The World Bank approved 300 million dollars in additional financing for lending to micro, small and medium enterprises. The decision of the Executive Board was announced from Washington on May 31, 2023.

This is achieved through a project to promote access to financing for productive purposes for Mipymes, implemented by the National Finance Corporation (CFN) of Ecuador. The approved additional financing is at a variable rate, with a repayment term of 20 years, including a grace period of 3.5 years.

Jorge Andrade, CFN President: We hope to deliver, for loans, $600 million from multilaterals in the time we have

The international organization reported that the new funds will be used to increase the number of loans, beneficiaries and impact on small and medium-sized enterprises, including those owned by women. Work will be done on the promotion of climate-resistant MSMEs and the mobilization of private capital.

The project started in July 2020 to help reactivation and economic recovery from the consequences of the COVID-19 pandemic. And in two and a half years of implementation, 3,738 loans were delivered through more than a dozen banks and cooperatives, and another 801 loans were supported through partial guarantees.

60% of these loans were for small and medium-sized enterprises owned or managed by women, and almost 50% were granted to small and medium-sized enterprises that received a loan from the respective financial institution for the first time.

BanEcuador will offer loans of up to 500,000 dollars to artisanal miners who perform their activity legally and without mercury

The results were highlighted by the World Bank, which “continues to support the operation that started during the pandemic and has been very successful, strengthening CFN’s operational capacity as a second-tier credit institution, in a context of high demand.” said Pilar Maisterra, the agency’s interim director for Bolivia, Chile, Ecuador and Peru. “The results are evident, these funds managed to support the revitalization of the economy and financial inclusion.”

The approval of additional funds for the Minister of Economy, Pablo Arosemena, “is another example of the trust and international support that Ecuador receives for the orderly and responsible economic management carried out by the Government.”

There will now be a new indicator to measure loans to SMEs that represent productive initiatives with a climate change mitigation or adaptation component. Investments may include projects with components for the use and/or production of renewable energy, clean transportation, sustainable waste management, environmentally efficient products or infrastructure, among others.

Despite the progress made under the project, a gap in access to finance in Ecuador persists, according to the World Bank: although credit to the private sector increased from 30% to 48.8% of GDP between 2017 and 2021, it remains below the average for Latin America and the Caribbean, which is 55% of GDP. Furthermore, according to Findex 2021, only 23% of adults borrowed from a formal financial institution in 2021, below the region’s average of 31%. Access to credit in Ecuador also presents a large gender gap of 18 percentage points compared to an average of 11 percentage points for Latin America and the Caribbean, with only 15% of adult women having access to credit.