                                                     445        266
                                            Total long term assets                                                                351,670    299,457

                                            CURRENT ASSETS
                                       4    Receivables                                                                            11,875      8,256
                                       5    Cash and banks                                                                         23,073     12,663
                                            Total current assets                                                                   34,948     20,919

                                            TOTAL ASSETS                                                                          386,618    320,376

                                            MEMBER CAPITAL AND RESERVES
                                       6    Issued capital                                                                        318,760    276,326
                                       7    General and other reserves                                                              9,708      8,670
                                            Undistributed net income for the year                                                  18,864      8,511
                                                                                                                                  347,332    293,507

                                       8    PROVISIONS
                                            Provision for pensions                                                                    513        468

                                       9 Long term                                                                                 17,001     14,580
                                       10 Current                                                                                  21,772     11,821
                                                                                                                                   38,773     26,401

                                            TOTAL LIABILITIES                                                                     386,618    320,376
Oikocredit financial statements 2007

                                       The accompanying notes are an integral part of these financial statements.

Income statement
Notes                                                                         2007      2006
                                                                             E ,000    E ,000
    Project funding: Interest and dividends                                  20,147    15,239
    Result on selling equity participation in Banco del Desarrollo Chile     12,602         -
    Deposits at financial institutions                                           76        15
    Management fees                                                              59        55
    Total development financing                                              32,884    15,309

    Term investment income: development related                                2,235    2,623
    Term investment income: other                                              2,984    2,961
    Term investment: negative balance equalisation reserve                   (3,171)        -
    Total term investments                                                    2,048     5,584

11 Other income                                                                   -       451
   Interest expenses                                                          (401)     (106)
   TOTAL INCOME                                                              34,531    21,238

13 Personnel                                                                  6,143     5,122
   Travel                                                                       635       591
   General                                                                    1,964     1,866
   Less: - grant income                                                       (254)     (176)
   TOTAL EXPENSES                                                             8,488     7,403

   GROSS INCOME                                                              26,043    13,835
12 Less: - additions to loss provisions                                      (7,127)   (5,579)
                                                                             18,916      8,256
15 Net result group companies                                                   (52)       255
17 NET INCOME                                                                18,864      8,511

                                                                                                 Oikocredit financial statements 2007

The accompanying notes are an integral part of these financial statements.

                                       Cash Flow Statement
                                       Notes                                                                                                           2007                       2006
                                                                                                                                                      E ,000                     E ,000
                                            CASH FLOW FROM OPERATIONS
                                            Development financing income                                                                              19,190                     12,082
                                            Shares sold in Banco del Desarrollo                                                                       17,006                           -
                                            Term investments income                                                                                     4,725                      4,848
                                            Oikocredit International Support Foundation                                                                 1,325                        160
                                            Other income                                                                                                  476                          -
                                            Operating expenses                                                                                        (6,707)                    (5,999)
                                            Interest paid                                                                                               (144)                      (155)
                                            Dividends paid                                                                                            (2,453)                    (2,262)

                                            Total cash from operations                                                                                33,418                      8,674

                                            CASH FLOW FROM FINANCING ACTIVITIES
                                            New funds
                                            Issue of shares                                                                                           39,594                     34,273
                                            Redemption of shares                                                                                      (2,716)                     (497)
                                            Term loans                                                                                                  8,470                     3,842

                                            Total cash from financing activities                                                                      45,348                     37,618

                                            CASH USED FOR INVESTING ACTIVITIES
                                            Project funding (net additions)
                                            Disbursements                                                                                          (130,127)                   (91,446)
                                            Less: - repayments of principal                                                                           60,568                     38,753
                                                                                                                                                    (69,559)                   (52,693)

                                            Net disposals of deposits at financial institutions in developing countries                                      -                       191

                                            Net investments in group companies                                                                            (75)                      (30)

                                            Term investments: disposals (net investments)                                                               1,146                    (4,373)

                                            Tangible fixed assets (net investments)                                                                     (300)                       (22)

                                            Total cash used for investing activities                                                                 (68,788)                  (56,927)

                                            Exchange rate differences during the year                                                                     432                       (68)

                                            CHANGES IN CASH AND BANKS                                                                                 10,410                   (10,703)
Oikocredit financial statements 2007

                                       Some of the items have been calculated against average exchange rates over the year, while other items have been calculated on the basis of daily
                                       exchange rates. As a consequence exchange differences will arise.

Notes to the financial statements

NOTE 1. Development financing
 1.1. Changes in project funding
 Changes in project funding are as follows:
                                                                                                                                            2007                      2006
                                                                                                                                           E ,000                    E ,000

 Outstanding as of January 1                                                                                                             199,411                    158,385
 Disbursements                                                                                                                           125,308                      89,097
 Revaluation                                                                                                                                    -                        153
 Capitalised interest and dividends                                                                                                           736                        603
 Less:      - repayments                                                                                                                 (56,544)                   (38,229)
            - write-offs                                                                                                                  (1,101)                    (1,690)
 Exchange adjustments                                                                                                                     (7,685)                    (8,908)
 Outstanding as of December 31                                                                                                           260,125                    199,411

 Approved in the year                                                                                                                     159,452                   116,664
 Less:      - commitments cancelled                                                                                                      (13,705)                    (9,738)
 Not yet disbursed January 1                                                                                                               64,283                     50,466
 Less:      - disbursements                                                                                                             (125,308)                   (89,097)
            - disbursements through subsidiary Maanaveeya Holdings                                                                       (10,077)                    (4,571)
 Exchange adjustments                                                                                                                       (204)                        559
 Approved as of December 31                                                                                                               334,566                   263,694

We refer to note 1 of the consolidated financial statements for further detailed information on project funding and develop-
ment financing.

 1.2. Investments in group companies active in developing countries

                                                                                                                                         31/12/07                  31/12/06
                                                                                                                                          E ,000                    E ,000

 Maanaveeya Holdings & Investments Private Ltd., Hyderabad, India 1)                                                                         4,303                     4,280

      The investment in Maanaveeya Holdings & Investments Private Ltd., Hyderabad, India, consists of 100% of the redeemable, non-convertible preference shares amounting
      to Indian rupees 211,550,000 and 75% of the ordinary shares amounting to Indian rupees 17,250,000. In an extraordinary meeting of shareholders held during December
      2007, the shareholders decided to increase the authorized ordinary share capital with USD 50 million and to restructure the capital. The board of directors of Oikocredit
      approved the increase in capital in Maanaveeya Holdings and Investments Ltd.
                                                                                                                                                                                  Oikocredit financial statements 2007

                                                                                                                                            2007                      2006
                                                                                                                                           E ,000                    E ,000

 Balance as of January 1                                                                                                                     4,280                     4,389
 Net result for the year                                                                                                                       (52)                      255
 Exchange adjustments                                                                                                                            75                    (364)
 Balance as of December 31                                                                                                                   4,303                     4,280

                                        1.3. Provision for possible losses on project funding and deposits at financial institutions
                                        Changes in the provision for possible losses are summarised as follows:
                                                                                                                                                                                       2007                       2006
                                                                                                                                                                                      E ,000                     E ,000

                                        Balance as of January 1                                                                                                                      27,630                      26,327
                                        Additions                                                                                                                                      5,862                       4,499
                                        Exchange adjustments                                                                                                                         (1,323)                     (1,506)
                                                                                                                                                                                     32,169                      29,320
                                        Less: - write-offs                                                                                                                           (1,101)                     (1,690)
                                        Balance as of December 31                                                                                                                    31,068                      27,630

                                       NOTE 2. Term investments

                                        Summary of term investments:                                                                                                               31/12/07                    31/12/06
                                                                                                                                                                                    E ,000                      E ,000

                                        Term investments in bonds issued by development banks and developing countries and
                                        by companies active in – and with particular beneficial impact in – developing countries                                                     69,152                      71,122
                                        Other term investments                                                                                                                       48,713                      52,008
                                        Balance as of December 31                                                                                                                   117,865                     123,130

                                                                                                                                                                                       2007                       2006
                                        Changes in term investments are as follows:                                                                                                   E ,000                     E ,000

                                        Balance as of January 1                                                                                                                     123,130                     120,031
                                        Transfer of titles to the 4F-Fund                                                                                                                  -                  (108,274)
                                        Investments during the year at cost                                                                                                            4,462                    122,202
                                        Disinvestments / redemptions during the year                                                                                                 (5,612)                     (6,794)
                                        Revaluation to market value as of December 31                                                                                                (3,854)                     (3,740)
                                        Exchange adjustments                                                                                                                           (261)                       (295)
                                        Balance as of December 31                                                                                                                   117,865                     123,130

                                       Most of the term investments can be easily liquidated in the financial markets. For a breakdown of the individual titles in
                                       the fund and for further information on the 4F-Fund we refer to note 2 of the consolidated financial statements.

                                       NOTE 3. Tangible fixed assets

                                        Changes in tangible fixed assets in 2007 and in the cost of acquisition and accumulated
                                        depreciation as of December 31, 2007 are specified as follows:
                                                                                                                                                                                       2007                       2006
                                                                                                                                                                                      E ,000                     E ,000

                                        Balance as of January 1                                                                                                                           266                        358
                                        Additions                                                                                                                                         300                         76
                                        Less:     - depreciation over the year                                                                                                          (121)                      (114)
                                                  - retirements                                                                                                                             -                       (54)
                                        Balance as of December 31                                                                                                                         445                        266
Oikocredit financial statements 2007

                                        Of which: - at original cost                                                                                                                   1,165                       1,009
                                                  - less: accumulated depreciation                                                                                                     (720)                       (743)

                                        The useful life of the equipment is estimated at five years on average. Information Technology (IT) equipment is depreciated in three years. Buildings are depreciated in 25 years.

NOTE 4. Receivables

    The receivables maturing within one year can be broken down as follows:
                                                                                                                            31/12/07                     31/12/06
                                                                                                                             E ,000                       E ,000

    Accrued interest                                                                                                          4,281                        3,034
    Of which: - on time deposits, savings, deposits at financial institutions                                          -                            31
               - on investments                                                                                        -                             -
               - on project funding net of allowance                                                               4,281                         3,003
    Interest receivable                                                                                                       1,510                        2,411
               - face value                                                                                         6,098                      6,081
               - less: allowance for uncollectability                                                             (4,588)                    (3,670)
    Member capital committed                                                                                                  4,272                            -
    Group companies (note 15)                                                                                                   522                          287
    Staff loans 1)                                                                                                              450                          490
    Value added tax                                                                                                              52                          528
    Sundry receivables                                                                                                          788                        1,506
    Balance as of December 31                                                                                                11,875                        8,256

         All housing loans to staff are covered by mortgages. Market interest rates are charged on staff loans.

                                                                                                                              2007                         2006
    Changes in the allowance for uncollectability are specified as follows:                                                  E ,000                       E ,000

    Balances as of January 1                                                                                                  3,670                        3,003
    Additions charged to income                                                                                               1,265                        1,081
    Write-offs from allowance                                                                                                 (189)                        (229)
    Exchange adjustment                                                                                                       (158)                        (185)
    Balance as of December 31                                                                                                 4,588                        3,670

NOTE 5. Cash and banks

The Society maintains its funds in banking institutions in Europe, Asia, Latin America, Africa and in the United States of
America. The time deposits included in cash and banks as of December 31, 2007 all mature in 2008.
The Society has credit facility agreements with Dutch banks amounting to E 20.75 million and a guarantee of E 16 million
given to a Dutch bank (we refer to note 7 of the consolidated financial statements). These facilities are subject to the
following conditions:

l        Audited financial statements should be provided within six months after year end;
l        The solvency ratio should be at least 70%;
l        The total value of Oikocredit’s bond portfolio and liquidities should be at least 150% of the credit facilities and guarantees

NOTE 6. Member capital & general reserve

    The Society issues Euro shares of E 200 each, British pound shares of GBP 150 each, Canadian dollar shares of CAD$ 200 each, Swedish kroner shares
    of SEK 2,000 each and US dollar denominated shares of US$ 200 each. The number of authorised shares of capital stock is unlimited. Changes in member
    capital and general reserve can be summarised as follows:
                                                                                                                             2007                   2006
                                                                                                                          E ,000                  E ,000
                                                                                                                                                                    Oikocredit financial statements 2007

    Issued capital:
    Balance as of January 1                                                                                              276,326                 241,843
    New shares issued                                                                                                      46,493                 36,292
    Redemption of shares                                                                                                  (2,716)                   (497)
    Exchange adjustments                                                                                                  (1,343)                 (1,312)
    Balance as of December 31                                                                                            318,760                 276,326

    Of which: - Euro shares                                                                                                            293,942           262,145
              - shares in other currencies                                                                                              24,818            14,181

                                       Shares shall be redeemed, if a member has ceased to be a member of the Society, no later than five years after the ces-
                                       sation of membership. Redemption (partial redemption) will be at the nominal value. If the annual accounts show a loss,
                                       the amount payable upon redemption of the shares shall not exceed the sum corresponding to the value of the shares
                                       according to the balance sheet last established (article 12 of the articles of association).

                                       NOTE 7. General and other reserves

                                            Reserves are built up as follows:
                                                                                                                                           31/12/07        31/12/06
                                                                                                                                            E ,000          E ,000

                                            General reserve                                                                                 11,337           10,067
                                            Local currency loan reserve 1)                                                                    2,932              771
                                            Exchange fluctuation reserve 2)                                                                 (4,561)          (3,345)
                                            Equalisation reserve term investments                                                                 -            1,177
                                            Balance as of December 31                                                                         9,708            8,670

                                            General reserve
                                            Balance as of January 1                                                                         10,067            8,976
                                            Appropriation of the result                                                                      1,270            1,091
                                            Balance as of December 31                                                                       11,337           10,067

                                            Local currency loan reserve
                                            Balance as of January 1                                                                            771                -
                                            Appropriation of the result                                                                      2,161              771
                                            Balance as of December 31                                                                        2,932              771

                                            The local currency loan reserve will be used for exchange rate differences, resulting from local currency loans, insofar
                                            as these exchange rate differences cannot be covered by the local currency risk funds in the Oikocredit International
                                            Support Foundation.

                                            The exchange fluctuation reserve represents the accumulation of gains and losses on assets and liabilities not nominated
                                            in Euros. We refer to the section translation of foreign currency in the summary of accounting policies for the treatment
                                            of exchange fluctuations by Oikocredit.

                                       Note 16 describes Oikocredit’s hedging policies.

                                            Changes equalisation reserve:
                                                                                                                                             2007             2006
                                                                                                                                            E ,000           E ,000

                                            Balance as of January 1                                                                           1,177            5,652
                                            Realized and unrealized results on term investments                                             (3,854)          (3,737)
                                            Amortization to income                                                                            (494)            (736)
                                            Negative balance equalisation reserve charged to income                                           3,171
                                            Balance as of December 31                                                                             -           1,177
Oikocredit financial statements 2007

                                       NOTE 8. Provisions

                                       Provision for pensions

                                       The principles for calculating this provision are included in the section on accounting policies.

NOTE 9. Long term liabilities

 Long term liabilities are made up as follows:
                                                                                                                                31/12/07                 31/12/06
                                                                                                                                 E ,000                   E ,000

 US Note loans 1)                                                                                                                  8,028                    5,952
 Loans Shared Interest 2)                                                                                                          2,571                    3,287
 Funds under Management 3)                                                                                                         3,002                    1,930
 Loan Basel Pension Kasse 4)                                                                                                         686                      758
 First Oikocredit Canada 5)                                                                                                          840                      712
 Other liabilities 6)                                                                                                              1,874                    1,941
 Total long term liabilities                                                                                                      17,001                   14,580

      Loans taken from Oikocredit USA against their US Notes issue. The average interest rate of the loans over 2007 was 1.7% (2006: 1.8%). Expenses
      related to the US Notes issues have been taken up under prepaid expenses. The loans mature from 2008 until 2012.

      The loans of Shared Interest consists of two loans:
       a. Five-year loan of 1,000,000 British pound with an interest of 1.75%. Repayment will take place in one payment on April 30, 2009. The loan is
          covered by a GBP / USD swap agreement for principal and interest with Rabobank International over the same period.
       b. Five-year loan of 1,000,000 British pound with an interest of 1.75%. Repayment will take place in one payment on April 30, 2010. The loan is
          covered by GBP term investments.

      Funds managed by Oikocredit on behalf of funders which have been invested in Oikocredit’s project funding or term investments. Oikocredit receives
      its funds under contract from various co-financing donor or development agencies and social ethical funds. The funds are managed by Oikocredit for
      the risk and account of these donor agencies and funds. Breakdown per donor agency as of year-end:

 l    ASN-Novib Fund                                                                                                                                  E 202,000
 l    Oxfam Novib                                                                                                                                    E 1,180,000
 l    ICCO                                                                                                                                            E 375,000
 l    PUM-Kerk in Actie                                                                                                                               E 831,000
 l    PUM-Cordaid                                                                                                                                     E 287,000
 l    Woord en Daad                                                                                                                                   E 127,000

      Loan from Basel Pension Fund. A loan of 1 million US dollar granted during 2001 and repayable on December 31, 2010. The loan bears interest at 1%
      per annum.

      Loans taken from First Oikocredit Canada against their Canadian Notes issue. The average interest rate of the loans over 2007 was 1.75%

      The major part of other liabilities is the provident / savings fund accounts of overseas staff of the Society. Funds related to these liabilities are invested
      in bonds.

NOTE 10. Current liabilities

 All current liabilities mature within one year and can be specified as follows:
                                                                                                                                31/12/07                 31/12/06
                                                                                                                                 E ,000                   E ,000

 Long term loans expired or expiring within one year                                                                               2,960                     4,223
                                                                                                                                                                       Oikocredit financial statements 2007

 Rabobank International, Utrecht the Netherlands, Repo loan                                                                            -                     4,013
 Short term loans from members                                                                                                     8,173
 Taxes payable (mainly on sale of shares equity participation)                                                                     5,221                      705
 Accrued expenses, sundry liabilities                                                                                              2,392                    2,060
 Advances received                                                                                                                 1,715                        -
 Group companies (note 15)                                                                                                           806                        -
 Funds under Management                                                                                                              505                      487
 Pension liabilities                                                                                                                   -                      333
 Balance as of December 31                                                                                                        21,772                   11,821

                                       NOTE 11. Other
                                        11.1. Other income
                                        Is specified as follows:
                                                                                                                                                                                         2007                        2006
                                                                                                                                                                                        E ,000                      E ,000

                                        Value added tax reimbursements previous years                                                                                                          -                        451
                                                                                                                                                                                               -                        451

                                        11.2. Interest expenses
                                        Is specified as follows:
                                                                                                                                                                                         2007                        2006
                                                                                                                                                                                        E ,000                      E ,000

                                        Interest payable on long term loans, current accounts and sundries                                                                                (401)                       (106)
                                        Interest allocated from term investments                                                                                                            162                         193
                                        Less interest expenses on:
                                                    - US Notes loans                                                                                                                      (162)                       (193)
                                                                                                                                                                                          (401)                       (106)

                                       NOTE 12. Additions to loss provisions

                                        The breakdown of the additions to the project funding loss provisions is as follows:
                                                                                                                                                                                         2007                        2006
                                                                                                                                                                                        E ,000                      E ,000

                                        Additions to provisions against losses:
                                                   - on principal projects                                                                                                               5,862                       4,499
                                                   - on interest                                                                                                                         1,265                       1,080
                                                                                                                                                                                         7,127                       5,579

                                       NOTE 13. Personnel information

                                        1. The number of employees who were directly or indirectly employed by the Society at the end of 2007 on the basis of full time equivalents (fte)
                                           amounted to 160 (2006: 137). This number includes staff employed by the regional and country offices.

                                        2. Personnel expenses:                                                                                                                           2007                        2006
                                                                                                                                                                                        E ,000                      E ,000

                                           Salaries                                                                                                                                      4,205                       3,384
                                           Pension charges and social securities                                                                                                         1,151                       1,004
                                           All other personnel costs                                                                                                                     1,342                       1,039
                                           Less: - charged to the Oikocredit International Support Foundation                                                                            (555)                       (305)
                                                                                                                                                                                         6,143                       5,122
Oikocredit financial statements 2007

                                        The board decided to acknowledge the commitment of staff in reaching the objectives set by the board. The acknowledgement was granted to all staff members of Oikocredit and was
                                        partly in the form of shares in Oikocredit and partly in the form of an extra allowance. The amounts related to this acknowledgement are included under all other personnel costs.

                                        3. Breakdown personnel expenses of staff based in the Netherlands:

                                           Salaries staff based in the Netherlands                                                                                                       2,275                       1,880
                                           Pension charges staff based in the Netherlands                                                                                                  347                         265
                                           Social securities charges staff based in the Netherlands                                                                                        281                         218

NOTE 14. Remuneration policies

Staff based in the Netherlands
The remuneration policy of staff living in the Netherlands is in principle based on similar employment conditions formulated
by a Dutch development organisation. Total base remuneration – including holiday allowance, but excluding social secu-
rity charges, pensions and acknowledgement for good results – payable to the management team (4 fte’s) for the year 2007
amounted to E 430,000 (2006: E 391,000). Oikocredit has introduced a “median wage” pension system for its employees
in the Netherlands, to which the employer and the employees each contribute a part of the pension premiums. Pensions
are indexed based on the average wage increases during the year and will be determined from year to year.

Staff based outside the Netherlands
National staff based outside the Netherlands are being remunerated according to standards applicable to employees with
similar responsibilities in their home countries. In principle, national staff are paid in the currencies of the countries in which
they reside and work. A savings / provident fund scheme is available for staff outside the Netherlands to which the employ-
er and employees each contribute a fixed percentage of the staff member’s gross remuneration.

Remuneration of the board of directors
In general, no remuneration is paid to the board of directors. However, board members receive compensation in case of
loss of income when attending Oikocredit board meetings. The total remuneration for loss of income paid in 2007 amoun-
ted to E 1,500 (2006: E 3,000).

NOTE 15. Group companies
     15.1. Investment in group companies

     The investment in Maanaveeya Holdings & Investments Private Ltd., Hyderabad, India, consists of 100% of the redeemable, non-convertible preference
     shares issued and 75% of the ordinary shares. We refer to note 1.2 for further details of the investment.

15.2. Transactions with Oikocredit Foundations during the year

Material transactions with the Oikocredit International Support Foundation:
During 2007, E 1,048,000 of category A 1) costs were directly charged to the Oikocredit International Support Foundation
(2006: E 818,000).

Grant income (included in the income statement) refers to amounts raised by the Oikocredit International Support
Foundation for non-banking activities and “model costs” (category B costs 1) ). During 2007 it amounted to E 254,000
(2006: E 176,000).

Cumulative exchange rate differences charged to the local currency risk funds amounted to E 581,000 (2006: E 66,000
added to the fund).

     For a description of category A and category B costs as well as local currency risk funds we refer to “Description of Organisation” included in the summary
     of accounting policies.

Transactions with the Oikocredit International Share Foundation:
There were no material transactions with the International Share Foundation during 2007 or 2006. The dividends paid to
the Share Foundation were passed on to the individual shareholders of the International Share Foundation.
                                                                                                                                                                   Oikocredit financial statements 2007

                                        15.3. Amounts owed by and to Oikocredit foundations
                                        (market interest rates are charged on these amounts)

                                                                                                                                          31/12/07           31/12/06
                                                                                                                                           E ,000             E ,000

                                        Amounts owed to group companies:
                                        Oikocredit International Support Foundation and local loan reserve                                    806                   -

                                        Amounts owed by group companies:
                                        Maanaveeya Holdings & Investments Private Ltd., Hyderabad                                               -                 16
                                        4F-Fund, Fund for Fair Future, Amersfoort                                                             167                 67
                                        Oikocredit International Support Foundation                                                             -                131
                                        Oikocredit International Share Foundation                                                             355                 73
                                                                                                                                              522                287

                                       15.4. Funds available within the Oikocredit Support Foundation

                                       Total funds available within the International Support Foundation to cover future category A and B costs – as well as
                                       guarantees and capacity building of Oikocredit – amount to approximately E 7.4 million at year-end.
                                       At year-end the available local currency risk funds within the Support Foundation – to cover future currency losses on
                                       local currency loans – amount to approximately E 13.6 million.

                                       NOTE 16. Hedging policy and the use of financial instruments

                                       Hedging policy
                                       Member capital of Oikocredit is predominantly denominated in Euro and a significant part of Oikocredit’s investments in
                                       development financing are outstanding in US dollar and in local currencies. Thus, Oikocredit has considerable US dollar
                                       and domestic currency exposure. In addition to Euro shares, the Society issues US dollar, British pound, Canadian dollar
                                       and Swedish kroner denominated shares and has received long term loans in US dollars which reduces this exposure. The
                                       objective of issuing US dollar shares and loans is to achieve a better matching between assets and liabilities in US dollar.

                                       It is likely that Oikocredit’s US dollar and domestic currency exposure will increase as a result of possible further growth
                                       in development financing because its newly issued member capital will be mainly in Euro. When Oikocredit receives US
                                       dollar or local currency repayments from its partners, the amounts are usually not exchanged into Euro, but reinvested in
                                       US dollar or local currency development financing.

                                       Oikocredit hedges (part of) its currency exposure to maintain the value of member capital. Taking into account the above
                                       mentioned considerations, the Oikocredit board of directors decided that Oikocredit should hedge at least 50% to 75% of
                                       its exposure in Canadian dollar, British pound and Swedish kroner, depending on other exchange rate developments.

                                       To cover the risks related to Oikocredit’s exposure to domestic currency, the Oikocredit International Support Foundation
                                       has established Local Currency Risk Funds and Oikocredit itself established a Local Currency Loan Reserve. Accumulated
                                       losses or profits on the difference between the value of local currency loans - including interest - (should these loans have
                                       been granted in Euros) and the actual value of local currency repayments and interest received by Oikocredit in Euros, will
                                       be first charged or credited to the available local currency risk funds and thereafter to the Local Currency Loan Reserve at
                                       the moment the local currency loans are fully repaid or written off. We refer to note 4 of the Consolidated Financial
                                       Statements and to note 7 of the Financial Statements for further information on the Local Currency Risk Fund and the Local
                                       Currency Loan Reserve.
Oikocredit financial statements 2007

                                       The net US dollar exposure in the income statement – if material – is also hedged. The objective is to avoid declining US dollar
                                       versus Euro exchange rate differences as this would negatively influence the income of the Society during the financial year.

                                       Financial instruments
                                       The net exposure as at December 31, 2007 amounts to:
                                       - US$ 117 million (net assets)
                                       - Swedish kroner 100 million (net liabilities)

To meet our objectives explained in the previous paragraph, the net US dollar is hedged for approximately 70% while the
Swedish kroner (SEK) is hedged for approximately 77% at year-end. The net exposure to the British pound and Canadian
dollar is immaterial. Oikocredit has entered into the following contracts to cover its US dollar and SEK exposure:

    Contracts                       End date          USD amount              SEK amount       Exchange       Interest       Interest
                                     contract            covered                 covered            rate          USD           Euro

    FX Swap                         31/05/08             2,000,000                               1.3185
    FX Swap                         31/07/08            16,000,000                               1.4390
    FX Swap                         31/07/08             7,500,000                               1.4778
    Cross Currency Swap             15/08/08             6,800,000                               1.3352           fixed          fixed
    Cross Currency Swap             28/10/08             5,600,000                               1.0980           fixed          fixed
    Cross Currency Swap             30/11/09             4,000,000                               1.3043           fixed          fixed
    Cross Currency Swap             30/11/09             6,000,000                               1.1750           fixed   floating 6M
    Cross Currency Swap             30/11/09             3,000,000                               1.1750           fixed   floating 6M
    Cross Currency Swap             06/07/10             5,000,000                               1.2750    floating 6M    floating 6M
    Cross Currency Swap             29/10/10             3,000,000                               1.2650    floating 3M    floating 3M
    FX forward                      16/03/11                                      68,430,000     9.2730
    FX Swap                         04/01/12                                       8,200,000     8.9845
    Cross Currency Swap             15/06/12             6,000,000                               1.3800          fixed          fixed
    FX Option                       06/11/17            17,000,000                               1.4000

The related costs to these hedging contracts are taken up as operating expenses and are charged to the income statement
over the period of the hedging contract.

Oikocredit has entered into a long term option contract (as presented above) expiring in 2017. Currently, Oikocredit is
protected at a rate of US$ 1 = E 0.71. If the Euro-USD exchange rate increases to a certain level, the level of protection
increases as well. The option has four of these pre-set levels at US$ 1 = E 0.741, at 0.769, at 0.8 and at 0.833 when the
protection levels will increase to US$ 1 = E 0.727, 0.741, 0.755 and 0.769.

NOTE 17. Proposal for allocation of net income

In respect of allocation of net income, the Society’s articles of association determine the following (article 35): “The net
profits shall be allocated by the annual general meeting after receiving the proposals of the board of directors.”

The board of directors will make the following proposal to the annual general meeting 2008 as to the 2007 net income:

l    To pay a dividend of 2% on all outstanding shares as of December 31, 2007, which were also outstanding as of
     December 31, 2006, and to pay a dividend of 1% on all outstanding shares as of December 31, 2007, which were also
     outstanding as of June 30, 2007, but not yet outstanding as of December 31, 2006 and to pay a dividend of 0.5% on all
     outstanding shares as of December 31, 2007, which were not yet outstanding as of June 30, 2007.
l    To pay 1% on all sold shares that were outstanding between June 30, 2007 and December 31, 2007 and also outstan-
     ding as of December 31, 2006. Dividend to be paid in shares or in cash at the members’ option.
l    To add E 13 million to the general reserve.

    17.1. Allocation of net income

    According to this proposal the allocation of net income will be as follows:
                                                                                                                                         Oikocredit financial statements 2007

                                                                                                             2007              2006
                                                                                                            E ,000            E ,000

    Dividend distribution                                                                                    5,834             5,080
    Local currency loan reserve                                                                                  -             2,161
    General reserve                                                                                         13,030             1,270
    Net income                                                                                              18,864             8,511

                                       Consolidated balance sheet
                                       Notes                                                                        31/12/07   31/12/06
                                                                                                                     E ,000     E ,000
                                            LONG TERM ASSETS
                                       1    Development financing:
                                            Project funding:
                                            Approved                                                                351,669    272,120
                                            Less: - not yet disbursed                                               (74,441)   (64,283)
                                                                                                                    277,228    207,837
                                            Less: - loss provision                                                  (31,353)   (27,679)
                                                                                                                    245,875    180,158
                                       2    Term investments: development banks, developing countries, companies
                                            active in developing countries with particular beneficial impact         81,552     84,369

                                       2    Term investments: other                                                  51,307     54,421

                                            Tangible fixed assets                                                       448        270
                                            Total long term assets                                                  379,182    319,218

                                            CURRENT ASSETS
                                            Receivables and other current assets                                     18,369     13,111
                                            Cash and banks                                                           23,788     12,990
                                            Total current assets                                                     42,157     26,101

                                            TOTAL ASSETS                                                            421,339    345,319

                                            GROUP EQUITY
                                            Issued capital                                                          318,760    276,326
                                       3    General and other reserves                                                9,749      8,668
                                       4    Local currency risk funds                                                13,628     12,352
                                       5    Funds for non-banking expenses and activities                             7,395      7,143
                                            Undistributed net income for the year                                    18,856      8,508
                                                                                                                    368,388    312,997

                                       6    THIRD PARTY INTERESTS                                                       999        702

                                            PROVISION FOR PENSIONS                                                      513        468

                                       7    Long term                                                                30,088     19,025
                                            Current                                                                  21,351     12,127
                                                                                                                     51,439     31,152

                                            TOTAL LIABILITIES                                                       421,339    345,319
Oikocredit financial statements 2007

                                       The accompanying notes are an integral part of these financial statements.

Consolidated income statement
Notes                                                                         2007      2006
                                                                             E ,000    E ,000
    Total development financing:                                             34,229    15,833
    Term investments:                                                          2,404    6,261
8   Grants                                                                     3,600      737
    Other income                                                                   -      499
    Interest expenses                                                        (1,025)    (106)
    TOTAL INCOME                                                             39,208    23,224

    Personnel                                                                 6,857     5,516
    Travel                                                                      676       604
    General and other                                                         3,338     2,510
    TOTAL EXPENSES                                                           10,871     8,630

    GROSS INCOME                                                             28,337    14,594

    Less: additions to loss provisions                                       (7,377)   (5,587)

    NET INCOME BEFORE ALLOCATION TO FUNDS                                    20,960     9,007

    Less: minority interest in group companies                                   (5)        -
9   Less: addition to funds                                                  (2,099)    (499)

    NET INCOME                                                               18,856     8,508

                                                                                                 Oikocredit financial statements 2007

The accompanying notes are an integral part of these financial statements.

                                       Notes to the consolidated
                                       financial statements

                                       Establishing the 4F-Fund (Fund for Fair Future)
                                       Oikocredit has developed a portfolio of socially responsible investments in investment-grade bonds alongside its direct
                                       financing of development projects. This portfolio consists of fixed income investments, has a track record and has the
                                       following characteristics:

                                       l   A focus on development: bonds issued by developing countries and by development banks and corporate bonds, whose
                                           issuers are active in developing countries and screened on their particular benefits in developing countries;
                                       l   The bond titles have a credit rating of at least Moody’s investment grade;
                                       l   The investments have a high social / ethical profile, which is monitored by thorough screening done by Vigeo Group and
                                           is guaranteed by the Ethibel label.

                                       Based on its mission and investment experience, Oikocredit wants to enable a selective group of investors (churches and
                                       church-related organisations) to participate in its term investments (alongside with Oikocredit itself) and thus enable these
                                       organisations to invest in a socially responsible way with a special focus on development. Under legislation in the Netherlands
                                       governing investment funds, effective as of September 1, 2005, Oikocredit is not required to apply for a fund license with
                                       the Netherlands Authority for the Financial Markets as those who participate in the Fund are offered participations with a
                                       nominal value per participation of at least E 50.000. Therefore, Oikocredit established the 4F-Fund (Fund for Fair Future) in
                                       2006. The Fund is created as a restricted, tax transparent investment fund (beleggingsfonds) with an open-end for members/
                                       shareholders and future members / shareholders of Oikocredit. The Fund is not an incorporated legal entity, but an unincor-
                                       porated contract of its own nature. The Fund and the participations will not be listed on any stock exchange.

                                       During 2006, Oikocredit and its related foundations transferred their entire fixed income investment portfolio of about E 130
                                       million to the Fund.

                                       Basis of consolidation
                                       The consolidated financial statements of Oikocredit Ecumenical Development Cooperative Society U.A. (the Society)
                                       include the financial information of the Society as well as the financial information of group companies Oikocredit International
                                       Support Foundation (“Support Foundation”) and Oikocredit International Share Foundation (“Share Foundation”) in
                                       Amersfoort, the Netherlands; Maanaveeya Holdings and Investments Private Limited in Hyderabad, India; and the 4F-Fund
                                       (Fund for Fair Future), an investment fund based in Amersfoort, the Netherlands, and managed by Oikocredit U.A..

                                       The difference between the equity / results presented in the consolidated financial statements and the equity / results
                                       presented in the financial statements of the Society can be attributed to the equity / results reported for the Oikocredit
                                       International Support Foundation and the Oikocredit International Share Foundation.

                                       We refer to the accounting policies of the Society (described in the summary of accounting policies).

                                       Changes in accounting principles 2006
Oikocredit financial statements 2007

                                       Term investments Support Foundation
                                       Up to the end of 2005, the term investments of the Support Foundation were valued differently when compared to the valua-
                                       tion method used for term investments of the Society. The term investments of the Foundation were valued at cost or amor-
                                       tized cost. Gains or losses on redemptions or sales of investments, measured by the difference between book value and
                                       proceeds of sales, were taken to the income statement. For the valuation of the Society’s portfolio, we refer to the relevant
                                       section on term investments in the accounting policies of the Society (described in the summary of accounting policies).

The reason for the different valuation methods was that the bond titles within the portfolio of the Support Foundation were
held to maturity and no active trading took place while the portfolio of Oikocredit is actively managed with the intent to
optimise yields.

In order to further improve yields on the investment portfolio, the Oikocredit International Support Foundation decided to
implement a strategy of active management of its term investments. Therefore on January 1, 2006 the Support Foundation
changed its accounting principles to be similar to the accounting principles of the Society. The relevant balance sheet items
were restated as of 1/1/06:

l    Term investments were revalued with an amount of E 468,000
l    An equalisation reserve was created with an amount of E 468,000

Term investment income for 2006 would have been approximately E 52,000 lower when the accounting principles applica-
ble up to 2005 were used during 2006.

NOTE 1. Development financing
    1.1. Changes in project funding

    Changes in project funding are as follows:
                                                                                                   2007              2006
                                                                                                  E ,000            E ,000

    Outstanding as of January 1                                                                  207,837           162,608
    Disbursements                                                                                135,385             93,668
    Revaluation                                                                                         -               153
    Capitalised interest and dividends                                                                736               603
    Less:      - repayments                                                                      (57,998)          (38,229)
               - write-offs                                                                       (1,101)           (1,690)
    Exchange adjustments                                                                          (7,631)           (9,276)
    Outstanding as of December 31                                                                277,228           207,837

    Approved in the year                                                                          159,452          116,664
    Less:      - commitments cancelled                                                           (13,705)           (9,738)
    Not yet disbursed January 1                                                                    64,283            50,466
    Less:      - disbursements                                                                  (125,308)          (89,097)
               - disbursements through subsidiary Maanaaveeya Holdings                           (10,777)           (4,571)
    Exchange adjustments                                                                              496               559
                                                                                                                                Oikocredit financial statements 2007

    Approved as of December 31                                                                    351,669          272,120

                                       1.1.1. Breakdown of outstanding project funding
                                       Project funding outstanding by sector as of December 31, 2007:

                                                                       2007                                                                2006
                                                                   Financial services                                                Financial services
                                                                         79%                                                               74%

                                                           Other                                                             Other
                                                                       Trade      Agriculture                                 7%      Trade          Agriculture
                                                                        4%           10%                                               6%               13%

                                       Project funding outstanding by region as of December 31, 2007:

                                                                       2007                                                                2006
                                                                    Latin America                                                     Latin America
                                                                         40%                                                               46%

                                                                                                All other
                                                                                                regions                                                               All other
                                                                                                   2%                                                                 regions
                                           Central and                                                        Central and
                                         Eastern Europe                                         Africa      Eastern Europe
                                                                                                17%                                                                Africa
                                              19%                                                                16%
                                                                        Asia                                                              Asia
                                                                        22%                                                               17%

                                       Project funding outstanding by type of financing (loans, guarantees and equity investments) as of December 31, 2007:

                                                                       2007                                                                2006
                                                                        Loans                                                               Loans
                                                                        94.1%                                                               91.1%
Oikocredit financial statements 2007

                                                          Guarantees    Equity                                               Guarantees     Equity
                                                            0.2%        5.7%                                                   0.3%         8.6%

                                       The Society has entered into agreements to guarantee local loans to projects from other financial institutions for a total of
                                       E 580,000. This amount is covered by letters of guarantee from various banks which are backed by Oikocredit deposits in
                                       the same banks.

Project funding outstanding by type of currency as of December 31, 2007:

                                2007                                                                         2006

                                USD ($)                                                                       USD ($)
                                 44%                                                                           46%

                                                       Euro (E)                                                                  Euro (E)
               Local                                     20%                                 Local                                 22%
             currencies                                                                    currencies
                36%                                                                           32%

Of projects denominated in local currencies 6.9% are in Indian rupee and 4.2% in Philippine peso.

 1.1.2. Maturity of outstanding project funding

 The outstanding project funding as of December 31, 2007 can be specified as follows:

                                                                                                                 31-12-2007         31-12-2006
                                                                                                                     E ,000             E ,000

 Repayments < 5 years                                                                                                245,999           180,532
 Repayments > 5 years                                                                                                 15,659             9,609
 Equity investments                                                                                                   15,570            17,696
                                                                                                                     277,228           207,837

 1.1.3. Project funding committed not yet disbursed

 The outstanding project funding committed not yet disbursed as of December 31, 2007, can be specified as follows:

                                                                                                                     31/12/07         31/12/06
                                                                                                                      E ,000           E ,000

 Equity investments in process of finalisation                                                                           6,547           6,521
 Committed on credit lines, not yet taken up by partners                                                                 6,536           2,005
 Loans committed < 6 months                                                                                             45,319          39,295
 Loans committed > 6 months                                                                                             16,039          16,462
 Total                                                                                                                  74,441          64,283
                                                                                                                                                 Oikocredit financial statements 2007

                                       1.1.4. Equity investments included in project funding

                                       Value of equity investments as of 31/12/07 and 31/12/06 1)
                                                                                                                                31/12/07   31/12/06
                                                                                                                                 E ,000     E ,000

                                       Africinvest, Mauritius                                                                     1,763      1,403
                                       Banrural, Guatemala                                                                        1,444      1,596
                                       Balkan Equity Fund, Switzerland                                                            1,354        101
                                       Opportunity Banka A.D., Serbia                                                             1,350          -
                                       Opportunity International Savings and Loans, Ghana                                         1,016        329
                                       Wizzit Payments, South Africa                                                                997          -
                                       Microinvest, Moldova                                                                         911          -
                                       Confianza, Peru                                                                              778        734
                                       Fondo de la Comunidad, Bolivia                                                               686        758
                                       Divine, United Kingdom                                                                       680        742
                                       Banco Solidario, Ecuador                                                                     657        726
                                       FIE, Centro de Fomento Iniciativas Económicas, Bolivia                                       604        482
                                       Uganda Finance Trust, Uganda                                                                 399        435
                                       Prasac, Cambodia                                                                             395        433
                                       Proempresa, Peru                                                                             380        397
                                       COFAC, Uruguay                                                                               362        400
                                       Banco Oportunidade, Mozambique                                                               349        351
                                       Fonkoze, Haïti                                                                               274        303
                                       Divine Chocolate Inc., USA                                                                   257        284
                                       Rqubed Consultants, South Africa                                                             249          -
                                       Fidelity Equity Fund, Ghana                                                                  237          -
                                       Omro, Romania                                                                                201        214
                                       Inversiones para el Desarrollo, Chile                                                         73         81
                                       Barefoot Power, Australia                                                                     60          -
                                       CAP Microfinance, Senegal                                                                     38          -
                                       Horizon Equity Fund, South Africa                                                             32          -
                                       Stedionica Opportunity International, Serbia                                                   -        600
                                       Banco del Desarrollo, Chile                                                                    -      7,310
                                       Other                                                                                         24         17
                                                                                                                                 15,570     17,696

                                            Excluding loss provisions

                                       1.2. Provision for possible losses on project funding and deposits at financial institutions

                                       Changes in the provision for possible losses are summarised as follows:
                                                                                                                                  2007       2006
                                                                                                                                 E ,000     E ,000

                                       Balance as of January 1                                                                   27,679     26,368
                                       Additions                                                                                   6,100      4,507
                                       Exchange adjustments                                                                      (1,325)    (1,506)
Oikocredit financial statements 2007

                                                                                                                                 32,454     29,369
                                       Less:    - write-offs                                                                     (1,101)    (1,690)
                                       Balance as of December 31                                                                 31,353     27,679

NOTE 2. Term investments

Summary of term investments:                                                                             31/12/07              31/12/06
                                                                                                          E ,000                E ,000

Term investments in bonds issued by development banks and developing countries and
by companies active in – and with particular beneficial impact in – developing countries
and other term investments with development impact                                                        81,552                 84,369
Other term investments                                                                                    51,307                 54,421
Balance as of December 31                                                                                132,859                138,790

                                                                                                           2007                   2006
Changes in term investments are as follows:                                                               E ,000                 E ,000

Balance as of January 1                                                                                   138,790               136,386
Revaluation of International Support Foundation investments to market value as at January 1                      -                   468
Investments during the year at cost                                                                        41,718                71,317
Disinvestments / redemptions during the year                                                             (42,888)              (63,825)
Revaluation to market value as of December 31                                                              (3,833)               (4,645)
Exchange adjustments                                                                                         (928)                 (911)
Balance as of December 31                                                                                132,859               138,790

Bonds issued by development banks, developing countries and by companies active in
– and with particular beneficial impact in – developing countries 1)                                     31/12/07              31/12/06
                                                                                                          E ,000                E ,000
Bonds issued by development banks:
Inter American Development Bank l 2)                                                                      15,261
European Bank for Reconstruction and Development                                                           6,820
Dutch Government Investment Bank                                                                           3,300
Asian Development Bank l 2)                                                                                2,248
African Development Bank l 2)                                                                                206
Bonds issued by developing countries:
Republic of Hungary                                                                                         4,411
Banque Centrale de Tunesie, Tunesia                                                                         2,081
United Mexican States                                                                                       2,021
Republic of Chile l 2)                                                                                        187
Malaysia Government l 2)                                                                                      188
Bonds issued by companies active in – and with particular beneficial impact in – developing countries:
Electricidade de Portugal SA / Energias de Portugal, Portugal                                              5,223
Anglian Water Services Financing PLC, United Kingdom                                                       4,379
Telenor ASA, Norway                                                                                        5,513
Australia & New Zealand Banking Group Ltd., Australia                                                      5,733
Bayerische Hypo-Vereinsbank, Germany                                                                       4,359
Council of Europe Development Bank ll 2)                                                                   3,358
Veolia Environnement SA, France                                                                            5,292
Telefonica Emision Sau, Spain                                                                              2,304
Olivetti Finance (Telecom Italia), the Netherlands                                                         1,120
France Telecom SA, France                                                                                  3,954
Subtotal                                                                                                  77,958                 84,369
                                                                                                                                              Oikocredit financial statements 2007

Other term investments with development impact
TCX, The Currency Exchange Fund N.V., the Netherlands                                                       3,428
Other                                                                                                         166
Subtotal other investments                                                                                  3,594                      0

Subtotal                                                                                                  81,552                 84,369

                                                                                                                     Continued on page 46 ➤

                                        Continued from page 45

                                        Other term investments

                                        Corporate bonds 1)
                                        Deutsche Telecom International Finance BV, the Netherlands                                                                                        3,823
                                        ING Group NV, the Netherlands                                                                                                                     2,915
                                        Banca Monte Dei Paschi di Siena Spa, Italy                                                                                                        2,755
                                        Air Products & Chemicals, United States of America                                                                                                2,768
                                        Lloyds TSB Bank, United Kingdom                                                                                                                   2,577
                                        British Gas International Finance, the Netherlands                                                                                                2,446
                                        EVN Energie-Versorg, Austria                                                                                                                      2,108
                                        Vivendi SA, France                                                                                                                                2,081
                                        British Telecommunications, United Kingdom                                                                                                        2,015
                                        Merck-Finanz AG, Luxembourg                                                                                                                       1,970
                                        Nederlandse Waterschapsbank NV, the Netherlands                                                                                                  12,736
                                        Bank of America                                                                                                                                     882
                                        Rabobank members certificates, the Netherlands                                                                                                      349
                                        Subtotal bonds                                                                                                                                   39,425          42,244

                                        ASN Share Fund, the Netherlands                                                                                                                  10,126
                                        DZ Bank EKK Global Ethik Zertifikate, Germany                                                                                                       709
                                        Subtotal shares                                                                                                                                  10,835          10,978

                                        Other loans
                                        Oikocredit USA, United States of America                                                                                                            747
                                        GLS Bank, Germany                                                                                                                                   300
                                                                                                                                                                                          1,047           1,199

                                        Subtotal other term investments                                                                                                                  51,307          54,421

                                        Total balance                                                                                                                                   132,859         138,790

                                              All investments in bonds comply with the following Ethibel labels and sub labels:
                                        	     •		Ethibel	“Excellence”	label,	including	companies	active	in	developing	countries	with	particular	beneficial	impact	in	these	countries;
                                        	     •		Ethibel	label	for	bonds	in	developing	countries	and	emerging	markets.

                                             Term investments are Euro denominated except for bonds marked with l which are (partly) US dollar denominated and l l which are (partly) GBP denominated.

                                       The interest received on the US dollar bonds, in so far as they are not held for staff savings / provident fund purposes, is
                                       sufficient to cover interest due on certain US Notes loans (US$ 220,000). Of the investments in bonds, 41% (2006: 33%)
                                       has a medium-term maturity (1-5 years), while 59% (2006: 67%) matures thereafter.

                                       Investments in bonds as of                                                             2007
                                       December 31, 2007:
                                                                                                            Development banks

                                                                                                                                                                  Companies active in developing
                                                                                                                                                                 countries with particular beneficial
                                                                             Developing countries
                                                                                                                                                                     impact in those countries
Oikocredit financial statements 2007


                                                                                                         All other non-development related

                                       The average duration of the portfolio as at 31/12/07 was 5.04 (31/12/06: 5.05). Our term investments are selected from
                                       Ethibel universes, which comply with our own ethical criteria. Our term investments in bonds are all investment grade bonds
                                       according to Moody’s rating agency.

NOTE 3. General & other reserves
 3.1 The general and other reserves are built up as follows:

                                                                                               31/12/07   31/12/06
                                                                                                E ,000     E ,000

 Oikocredit general and other reserves (with reference to note 7 Oikocredit)                     9,708      8,670
 Reserves Oikocredit International Support Foundation                                               41         (2)
 Reserves Oikocredit International Share Foundation                                                  -           -
 Balance as of December 31                                                                       9,749      8,668

The changes in the general and other reserves can be summarised as follows:

                                                                                                 2007       2006
                                                                                                E ,000     E ,000

 Balance as of January 1                                                                          8,668     14,647
 Revaluation of International Support Foundation investments to market value as at January 1          -        468
 Appropriation for the year Oikocredit                                                            3,439      1,862
 Result previous year of the Oikocredit International Share and Support Foundations                   -        (15)
 Realized and unrealized results on term investments and amortisation to income                 (4,573)    (4,963)
 Negative equalisation reserve charged to income                                                  3,413           -
 Exchange rate differences                                                                      (1,198)    (3,333)
 Balance as of December 31                                                                        9,749      8,668

NOTE 4. Local currency risk funds

                                                                                                 2007       2006
                                                                                                E ,000     E ,000
 Balance as of January 1                                                                            329       114
 Exchange rate differences on invested funds in US dollars                                         (15)        (7)
 Addition to / released from fund                                                                 (163)       222
 Balance as of December 31                                                                          151       329

 Balance as of January 1                                                                           123        129
 Exchange rate differences on invested funds in US dollars                                          (6)        (8)
 Addition to / released from fund                                                                  (14)          2
 Balance as of December 31                                                                         103        123

 Balance as of January 1                                                                         5,439      5,793
 Transfer to fund non-banking and model costs                                                      (29)          -
 Exchange rate differences on invested funds in US dollars                                       (247)      (340)
 Released from / addition to fund                                                                2,078        (14)
 Balance as of December 31                                                                       7,241      5,439

 Local currency risk fund Africa
 Balance as of January 1                                                                         2,824      1,822
 Transfer from guarantee and capacity building funds Africa                                          -        845
 Exchange rate differences on invested funds in US dollars                                       (128)      (107)
 Released from / addition to fund                                                                (119)        264
                                                                                                                      Oikocredit financial statements 2007

 Balance as of December 31                                                                       2,577      2,824

 Local currency risk fund South and East Asia
 Balance as of January 1                                                                         3,637      3,713
 Exchange rate differences on invested funds in US dollars                                       (165)      (219)
 Released from / addition to fund                                                                   84        143
 Balance as of December 31                                                                       3,556      3,637

 Total local currency risk funds                                                                13,628     12,352

                                       The currency risk funds are used to cover potential currency losses on loans issued in the currencies of developing countries
                                       where Oikocredit operates rather than in US$ or Euros. The funds originate from grants from members and third parties.

                                       4.2 Local currency loans cumulative exchange rate differences account
                                       This amount is included under the other current assets or liabilities in the consolidated balance sheet and consists of the
                                       cumulative exchange rate differences on local currency loans which did not yet mature. At year-end 2007, it amounts to
                                       negative E 2.3 million (2006: negative E 1.5 million). If losses are realised when loans in local currency mature, the losses
                                       will be charged to the local currency risk funds. If profits are realised when local currency loans mature, the profits will be
                                       added to the local currency risk funds.

                                       NOTE 5. Funds for non-banking expenses and activities

                                       The funds below originate from grants received for purposes described for each separate fund below. The Support
                                       Foundation charges the related A and B costs to these funds. We refer for an explanation of category A and B costs under
                                       summary of accounting policies.

                                        Members’ travel fund

                                                                                                                                           2007               2006
                                                                                                                                          E ,000             E ,000

                                        Balance as of January 1                                                                                20                24
                                        Released from / addition to fund                                                                     (10)                (4)
                                        Balance as of December 31                                                                              10                20

                                       This fund was established to assist members of Oikocredit in attending the organisation’s annual general meeting.

                                        Funds for non-banking and model costs

                                                                                                                                           2007               2006
                                                                                                                                          E ,000             E ,000

                                        Balance as of January 1                                                                            4,295              4,286
                                        Previous year adjustment                                                                             (11)                 -
                                        Transfer from capacity building funds Africa / South and East Asia / LCRF general                    193                  -
                                        Released from / addition to fund                                                                   (227)                  9
                                        Balance as of December 31                                                                          4,250              4,295

                                       This fund was set up during 1999 to cover the non-banking and model costs of Oikocredit.

                                        Capacity building Africa

                                                                                                                                           2007               2006
                                                                                                                                          E ,000             E ,000
Oikocredit financial statements 2007

                                        Balance as of January 1                                                                               743              1,274
                                        Transfer to fund for non-banking and model costs                                                    (108)              (422)
                                        Released from / addition to fund                                                                    (124)              (109)
                                        Balance as of December 31                                                                             511                743

                                       This fund was set up during 2004 for capacity building of existing and potential project partners and feasibility studies of
                                       potential project partners in Africa.

 Capacity building South and East Asia

                                                                                                       2007               2006
                                                                                                      E ,000             E ,000

 Balance as of January 1                                                                                783                 863
 Transfer to fund for non-banking and model costs                                                       (56)
 Released from / addition to fund                                                                       (92)                (80)
 Balance as of December 31                                                                              635                 783

This fund was set up during 2004 for capacity building of existing and potential project partners and feasibility studies of
potential project partners in South and East Asia.

 Technical assistance funds

                                                                                                       2007               2006
                                                                                                      E ,000             E ,000

 Balance as of January 1                                                                                   -                   -
 Addition to the fund                                                                                    268                   -
 Balance as of December 31                                                                               268                   -

This fund was set up for capacity building of existing and potential project partners and feasibility studies of potential project

The two guarantee funds below were established to enable institutional donors and individuals to participate in a fund that
insures part of the credit risk (equity or loan and accumulated interest) of projects to be financed by Oikocredit. For the
addition to these funds we refer to note 8.

 General guarantee funds

                                                                                                       2007               2006
                                                                                                      E ,000             E ,000

 Balance as of January 1                                                                                 312                298
 Exchange rate differences on invested funds in US dollars                                                 1
 Released from / addition to fund                                                                        394                 14
 Balance as of December 31                                                                               707                312

 Guarantee Fund for Africa

                                                                                                       2007               2006
                                                                                                      E ,000             E ,000
                                                                                                                                     Oikocredit financial statements 2007

 Balance as of January 1                                                                                 990              1,361
 Transfer to local currency risk fund Africa                                                               -              (422)
 Released from / addition to fund                                                                         24                 51
 Exchange rate differences on invested funds in US dollars                                                 -                  -
 Balance as of December 31                                                                             1,014                990

 TOTAL FUNDS FOR NON-BANKING EXPENSES AND ACTIVITIES                                                   7,395              7,143

                                       NOTE 6. Third party interests

                                       Consists of minority interests in Maanaaveeya Holdings & Investments Private Limited in Hyderabad, India, as well as par-
                                       ticipants in the 4F-Fund (Fund for Fair Future).

                                       NOTE 7. Long term liabilities

                                        Long term liabilities can be specified as follows:
                                                                                                                                                                                      2007                       2006
                                                                                                                                                                                     E ,000                     E ,000

                                        Long term liabilities Maanaveeya Investments and Holdings Private Ltd., Hyderabad, India 1)                                                  13,087                      4,445
                                        Oikocredit long term liabilities 2)                                                                                                          17,001                     14,580
                                        Total long term liabilities                                                                                                                  30,088                     19,025

                                             Consists of three loans with a total principal amount of Rupee 800 million from a financial institution in India, of which a part has not yet been released. The loans have
                                             terms of 5 years and should be repaid in half yearly instalments of Rupee 37.5 million starting on 1/10/2007. The loan carries an interest rate at the base rates used by the
                                             financial institution less 5 to 5.5%. Oikocredit has issued a guarantee of E 16 million to a financial institution for this loan.

                                             We refer to note 9 of the Society’s financial statements.

                                       NOTE 8. Grants

                                                                                                                                                                                      2007                       2006
                                                                                                                                                                                     E ,000                     E ,000

                                        Grants received from Dutch government                                                                                                            150                        628
                                        Grants received from Dutch government through cooperation with ICCO                                                                            3,290                          -
                                        Other grants received                                                                                                                            160                        109
                                        Total grants                                                                                                                                   3,600                        737

                                       NOTE 9. Additions to and release from funds

                                                                                                                                                                                      2007                       2006
                                                                                                                                                                                     E ,000                     E ,000

                                        Local currency risk fund Philippines
                                        Grants received                                                                                                                                    -                          -
                                        Exchange rate differences local currency loans repaid                                                                                          (169)                        214
                                        Interest added                                                                                                                                     6                          8
                                        Released from / addition to fund                                                                                                               (163)                        222

                                        Local currency risk fund Indonesia
                                        Grants received                                                                                                                                     -                          -
                                        Exchange rate differences local currency loans repaid                                                                                            (17)                        (3)
                                        Interest added                                                                                                                                      3                          5
Oikocredit financial statements 2007

                                        Released from / addition to fund                                                                                                                 (14)                          2

                                        Local currency risk fund general
                                        Grants received                                                                                                                                2,144                        107
                                        Exchange rate differences local currency loans repaid                                                                                          (214)                      (336)
                                        Interest added                                                                                                                                   148                        215
                                        Released from / addition to fund                                                                                                               2,078                       (14)

                                                                                                                                                                                                 Continued on page 51 ➤

Continued from page 50                                                                                                                    2007           2006
                                                                                                                                         E ,000         E ,000

Local currency risk fund Africa
Grants received                                                                                                                                -            -
Exchange rate differences local currency loans repaid                                                                                      (182)          191
Interest added                                                                                                                                63           73
Released from / addition to fund                                                                                                           (119)          264

Local currency risk fund South and East Asia
Grants received                                                                                                                                 -            -
Exchange rate differences local currency loans repaid
Interest added                                                                                                                                84          143
Released from / addition to fund                                                                                                              84          143

Members’ travel fund
Other costs                                                                                                                                 (10)           (4)
Released from / addition to fund                                                                                                            (10)           (4)

Non-banking and model costs
Grants received                                                                                                                              633           628
Interest received allocated to fund                                                                                                          100           164
Category A costs 1)                                                                                                                        (908)         (504)
Category B costs 1)                                                                                                                            -         (176)
Other	costs;	office	expenses	                                                                                              	                (52)		        (69)	
Contribution to Share Foundation                                                                                                               -          (34)
Released from / addition to fund                                                                                                           (227)             9

Capacity building Africa
Interest added                                                                                                                                15            47
Other costs                                                                                                                                (139)         (156)
Released from / addition to fund                                                                                                           (124)         (109)

Capacity building South and East Asia
Interest added                                                                                                                                16            31
Other costs                                                                                                                                (108)         (111)
Released from / addition to fund                                                                                                            (92)          (80)

Technical assistance funds
Grants received                                                                                                                              442
Interest added                                                                                                                                 3             -
Other costs                                                                                                                                (177)             -
Released from / addition to fund                                                                                                             268             -

Guarantee funds general
Grants received                                                                                                                              381            3
Interest added                                                                                                                                13           12
Released from / addition to fund                                                                                                             394           15

Guarantee fund Africa
Interest added                                                                                                                                24           51
                                                                                                                                                                  Oikocredit financial statements 2007

Released from / addition to fund                                                                                                              24           51

TOTAL ADDITION TO FUNDS                                                                                                                   2,099           499

 		A	definition	of	category	A	and	category	B	cost	is	included	in	the	summary	of	accounting	policies	under	the	note	“Description	of	the	organisation”.

                                       NOTE 10. Other information

                                       During 2006, the Dutch Ministry of Development Cooperation awarded a subsidy for Oikocredit’s non-banking costs to the
                                       International Support Foundation, amounting to E 14.8 million for the period 2007 to 2010. The amounts will be paid out
                                       based on reports submitted to the Dutch government on our non-banking activities, and are accepted as income when

                                       The Society has to keep US$ 6 million of investment grade bonds free of liens, pledges or any other encumbrance to
                                       secure a negative pledge to an American organisation until December 31, 2010, in case Oikocredit USA defaults on its
                                       US note obligations of US$ 6 million.

                                       The Society agreed with the Oikocredit Nederland Fonds (ONF) in Utrecht, the Netherlands – as one of the conditions for
                                       ONF to qualify as a socially responsible investment opportunity for Dutch tax purposes – to earmark part of microfinance
                                       project funding for fiscal purposes. (A certain percentage of total ONF member capital is allocated to Oikocredit U.A.)
                                       Furthermore, microfinance project funding is earmarked for fiscal purposes to ASN-Novib fund in The Hague, the Netherlands,
                                       and to ING Bank NV in Amsterdam.

                                       The Society has entered into a rental agreement for seven years in December 2006 starting at 1/7/2007. The total yearly
                                       rent payments amount to E 240,000 per year and are indexed.

                                       NOTE 11. Information on role of board of directors and committees of Oikocredit

                                       Board of directors of Oikocredit
                                       Oikocredit has appointed an international board of directors who has the widest powers in regard of the management of the
                                       Society. It has the authority to decide on all matters which are not specifically attributed and reserved to the general meeting
                                       of the Society: the board of directors has the power to delegate (a part of) its powers to the Managing Director who is res-
                                       ponsible for the day to day management of the Society under specific instructions of the board of directors on financial,
                                       economical and social policies. Further details can be found in article 30 to article 32 in the articles of association of the
                                       Society. The board had three meetings during 2007.

                                       The following persons are member of the board of directors as of December 31:

                                        Ms Jill Martin – President (Canada)                                Mr Sérgio Roschel (Brazil)
                                        Mr Gerhard Novy – Vice President (Austria)                         Rev. Dr. Fidon R. Mwombeki (Tanzania)
                                        Dr. Rev. Ms Shobha Arole (India)                                   Mr Ken Vander Weele (United States of America)
                                        Ms Judith Castañeda (Guatemala)                                    Mr Heinrich Wiemer (Germany)
                                        Dr. Nune Darbinyan (Republic of Armenia)
                                        Mr Harry Derkx (The Netherlands)                                   Secretary to the Board:
                                        Ms Kristina Herngren (Sweden)                                      Mr Tor G. Gull (Finland)

                                       The Managing Director has established a management team consisting of the following four staff members:

                                        Mr Tor G. Gull – Managing Director (Finland)
Oikocredit financial statements 2007

                                        Mr Erik Heinen – Director of Credit Operations and Deputy to the Managing Director (The Netherlands)
                                        Mr Albert Hofsink – Director of Finance and Administration (The Netherlands)
                                        Mr Ben Simmes – Director of Membership and Investments (The Netherlands)

Audit committee
The annual general meeting has set terms of reference for the audit committee, which consists of three persons elected by the
annual general meeting for a three-year term. The audit committee had two meetings during 2007, reviewing amongst other
the financial statements, internal control structures, the risk management project, as well as legal and compliance issues.

Members of the audit committee:

    Mr Hans Hekkenberg (The Netherlands)
    Mr Lars-Olof Hellgren (Sweden)
    Ms Jo Jamieson (Canada)

Investment advisory committee
The management of Oikocredit has institutionalised an investment advisory committee consisting of three persons to advise
on Oikocredit’s long term investment policies. The objectives of the investment advisory committee are:

l    Review and develop the investment policy of Oikocredit;
l    Monitor conflicts of interest related to the investment portfolio;
l    Evaluate the transactions and evaluate and monitor the performance of the Oikocredit investment portfolio for the period
     under review;
l    Review extraordinary transactions in the period under review;
l    Advise on the investment portfolio and policy.

Members of the investment advisory committee:

    Mr Paul van Loon – former Finance Manager of Oikocredit
    Mrs Jacqueline van Voorthuizen – Zyllian Strategies, Consultant Sustainable Investments, The Hague, the Netherlands
    Mr Heinrich Wiemer – Head of Insurance Research Vontobel Research Switzerland
    Prof Dr Theo Dijkstra – Head of Research and Development at SNS Bank Asset Management, Den Bosch, the Netherlands, and
    professor in econometrics with a special assignment for SRI at the University of Groningen, the Netherlands

Nomination committee
The nomination committee is elected by the members of Oikocredit and has the task of collecting and organising the nomi-
nations for candidates for membership on the board, the audit committee and the nomination committee itself.

Members of the nomination committee:

    Ms Ulrike Chini (Germany)
    Mr V. Kasturi (India)
    Mr Nils-Gunnar Smith (Sweden)
    Ms Judith Castañeda – member board of directors (Guatemala)
    Mr Tor G. Gull – Managing Director (Finland)
                                                                                                                                  Oikocredit financial statements 2007

Oikocredit financial statements 2007

Oikocredit financial statements 2007

                                In the eyes of Oikocredit

                                          Active                          Countries with                              Active countries with                   International                   National
                                          countries                       support associations                        support associations                    office                          support office

                                This unconventional upside down map shows the world according to its true proportions. This representation of the world is an illustration of how Oikocredit looks at the world.

                                Offices in regions

                                  Africa                                                     Asia                                                        South America
                                  East Africa                                                India                                                       Northern Region
                                  Ms Judy Ngarachu                                           Ms Suvarna Rani Gandham                                     Mr Frank Rubio
                                  E:                                E:                                 E:
                                  Offices: Kenya, Tanzania, Uganda                           Office: India                                               Offices: Ecuador, Peru

                                  South Africa                                               South-East Asia                                             Southern Region
                                  Mr Patrick Mabuela                                         Ms Ma. Theresa Pilapil                                      Mr Leonel Roland
                                  E:                                E:                                 E:
                                  Office: South Africa                                       Offices: Cambodia, Indonesia,                               Offices: Argentina, Bolivia, Brazil,
                                                                                             the Philippines                                             Paraguay, Uruguay
                                  West Africa
                                  English-speaking                                           Central and Eastern Europe                                  Non-focus countries
                                  Ms Muriel Edusei                                           Mr Florian Grohs                                            MFIs and Fair Trade organisations in
                                  E:                                E:                                 non-focus countries may turn to:
                                  Office: Ghana                                              Offices: Bulgaria, Romania, Slovakia,
                                                                                             Ukraine, Russia, Moldavia                                   Global Credits Unit*
                                  French-speaking                                                                                                        Mr Guillermo Salcedo
Oikocredit annual report 2007

                                  Ms Mariam Dao                                              Central America                                             E:
                                  E:                                Mexico, Central America
                                  Offices: Côte d'Ivoire, Mali, Senegal,                     and the Caribbean                                           * Based at the international office
                                  Benin                                                      Ms Teresita Murillo                                           in the Netherlands
                                                                                             Offices: Costa Rica, El Salvador,
                                                                                             Guatemala, Mexico, Nicaragua

International office

 Managing Director                                                         Heads of department

 Tor G. Gull                                                               Albert Hofsink                                                  Robert Bragar
                                                                           Director Finance and Administration                             General Counsel
 Deputy manager
                                                                           Ben Simmes                                                      Karima Wardak
 Erik Heinen                                                               Director Membership and Investments                             Head Corporate Communication
 Head of department and
 Director Credit Operations

Support associations and development funds (35)
 Continent              Country                               Location: city (region)                             E-mail address                             Telephone number
 Europe (26)            Austria                               Vienna                                                  +43 1 5054855
                        Belgium                               Antwerp                                                  +32 3 287 35 78
                        Denmark                               Viborg (Midtjylland)                                                   +45 86 68 23 33
                        France                                Grenoble (Rhône-Alpes)                                          +33 4 762 417 23
                                                              Marseille (Méditerranée)                               +33 4 91 75 13 53
                                                              Ostheim (France Est)                                       +33 389 49 00 92
                                                              Paris (Ile de France & Ouest)                     +33 1 48 74 90 92
                                                              Valentigney (Franche-Comté)                           +33 381 34 78 74
                        Germany                               Berlin (Nordost)                                            +49 30 680 57 150
                                                              Bonn (Westdeutschland)                                  +49 228 6880 280
                                                              Hamburg (Norddeutschland)                           +49 40 306 201 460
                                                              Hannover (Niedersachsen-Bremen)                +49 51 386 16 669
                                                              Kassel (Hessen-Pfalz)                                  +49 561 766 85 97
                                                              Köln – DACHS*)                                                   +49 221 139 969 80
                                                              Magdeburg (Ostdeutschland)                                    +49 391 537 12 40
                                                              Nuernberg (Bayern)                                           +49 911 366 72 17
                                                              Stuttgart (Baden-Württemberg)                    +49 711 24 50 11
                        Italy                                 Kaltern (Südtirol)                                        +39 0471 962 731 / +974 676
                        The Netherlands                       Utrecht (Oikocredit Nederland)                               +31 30 234 10 69
                                                              Amsterdam (ING)                                  +31 20 563 91 95
                        Spain                                 Barcelona (Catalunya)                                        +34 93 441 63 06
                                                              Bilbao (Euskadi)                                               +34 94 416 68 56
                                                              Sevilla                                                        +34 646 36 00 38
                        Sweden                                Uppsala                                                              +46 18 15 22 50
                        Switzerland                           Genève (Suisse Romande)                                      +41 22 328 46 70
                                                              Niederwangen (Deutsche Schweiz)                               +41 31 772 00 42
                        United Kingdom                        Bristol (South West)                                   +44 117 9743661
 North / South Canada                                         Dartmouth (Nova Scotia)                                 +1 902 466 4048
 America (6)                                                  Mississauga (Ontario)                                        +1 905 808 21 60
                                                              Victoria (British Columbia)                         +1 250 385 15 38
                        Mexico                                Mexico City                                                  +52 555 658 04 05 / 91 16 37 42
                        United States of America              Pittsburgh (Pennsylvania)                                  +1 412 731 40 84
                        Uruguay                               Montevideo                                                     +598 2 619 22 45
 Asia (3)               Japan                                 Kyoto                                                         +81 569 22 8539
                        South Korea                           Seoul                                                         +82 2 2075 6091
                        Philippines                           Quezon City                                             +63 2 929 32 29 / 32 35
                                                                                                                                                                                               Oikocredit annual report 2007

Oikocredit national support offices (4)
 Country                                                      Location: city (region)                             E-mail address                             Telephone number
 NSO – United Kingdom                                         Preston                                                         +44 1995 602806
 NSO – United States of America                               Washington                                                      +1 202 265 06 07
 NSO – Sweden                                                 Stockholm                                                   +31 33 422 40 40**)
 NSO – France                                                 Paris                                                       +31 33 422 40 40**)

 *) D-A-CH-S is the coordinating body of the eleven German-speaking support associations
**) Office will be opened in 2008. More information can be obtained at the international office (T: +31 33 422 40 40).
                                Strategic partners
                                                Church of Sweden	–	since	1997;

                                                ECLOF	–	since	2001;

                                                ICCO	–	since	2001;

                                                Terrafina Microfinance	–	since	2005;

                                Relevant networks
                                                Agri-ProFocus	–	member	since	2005;

                                                BiD Challenge – investment	partner	2007;

                                                CMEF	–	founding	member	since	2003;

                                                EUROSIF	–	member	since	2003;

                                                ICA	–	member	since	2005;

                                                Since 2006, Oikocredit together with:
                                ICCO Alliance
                                                DO PKN / Kerk in Actie,
                                                Share People,

                                                IFAT	–	member	since	1991;

                                                3iG	–	founding	member	since	2005;

                                                INAISE	–	member	since	2003;

                                                ING Microfinance Support	–	since	2004;
Oikocredit annual report 2007

                                                Netherlands Platform for Microfinance
                                                member	since	2003;

The Oikocredit team
Oikocredit international support office
T: +31 33 422 40 40
F: +31 33 465 03 36

Visiting address
Berkenweg 7
3818 LA Amersfoort
The Netherlands

Postal address
P.O. Box 2136
3800 CC Amersfoort
The Netherlands


Text and content editors
Charles den Tex, Nandy Heule,
Heads of departments and staff Oikocredit

Pete Pattisson (by order of Divine Chocolate Ltd.),
Oikocredit support associations and members,
project partners, Oikocredit staff

Marije Meulekamp, Karima Wardak

François Weststrate - Xplore Hoevelaken,
the Netherlands

Deltahage bv - The Hague, the Netherlands

Oikocredit uses 100% recycled paper, produced chlorine free.

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