Montreal - November 17, 2020 - FinDev Canada announced it will provide a USD 10 million loan to Colombia’s Business Development Bank (Bancóldex). Alongside IDB Invest, FinDev Canada’s financing will support Bancóldex’s COVID-19 emergency liquidity lending program, which will support SMEs severely affected by the pandemic in Colombia.
Created in 1992, Bancóldex has played an important role in the development of the country by boosting exports, supporting SMEs, and promoting environmental sustainability. Earlier this year, Bancóldex introduced the Colombia Responde para Todos program, among others, aimed at offering financial services to private sector companies, primarily SMEs, impacted by the economic crisis triggered by the pandemic.
The one-year financing, renewable for an additional year, will allow Bancóldex, in alliance with the Colombian Government, to reach non-regulated microfinance entities, particularly those in regions far from urban centers, which provide financial services to micro-entrepreneurs underserved by local commercial banking.
With the support of IDB Invest, among others, Bancóldex plans to disburse approximately 450,000 loans to MSMEs by 2022, increasing its MSME portfolio by approximately COP 10.3 billion.
The current transaction will allow Bancóldex to expand its credit lines or programs that target Colombian MSMEs affected by the economic crisis and the spread of COVID-19. These emergency credit lines will provide greater liquidity and longer terms for re-payment, helping to sustain companies and preserve employment.
“The financing we are offering Bancóldex, in partnership with IDB Invest, will go on to support Colombia’s hard-hit entrepreneurs as they respond to the extraordinary challenges that the pandemic has created,” said Paulo Martelli, VP and Chief Investment Officer of FinDev Canada. “In addition, this loan will strengthen Bancóldex as a leading financier of a dynamic business community in one of the largest countries in Latin America.”
The participation of IDB Invest consists of a loan up to USD 60 million. The support that FinDev Canada and IDB Invest bring to Bancóldex is key to strengthening its lines of credit and to disbursing resources and liquidity to the different sectors of the economy. This will help to meet the Colombian government’s goal of ensuring the long-term sustainability of the largest number of companies in the MSME ecosystem in Colombia.
“We are challenged by one of the biggest economic contraction that has ever affected Colombia´s business activity. Thanks to FinDev Canada´s support, this credit enhancement would achieve maximum impact in Colombian enterprises, “said Javier Díaz, Chief Executive Officer of Bancóldex.
Making an impact through inclusive Market Development
So far, the Colombia Responde para Todos program has resulted in significant job preservation and growth as businesses used lower-interest loans from Bancóldex to maintain their operations, despite sharp reductions in customers and cashflow. The funding from FinDev Canada will allow the bank to continue to help safeguard the survival of businesses across Colombia. They, in turn, will be able to maintain thousands of jobs, ensuring that individuals, families, and communities can weather the pandemic and emerge with as little financial and economic damage as possible.
On women’s economic empowerment, women account for more than half of all direct employees at the bank. Moreover, Bancóldex believes that, by incorporating a gender perspective into its decision-making and implementation, its team, beneficiaries and stakeholders will understand the needs and experiences of women and men aiming to close gender gaps. Bancóldex is currently developing a comprehensive Gender Policy for the institution, scheduled for implementation in 2021.
Development Finance Institutions and COVID-19
FinDev Canada is committed to remaining open for business to serve target regions during the COVID-19 pandemic. Investment will help ensure that liquidity continues to reach developing markets, helping them to recover from the economic and social consequences of this crisis.
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About FinDev Canada:
Development Finance Institute Canada Inc., operating under the FinDev Canada brand, is a Canadian institution dedicated to providing financial services to the private sector in developing countries with the aim of combating poverty through economic growth by focusing on three main themes: economic development through job creation, women economic empowerment, and climate change mitigation. The Development Finance Institute Canada Inc. is a wholly-owned subsidiary of Export Development Canada (EDC). Find out more about FinDev Canada here.
About IDB Invest:
IDB Invest, a member of the IDB Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social and environmental development in the region. With a portfolio of USD 13.1 billion in asset management and 385 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.
About Bancóldex:
Bancóldex is a Colombian business development bank that supports productive transformation with an emphasis on MSMEs, boosts exports, and promotes environmental sustainability and the country's creative economy. Amid the pandemic, Bancóldex has developed a support portfolio for companies affected by the economic effects of COVID-19, through 26 special lines under the name ¨RESPONDE¨ that to date has benefited more than 25,000 companies (92% of them micro-companies) throughout the country, with $1.2 billion worth of credit.