Press Release: Bancoagricola Increases Financing to the Productive Sector and Climate Investments in El Salvador by 30%, Through a Partnership With IFC
A partnership among Bancoagricola and IFC, increased by 30% the financing for MSMEs, businesses managed by women and climate-smart investments in El Salvador, helping reduce the barriers to access financing for these underserved segments.
The new US $70 million financing package mobilized by IFC with funds from international investors, adds to the US$282.5 million granted to Bancoagrícola in 2020, which also included own account funds. The participating international investors (Invest in Visions and Triodos Investment Management) are now joined by Banco Latinoamericano de Comercio Exterior (Bladex), ILX and the Eco Business Fund.
“It is extremely gratifying to witness how our investments are helping to reduce the financing gap in these segments. The increase of credits granted by Bancoagrícola to SMEs, SMEs led by women and climate investments, proves that partnerships like this one, accompanied by key technical advice, can lead to opportunities and a better quality of life for people,” said Sanaa Abouzaid, IFC Manager for Central America.
“As the bank of Salvadorans, we recognize our commitment and responsibility, and for this reason, we want to contribute with this type of financial support, especially to the productive sector. More than 30% of the formal workforce in our country is generated by micro and small businesses; supporting them with tools and protecting them to ensure their permanence and the preservation of jobs in the country remain a priority for us,” said Rafael Barraza, Executive President of Bancoagrícola.
In both financing packages from IFC granted to Bancoagrícola, more than USD $120 million have been mobilized from other investors. Marcelo Castellanos, Regional Manager of the IFC Financial Institutions Group in Latin America and the Caribbean, highlighted that the IFC-Bancoagrícola partnership has a demonstration effect by “proving the viability of investing in emerging markets. Our primary role is to pave the way for other players in the private sector to attract more capital to countries like El Salvador, to show that there is a business case in this type of investment, it boosts the economy and creates jobs.”
As part of Grupo Bancolombia, the objective of the bank is to remain a platform to ensure lasting prosperity, in balance with the environment, and be an engine of well-being; a purpose that is shared by IFC. Both entities seek to help the local economy and promote the Sustainable Development Goals (SDGs). In this sense, three areas were identified in which greater impact can be generated to support these segments:
- Strengthen the productive sector: helping it to become more solid, diverse and provide decent jobs so that people can develop their skills and generate income.
- Build sustainable cities and communities: to ensure that more and more people have access to decent housing; help deploy mobility solutions with a smaller environmental footprint; and support highly polluting industries in their decarbonization process.
- Promote financial inclusion: facilitating access to banking products and services and providing financial education to contribute to the formalization of the economy. Especially for women entrepreneurs who gain participation in the productive activity of the country and for whom their businesses are an opportunity to generate income and well-being for their families.
In El Salvador, only 40% of MSMEs have access to a bank loan or line of credit. The barriers are even higher for women, with only 23% of them having access to a bank account. Despite the country’s rapid rate of urbanization, low- and middle-income Salvadorans find it difficult to obtain affordable mortgage loans.
“We know that many Salvadorans face daunting challenges. For this reason, we want to guarantee that our actions contribute to economic reactivation, and this will be possible thanks to the financing we receive from IFC. We are very grateful and extremely proud that organizations such as IFC continue to trust Bancoagrícola and the country,” added Barraza.
Photo courtesy of FAO El Salvador/Oscar Mendoza.