MICROCAPITAL BRIEF: IFC Lending Banco Agricola $330m for Women, MSMEs, “Climate-smart” Investments, COVID-19 Relief in El Salvador

The International Finance Corporation (IFC), a member of the World Bank Group, recently issued a financing package of USD 330 million to Banco Agricola of El Salvador to support micro-, small and medium-sized enterprises (MSMEs), including those owned by women; housing for people with lower incomes; and “climate-smart” investments, including in buildings with lower environmental impacts. About 10 percent of the funding is earmarked for lending as short-term working capital to help MSMEs cope with the impact of the COVID-19 pandemic.

Rafael Barraza, Banco Agricola’s CEO, explains that “More than 30 percent of [the] country’s workforce is generated by micro- and small businesses, and it is important to support them with tools that protect them in the midst of this crisis, ensuring their resilience in the market and the preservation and generation of jobs in the country.”

The financing package is composed of USD 180 million directly from IFC, USD 50 million from IFC’s Managed Co-lending Portfolio Program (MCPP) and up to USD 100 million IFC has mobilized from third-party investors.

With the support of the Women Entrepreneurs Finance Initiative (We-Fi), which is housed in the World Bank Group, IFC also will advise Banco Agricola on identifying business opportunities that address the banking needs of women’s MSMEs and otherwise aid in scaling up financial inclusion for women. In addition, IFC will give Banco Agricola access to its Excellence in Design for Greater Efficiencies (EDGE) green-building certification tool to help the bank grow its portfolio of “climate-smart” assets such as loans for “sustainable” real estate development.

Banco Agricola was founded in El Salvador in 1955, and since 2006 it has been a member of Bancolombia, a banking group headquartered in Colombia. Banco Agricola serves businesses of all sizes as well as individuals with current and savings accounts, debit and credit cards, loans, investment accounts, and personal and business insurance. As of 2019, the bank reported total assets of SVC 4.9 billion (USD 559 million). Bancolombia operates in the Cayman Islands, Guatemala, Panama, Peru and the US territory of Puerto Rico in addition to Colombia and El Salvador.

IFC offers loans, equity investments, advisory services and technical assistance to private companies with the intent of alleviating poverty and promoting open and competitive markets in developing countries. As of June 2020, it reported total assets of USD 96 billion.

The World Bank Group is a multilateral organization whose overarching goals are to promote shared prosperity and end extreme poverty by 2030. With 189 member nations as of 2020, the group encompasses: (1) the International Development Association and the International Bank for Reconstruction and Development, which make up the World Bank; (2) IFC; (3) the Multilateral Investment Guarantee Agency; and (4) the International Centre for Settlement of Investment Disputes. During the year ending June 2019, the World Bank Group disbursed a total of USD 62 billion in loans, grants, equity investments and guarantees to partner countries and private businesses.

By Madigan Ruch, Research Associate

Sources and Additional Resources

IFC press release
https://ifcextapps.ifc.org/IFCExt/Pressroom/IFCPressRoom.nsf/0/5240224284A1BC6F852585D60060CFC6

Banco Agricola homepage
https://www.bancoagricola.com

2019 Banco Agricola Annual Report
https://www.bancoagricola.com/multimedia/render/1731

World Bank homepage
http://worldbank.org

Previous MicroCapital article on IFC
https://www.microcapital.org/microcapital-brief-isbank-georgia-ifc-agree-on-cross-currency-interest-swaps-10m-loan-for-smes/

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