Washington, D.C., May 31, 2023 – The World Bank Board of Directors approved US$ 300 million in additional financing for the project Promoting Access to Financing for Productive Purposes for MSMEs, implemented by Ecuador’s National Finance Corporation B.P. (CFN). The new resources will be used to increase the number of loans, beneficiaries and impact on micro, small and medium-sized enterprises (MSMEs), including those owned by women. The project will also promote climate resilient MSMEs and the mobilization of private capital.
The World Bank Board of Directors approved the project Promoting Access to Financing for Productive Purposes for MSMEs on July 1, 2020, to stimulate economic reactivation and recovery following the Covid-19 pandemic. After 2.5 years of implementation, the project has worked with more than a dozen banks and cooperatives to disburse 3,738 loans and support another 801 loans through partial guarantees. Approximately 60 percent of the loans were allocated to MSMEs owned and/or led by women and almost 50 percent of the loans were granted to MSMEs receiving credit for the first time at the respective financial institution.
“The approval of this additional World Bank loan is another example of the confidence and international support that Ecuador receives for the orderly and responsible economic management of the government administration of President Guillermo Lasso. These resources, which will be administered by the CFN, will strengthen job creation and the reactivation of the national micro-economy,” said Ecuadorian Finance Minister Pablo Arosemena.A new project indicator was added to this additional financing operation to measure loans for MSMEs that develop productive initiatives with a climate mitigation or adaptation component. Investments may include projects with components for the use and/or production of renewable energy, clean transportation, sustainable waste management, eco-efficient products or infrastructure, among others.
"With this additional financing, the World Bank continues to support a successful operation that began in the pandemic, reinforcing the CFN's operating capacity as a second-tier credit institution, in a context of high demand," said Pilar Maisterra, World Bank interim director for Bolivia, Chile, Ecuador and Peru. "The results are evident; these resources have managed to support both economic revitalization and financial inclusion," she said.
Despite project advances, the gap in access to financing in Ecuador persists. Although credit to the private sector rose from 30 percent to 48.8 percent of GDP between 2017 and 2021, it still falls short of the average for Latin America and the Caribbean (LAC), which is 55 percent of GDP. According to Findex 2021, only 23 percent of adults in Ecuador received a loan from a formal financial institution in 2021, below the LAC average of 31 percent. Access to credit in Ecuador also presents a large gender gap of 18 percentage points compared to the LAC average of 11 percentage points, with only 15 percent of adult women having access to credit.
The additional financing approved is a variable spread loan with a maturity period of 20 years, including a 3.5-year grace period.
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