NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, October 5, 2015

The Inter-American Development Bank (IDB), a US-based multilateral finance institution that operates in Latin America and the Caribbean, recently approved a loan of USD 10 million to Vision Banco, a microfinance institution (MFI) in Paraguay. The loan will be disbursed from IDB’s Opportunities for the Majority Sector facility, which lends, invests equity, offers technical advice and provides partial guarantees and risk-sharing facilities to “companies, financial intermediaries … [and] non-profits that are willing to engage with the base of the socioeconomic pyramid”[4].

Vision Banco will on-lend the money to “water and sanitation councils”[1] as well as to low-income families in Paraguay. It is anticipated that approximately 10,000 households will benefit from the funding. Additionally, IDB will provide technical assistance to Vision Banco with the aim of assisting the MFI with designing the credit product. Training will be made available for the water and sanitation councils on “operational, commercial and financial issues”[1].

Luis Ros, the manager of the Opportunities for the Majority Sector facility, said that “the market has a great need for a credit product adapted to the requirements and realities of the Councils, and for a product for home improvements related to water and sanitation adapted to the base of the pyramid”[1]. He added that “Vision Banco is an ideal partner to design and offer these types of credit products, because of its start in the area of micro-finances, its traditional focus on the base of the pyramid families, and its extensive network of branches all over the country”[1].

As of 2014, Vision Banco reported USD 1.04 billion in total assets, a gross loan portfolio of USD 750.3 million, total deposits of USD 778 million, return on assets of 1.63 percent and return on equity of 17.72 percent. As of December 2014, IDB reported total assets of USD 106.3 billion. During 2014, IDB disbursed funding of USD 203.2 million for projects in Paraguay.