Grameen Foundation 1029 Vermont Avenue NW, Suite 400

Washington, DC 20005 202.628.3560

www.gfusa.org

April 2006 Update

Post-Tsunami Microfinance Initiative

YKBS client Mrs. Mariani selling gasoline to neighbor and fellow YKBS client

Abdul Latif Jameel Co. Ltd. P.O. Box 248

Jeddah, 21411-0001 Saudi Arabia

00.966.2.693.0000 www. alj.com

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DECEMBER 26, 2004 TSUNAMI

The December 26, 2004 tsunami in the In-dian Ocean left an estimated 220,000 people dead. More than 1.6 million survivors were forced from their homes. Among those dis-placed were some of the world’s poorest citizens. Other who had escaped poverty in recent decades were thrust back into it.

GRAMEEN FOUNDATION RESPONSE

In the weeks that followed the Tsunami, Grameen Foundation, in collaboration with the Abdul Latif Jameel Group, assembled a team of microfinance experts to perform an on-site, comprehensive survey in the four countries that were most affected by the Tsunami. The purpose of the study was to determine how Grameen Foundation and the microfinance community could best support the post-tsunami recovery effort. The team’s findings suggested that tens of thousands of survivors were being held back in their ef-forts to recover because they lack invest-ment capital. They also found that microfi-nance institutions stand ready to meet those needs, but require additional financial and technical support.

Based on the study’s findings, GF has de-veloped a three-year plan that seeks to sup-port six of the most promising projects in Indonesia and India highlighted in the re-port.

The full report, entitled, “Recovery From the Tsunami Disaster: Poverty Reduction and Sustainable Development through Mi-crofinance,” can be downloaded from our website at:

www.gfusa.org/pubdownload/~pubid=2

CURRENT STATUS

Grameen Foundation has formed partner-ships with five microfinance institutions in Indonesia and India. In addition to providing funding to our partners, we are helping them implement management information systems (MIS) and providing on-the-ground technical assistance. So far, we have provided $690,000 in funding to our partners, enough to support the first 6,500 of 21,500 clients we intend to reach over three years. This first round of funding is expected to impact the lives of 32,500 people. The one million dol-lar contribution from the Abdul Latif Jameel Company paved the way for over 100 dona-tions from individuals, corporations and foundations, most notably from the Northern Rock Foundation of the U.K. To date, $1.25 million has been received in support of this plan, and another $280,000 has been commit-ted and will be disbursed in May 2006.

THE FUTURE

After six months of operations the Post-Tsunami Microfinance Initiative reassessed its program and the overall microfinance en-vironment in the tsunami-affected areas. We revised our targets to reach at least 21,500 tsunami-affected borrowers by mid-2008 through a $10 million initiative. To accom-plish this goal, Grameen Foundation, to-gether with the Jameel group and other part-ners, hopes to raise an additional $8.5 million and establish a partnership with one more microfinance institution in India.

Tsunami Partnerships 3 Partner Summary 3 Banda Aceh Update 4 Borrower Profile 5 Loan Officer Profile 6

INSIDE THIS UPDATE

Background

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YAMIDA Indonesia

YKBS Indonesia

ASA India

ESAF India

CCD India TOTAL

Funds Disbursed $200,000 $200,000 $145,000 $145,000 — $690,000

Funds Obligated (to be disbursed)** — — — — $115,000* $115,000

Number of Active Bor-rowers 1,149 1,015 — ** 633 — 2,797

Total Loans Outstanding (cumulative) $105,696 $95,677 — $83,221 — $284,594

Portfolio at risk (>30 days) 0 0 — 0 — 0

Note 1*: As of March 31, CCD is still awaiting formal approval from India’s Central Bank (RBI) before it can receive the $115,00 in funds ($95,000 loan for on-lending and $20,000 for operating expenses). Note 2**: ASA received RBI approval in late February. Funds were released to ASA in early March and received on March 28. Their first report to GF will be due in May 2006.

Since the last quarterly update, an additional $285,000 has been disbursed to four PTMI imple-mentation partners: ASA, ESAF, YKBS and YAMIDA. GF has also established a partnership with the Covenant Centre for Development (CCD), based in Madurai, Tamil Nadu. We are cur-rently waiting for approval from the Indian Central Bank to disburse $115,000 to CCD to allow them to begin their microfinance program in Rameswaram and Kanyakumari districts of South-ern India, providing loans to fish vending women, handicraft workers and beach vendors.

As of early March 2006, the Management Information Systems (MIS) consultant finished his seven-month term in Banda Aceh, Indonesia, after successfully implementing MIS and training YAMIDA and YKBS staff. The automation of our Indonesian partners’ systems has dramatically improved their ability to track information on clients and loans, keep accounting accurate and up-to-date, and submit their financial and operating reports to GF in a timely fashion.

CURRENT PTMI IMPLEMENTATION PARTNERS

INDONESIA: INDIA: Yayasan Mitra Dhuafa (Yamida) Activists for Social Alternatives (ASA) Yayasan Karya Bunda Sejahtera (YKBS) Covenant Centre for Development (CCD) Evangelical Social Action Forum (ESAF)

Tsunami Initiative Implementation Partnerships

Summary as of March 31, 2006

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Indonesia Partners Cross The 2,000-Client Mark

The staff of GFUSA Post-Tsunami Microfinance Initiative , YAMIDA and YKBS on a team-building retreat off the coast of Banda Aceh, Indonesia

Grameen Foundation’s PTMI implementation part-ners in Indonesia, YKBS and YAMIDA, have ex-perienced tremendous growth in client outreach since it began disbursing loans to clients in Novem-ber 2005.

At the start of our partnership, GF worked with YKBS and YAMIDA to determine operational tar-gets for outreach. We set the lofty target of 1,000 clients each by the end of March 2006. In light of the ambitious goals set, YKBS and YAMIDA staff worked diligently, with incredible fortitude and determination. In just five months of operation, both YKBS and YAMIDA exceeded their outreach tar-gets: as of March 31, 2006, YAMIDA had 1,149 clients, and YKBS had 1,015.

While most NGOs in the area are still in the planning phase of their microfinance operations, YKBS and YAMIDA are establishing a strong presence in Banda Aceh and meeting a still largely unmet need for finan-cial services among the poor.

These achievements would not have been possible without the support and expertise of Ahsan Habib, our Technical Advisor based in Banda Aceh, who brings with him over 20 years experience at Grameen Bank and Grameen Trust. Together with Dr. Gene Octavio, PTMI Regional Advisor, and Liam Collins, Manager of Spe-cial Projects, the Tsunami Initiative senior management team has over 58 years of combined microfinance experience.

GROWTH IN CLIENT OUTREACHNovember 2005 - March 2006

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Banda Aceh Update

Staff of Grameen Foundation, YAMIDA and YKBS on a re-treat in Banda Aceh, Indonesia

Rising Above Poverty in Banda Aceh, Indonesia: Mrs. Mariani

Borrower ProfileBorrower Profile

Mariani is a junior high school gradu-ate, born and raised in Aceh province. She lives with her husband and three children. Before the tsunami hit Aceh in December 2004, Mariani’s husband worked as a driver while Mariani stayed at home. As a driver, her hus-band made $5 a day, but work was not consistent.

Mariani lost her mother and daughter in the tsunami. Her husband’s work as a driver often took away from home for long stretches of time. Not wanting to be away from his wife during such a difficult time, Mariani’s husband quit his job and with a personal loan, opened up a small kiosk selling dry goods outside of their house. Profits from the kiosk average about $2 a day. This decrease in income made it very difficult for the couple to make ends meet. Mariani heard about YKBS from a neighbor of hers who had accessed a loan from YKBS. Mariani took out a loan of $100, and with it set up a stall out-side of her home to sell kerosene, gasoline and diesel. Mariani’s new business brings in an average profit of $5 a day, over twice as much as her husband’s kiosk. Together, Mariani and her husband make more now than they did be-fore the tsunami, and Mariani says she now feels very comfortable and happy that she and her husband can work closely together.

When asked about future plans for her business, Mariani said that she hopes to some day open a shop where she can sell all of her goods.

Mrs. Mariani standing proudly in front of her gaso-line stand

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An Interview with a Loan Officer As featured in Grameen Connections Spring Newsletter

Muslim works in the villages of Lampisang, Lam Kruet, Keuneu, Lam Paya and Nusa in Indonesia, serving 255 clients.

GFUSA: What do you do as a loan offi-cer? MUSLIM: My main duty is to survey and select new villages and gather women af-fected by the tsunami to start a microfi-nance program in their community with the help of the microfinance institution’s (MFI) branch manager. In meetings with the women, we explain our mission, vision and procedure of disbursing loans. After the gathering, we form a new center, organize borrowers into groups, give basic training on the Grameen methodology, disburse loans, check on loan utilization, attend center meetings to collect loan installments and savings, and deposit the money.

GFUSA: What is the need for microfinance in the area you serve? MUSLIM: Now I am working for the microfinance institution YKBS in three sub districts (Pekun Lohokgna and Darul Imarah) of the Aceh Besar district. These three districts have been totally destroyed by the tsunami. Most families need financial help to restart their livelihoods. Although they are getting aid from other organizations, my thinking is that [the survivors] need long-term financial help and YKBS can give it through microfinance.

GFUSA: What are some of the popu-lar businesses clients take on? MUSLIM: The clients in Aceh start a va-riety of businesses but most use their loan to buy and sell dried fish, vegetables, and cakes. Other popular businesses are handiwork, tailoring, dress making, rais-ing ducks and chickens, and opening a small grocery store.

Muslim visiting with one of his YKBS clients