PRIVATE SECTOR WITH PURPOSE: Stories of Development

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PRIVATE SECTOR WITH PURPOSE:
Stories of Development
PRIVATE SECTOR WITH PURPOSE:
PRIVATE SECTOR WITH PURPOSE: Stories of Development | 1
Contents
Message from the President of the Inter-American Development Bank
3
Introduction5
Chapter 1 Operational Highlights6
Operational Highlights 6
Outstanding Portfolio by Sector and by Country, 2013
8
Outstanding Portfolio by Country Group, 2013
9
Private Sector at a Glance, 2010-2013
10
Chapter 2 Supporting Micro, Small, and Medium Enterprises The Challenge and Working to Close the Development Gap
Tenda Atacado - Brazil
Early Stage Equity: Generating Economic and Social Value
Programa Emprender - Uruguay
IDB Group Technical Cooperation Grants
FINPYME - Regional 12
15
16
18
19
20
21
Chapter 3 Building Sustainable Infrastructure22
The Challenge and Working to Close the Development Gap
25
Palmatir - Uruguay
26
Blue Power Energy - Nicaragua
28
Infrastructure 360º - Regional
29
Pozo Almonte and Calama solar Photovoltaic
30
Canadian Climate Change Fund 31
Chapter 4 Fostering Innovation32
35
Subsole – Chile
36
The Shared Value Initiative 36
Banco Agricola – El Salvador 38
Innovations in Sustainability Awards - Regional 39
Chapter 5 Providing Basic Goods and Services40
43
Vinte - Mexico 44
Alternative Insurance Company (AIC) - Haiti 46
Economic and Social Inclusion of Recyclers - Regional
47
Universidad San Ignacio de Loyola (USIL) - Peru 48
Chapter 6 Encouraging Green Growth50
53
Using Remittances for Clean Energy in Haiti
54
Greenpyme - Regional
56
Green Credit Lines - Regional
56
Technical Assistance - Investment in Climate Change - Regional 57
Energy Efficiency Finance Facility - Nordic Development Fund - Regional
57
2 | PRIVATE SECTOR WITH PURPOSE: STORIES OF DEVELOPMENT
Chapter 7 Promoting Gender Equality 58
The Challenge and Working to Close the Development Gap 61
Mibanco - Peru
62
Women entrepreneurship Banking 64
Sustainable women-led businesses in Colombia 65
Finpyme Mujer Empresaria - Regional 66
Danper - Peru 67
Socially Inclusive Hospitality in Jamaica 68
Chapter 8 Catalyzing Development through Partnerships and Knowledge Creation Strategic Events and Forums
Annex
Abbreviations
70
70
72
Message from the President
of the Inter-American
Development Bank1
I am pleased to introduce “Private Sector with Purpose: Stories of Development,” which highlights examples of some the IDB
Group’s most innovative private sector work. It features recent projects, initiatives, and programs from across our four private
sector windows: the Structured and Corporate Finance Department (SCF), Opportunities for the Majority (OMJ), the InterAmerican Investment Corporation (IIC), and the Multilateral Investment Fund (MIF), showing the wide variety and reach of our
private sector operations.
The IDB Group’s private sector activities have contributed to the development of Latin America and the Caribbean. The Bank
has gained recognition for investing in under-served project types and/or sectors such as small and medium size enterprises
(SMEs) and in areas where the private sector has significant potential to promote the region’s growth through the development
of financial services, infrastructure, and base-of-pyramid markets. From 2010 to 2013, our combined financing to private sector
borrowers amounts to over US$7 billion through more than 500 projects spanning sectors from agribusiness to housing to
infrastructure to financial markets.
Complementing our own financing, we have partnered with other investors, leveraging more than US$4.7 billion in additional funds
to achieve transformational results. In addition to providing financing, we have fostered partnerships and introduced new products
and initiatives such as the Canadian Climate Fund with a lending capacity of US$250 million, Infrastructure 360°, a partnership with
Harvard University to recognize cutting-edge sustainable infrastructure, and the Women Entrepreneurship Banking program, which
helps banks increase their lending to women-led businesses. With the help of Technical Assistance grants, we have introduced
new products such as the Shared-Value Appraisal, through which we partner with clients to identify ways to drive business growth
and generate social value, thereby improving the social and environmental impact of our projects to all stakeholders including:
shareholders, employees, the surrounding community, and individuals within our clients’ value chains.
We have advanced these projects and programs in order to address the needs of current and future generations in Latin America
and the Caribbean. We must continue to develop creative partnerships with the private sector in order to promote jobs and
opportunities for all individuals in the region. We must work with others to leverage investment to satisfy growing demand for
infrastructure and basic services, meet the needs of poorest segments of our populations, and enhance productivity in a highly
competitive landscape.
I am confident that the changes underway in the IDB Group will catalyze further innovation and growth in our private sector
activities. It will also enable the IDB Group to serve the region’s private sector more effectively and efficiently, helping to maximize
its impact on the region’s development.
Luis Alberto Moreno
Washington D.C.
1. The President of the Inter-American Development Bank (IDB) is also Chairman of the Board of Executive Directors of the Inter-American Investment Corporation (IIC)
and Chairman of the Donors' Committee of the Multilateral Investment Fund (MIF).
“The private sector has a crucial role to play in the pursuit of
sustainable growth and equal opportunities in Latin America and
the Caribbean.“
Luis Alberto Moreno
President, Inter-American Development Bank
PRIVATE
SECTOR
WITH
PURPOSE
INTRODUCTION
As the key source of development financing for Latin America and the Caribbean, the IDB
Group has been supporting the private sector since its foundation over fifty years ago,
an acknowledgment of the critical role the private sector plays in the region's economic
development. The Inter-American Development Bank (IDB) is best known for its work
with governments in the region through its sovereign guaranteed (SG) operations and
non-financial products to reduce poverty, tackle inequality, and promote sustainable
economic growth. Those same fundamental goals drive the work the IDB Group does
in partnership with the private sector through its non-sovereign guaranteed (NSG)
operations, which include an array of financial and non-financial products.
This report—“Private Sector with Purpose: Stories of Development”— highlights
some of the achievements to date associated with the IDB Group's four private
sector windows.2 The report provides a compilation of case studies and examples
of some of the group’s most innovative and impactful projects.
The portfolio of more than $7 billion3 outstanding, reaches multiple sectors of the
economy throughout Latin America and the Caribbean. It is focused on providing
financing for projects that are not only financially sustainable but also contribute
important social and/or environmental benefits, an idea that not only resonates
with our private sector clients, but also with our public sector stakeholders.
This dual benefit drives our private sector clients to act as responsible corporate
citizens because they recognize that acting in society’s interest is also in their own
best interest. In fact, the priorities represented by every chapter in this report are
ultimately beneficial both to society and to business, whether the topic is creating
sustainable infrastructure, fostering innovation, encouraging green growth, making
sure that low-income consumers have access to basic goods and services, or
narrowing the financing gap for micro, small, medium, and women-led businesses.
When the private sector acts as a driver of economic growth that fosters sustainable
development while achieving high financial returns, it embodies the meaning of
"private sector with purpose."
2. The IDB Group’s support of the private sector is currently carried out through four dedicated windows:
Structured and Corporate Finance (SCF), Opportunities for the Majority (OMJ), the Inter-American Investment
Corporation (IIC) and the Multilateral Investment Fund (MIF). The report features projects, initiatives and
programs from across all four private sector windows.
3. All monetary amounts in this report refer to US dollars, unless otherwise specified.
People with a purpose
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PRIVATE
SECTOR
WITH
PURPOSE
CHAPTER 1
Operational Highlights
As of December 31, 2013, the value of the private sector portfolio exceeded $7 billion
and consisted of 501 projects spread throughout 24 countries across Latin America
and the Caribbean.
These operations are improving the lives
of over 7 million people with support to
solar, wind and clean energy, increased
access to financial services, training
through technical assistance and the
provision of essential services such as
housing, health and education. In addition,
since 2010, the IDB Group has supported
over $9.3 billion in non-sovereign climate
and environmentally friendly investments.
Projects supported included solar and
wind energy, industrial practices and
technology aimed at reducing emissions,
and Green Lines dedicated to the provision
of financing for environmentally friendly
investments. Lastly, since 2010, the IDB
Group has reached over 8.9 million MSMEs
through the provision of financial services
specifically designed for their needs
and through the promotion of inclusive
supply chains which among other services
provide training aimed at teaching MSME
farmers agricultural best practices.
2013 PORTFOLIO HIGHLIGHTS
2013 Outstanding Portfolio (USD 000s)*
Approvals (USD 000s)*
TOTAL
Volume
2012
Number
Volume
2013
Number
Volume
Number
Portfolio by product
$7,225,603
501
Approvals by product
$2,453,836
154
$3,285,635
158
A-Loans
$5,892,089
366
A-Loans
$1,754,367
114
$2,384,023
126
Guarantees
$217,204
11
Guarantees
$129,777
5
$32,979
4
TFFP guarantees
$645,000
30
TFFP uncommitted credit lines
$359,000
22
$812,955
20
TFFP loans
$328,408
11
Uncommitted facilities
$205,167
3
$50,000
1
Equity
$142,902
83
Equity
$5,525
10
$5,678
7
Portfolio by country group
$7,225,603
501
Approvals by country group
$2,453,836
154
$3,285,635
158
A/B
$3,077,323
219
A/B
$935,813
52
$1,574,028
60
C/D
$3,160,615
227
C/D
$970,956
85
$1,161,584
89
$987,665
55
Regional
$547,067
17
$550,023
9
Regional
TFFP - Trade Finance Facilitation Program
Group A. Argentina, Brazil, Mexico, and Venezuela. Group B. Chile, Colombia, and Peru. Group C. The Bahamas, Barbados, Costa Rica, Jamaica, Panama, Suriname, Trinidad
and Tobago, and Uruguay. Group D. Belize, Bolivia, the Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Haiti, Honduras, Nicaragua, and Paraguay.
* Reflects the combined portfolios of the Structured and Corporate Finance (SCF) Department, Opportunities for the Majority (OMJ), the Multilateral Investment Fund
(MIF), and the Inter-American Investment Corporation (IIC).
CHAPTER 1: Operational Highlights | 7
KEY METRICS
(2010-2013)
7 $9.3 8.9
million
People
with improved
living standards
billion
Climate-friendly
investments
million
MSMEs financed
and/or supported
2013 PORTFOLIO HIGHLIGHTS
Mobilization (2013 closed projects - in USD millions)*
Outstanding Portfolio Mobilization (in USD millions)*
B-Loans
B-Loans
Co-Loans
$697
$2,371
$3,200
China Fund
$50
Equity
$13
Clean Technology Fund
$36
Trust Funds
$10
Canadian Climate Fund
$21
* SCF, OMJ and IIC only
498 Technical Cooperations (TCs) under execution*
$507
Impact Evaluations
$1.5
Impact evaluations completed (#)
$1.6
Third-Party Funds
$108
* SCF, OMJ and IIC only
Technical Cooperations (in USD millions)
* 453 TCs under execution through MIF
Global Environment Facility
5
Others
Taxes paid by clients (USD millions)*
Underlying International Trade transactions supported**
$4,534
1,374
* Taxes paid refer to income taxes paid by SCF, OMJ and IIC client companies. SCF
& OMJ data are from 2010-2013. IIC data are from 2012. Data from previous years
not available.
** SCF only
B-loans are financed by commercial or other institutional lenders and complement loans funded from the Bank’s own resources. Co-loans: Agreement or mechanism
whereby third party resources are mobilized and combined with Bank loans to finance a specific operation or operations in a borrowing member country.
Structured and Corporate Finance (SCF), Opportunities for the Majority (OMJ), the Multilateral Investment Fund (MIF), and the Inter-American Investment Corporation (IIC).
Mexico
IDB Private Sector Group
Outstanding Portfolio
$534,652
47
501
projects
Over
$7 billion
invested in the region
A/B = $3 billion
C/D = $3.1 billion
Regional = $0.9 billion
PORTFOLIO BY COUNTRY GROUP
Volume (USD 000s)
Number of Projects
PORTFOLIO BY SECTOR (USD 000s)
Agribusiness
$245,331
Community Infrastructure
$3,636
Energy
$1,207,235
Financial Institutions
$1,699,014
Health & Education
$6,973
Housing
$293,900
Industries
$1,004,388
Investment Funds
$267,697
Water & Sanitation
$76,923
Others
$87,920
A/B
Countries
C/D
Countries
55
$1,052,749
$987,665
$1,088,434
Transportation
227
Trade
$3,160,615
$129,530
219
$61,872
Oil & Gas
$3,077,323
Manufacturing
Regional
The
Bahamas*
$0.55
2
Jamaica
Guatemala
$320,814
13
El Salvador
$66,462
8
Honduras
$5,619 Dominican
Republic
8
$184,771
8
Belize* $117,346
14
$2,461
Nicaragua
4
Colombia
Costa Rica
$374,901
27
Panama
Volume (USD 000s)
Number of
Projects
$987,665
55
Trinidad
& Tobago*
$3,259
5
$96,754
24
$140,148
13
Regional
Country
Haiti
$246,985
24
Guyana*
$709,211
25
Suriname*
$3,502
2
$1,497
2
Ecuador
$249,453
24
Brazil
$1,219,579
54
Peru
$270,779
30
Bolivia
$44,597
20
Paraguay
$535,548
24
Chile
$604,929
29
Uruguay
$314,960
19
Argentina
$200,430
35
*Technical Assistance grant funding only
PRIVATE
SECTOR
WITH
PURPOSE
Private Sector at a Glance
2010-2013
IDB Group Key Metrics
2010-2013
6,500
Measuring the key metrics associated
with IDB Group private sector projects is
a critical tool to gauge our success. The
figures below represent the cumulative
key metrics stemming from projects that
were active from 2010 to 2013.4
RENEWABLE ENERGY
PRODUCED (GWh)*
8.9 MILLION
MSMEs FINANCED
AND/OR SUPPORTED
4.5 MILLION
PEOPLE SUPPORTED THROUGH
INFRASTRUCTURE PROJECTS
Sustainable Infrastructure and Green Growth
For further information on the IDB
Group private sector contribution to Map
Americas, please visit:
4. January 1, 2010 to December 31, 2013.
Total capacity installed (in MW)
Low-carbon capacity installed (in MW)
Energy produced (GWh)*
2,800
900
8,200
Households with new or upgraded water supply
616,000
Households with new or upgraded sanitary connections
628,000
* The data for Energy produced (GWh) are cumulative for 2010-2013.
664,000
HOUSEHOLDS WITH NEW
OR UPGRADED DWELLINGS
336,000
SMALLHOLDER
FARMERS SUPPORTED
163,000*
WOMEN TRAINED
Fostering Innovation
Smallholder farmers
supported
People trained
336,000
1,400,000
Providing Basic Goods and Services
Gender*
Students benefitted by
education projects
Female Jobs created
Teachers trained
Microentrepreneurs supported
Households with new or
upgraded dwellings
Note: Data stems from projects active from 2010-2013.
17,000
14,600
6,200
Women Microentrepreneurs
supported
4,445,000
7,700,000
Female students supported
8,200
664,000
*Gender tracking began in 2012
PRIVATE
SECTOR
WITH
PURPOSE
CHAPTER 2
Supporting Micro, Small,
and Medium Enterprises
Chapter 2: Supporting Micro, Small, and Medium Enterprises | 13
Recognizing the contribution that micro, small, and
medium businesses can bring to a country’s economy,
the IDB Group invests in its success. It works with
financial institutions throughout Latin America and
the Caribbean to expand access to credit for small
businesses, helping unleash their potential to grow,
create jobs, and innovate.
$1.5 BILLION
Volume of Loans to MSMEs
in the Outstanding Portfolio
$598 MILLION
disbursed in 2013 to
support MSMEs through
financial institutions
8.9 MILLION
MSMEs financed and/or
supported from 2010 to 2013
“The coming decade will be about employing a smart
combination of finance, knowledge and innovation to
satisfy the needs of MSMEs across our changing region.”
Carl Muñana
General Manager, Inter-American Investment Corporation
THE CHALLENGE
VALUE OF CREDIT GAP IN LATIN
AMERICA5 ($ billion)
Micro, small, and medium enterprises (MSMEs) contribute
significantly to economic growth, job creation, and technological
development, yet many face substantial challenges. Chief among
them is a lack of access to credit. Despite major improvements
on this front in recent years, MSMEs in Latin America and the
Caribbean still face poorer access to finance, less favorable
conditions, and higher costs than larger firms.
MSMEs*
$330 - $410
SMEs**
$125 - $155
* Refers to formal and informal MSMEs.
** Refers to formal SMEs.
Working to Close the Development Gap
The IDB Group works with private lending
institutions throughout the region to
support financing for MSMEs in ways that
make the most impact and contribute to
sustainable economic growth, balancing
financial returns with social and
environmental gains. In 2013, it disbursed
nearly $600 million directly to financial
institutions to support MSMEs, and at
year’s end its outstanding portfolio of
these loans was around $1.5 billion. From
2010 through 2013, 8.9 million MSMEs
benefited from this support.
Financing is done in partnership
with banks and other lenders in
communities across the region, through
financing lines tailored to meet specific
needs—whether helping womenled MSMEs scale up their operations
or enabling smallholder farmers to
adopt greener technologies. From
2000 to 2011, the IDB Group made 151
discrete interventions (i.e. loans or
equity investments) to 113 financial
intermediaries. In addition to making
credit available, the IDB Group provides
lenders with technical assistance and
innovative instruments that allow
them to more accurately assess risk.
This is a vital piece of the puzzle, since
many small, informal businesses lack
collateral or even a credit history.
One niche for the IDB Group is providing
equity and capacity-building to MSMEs
as well as seed and venture capital
funding that comprises critical earlystage financing to dynamic enterprises.
These funds not only provide vital
long-term financing to businesses,
but they also introduce structural
changes needed to support growth—
good corporate governance practices,
professionalization of management, and
improvements in operational processes. 5. Sources: Stein, P., T. Goland, and R. Schiff (2010). Two Trillion and Counting. Assessing the credit gap for micro, small and medium-size enterprises in the developing
world, International Finance Corporation and McKinsey and Company
CASE STUDY
TENDA
ATACADO
Transforming
Business Relations
into Partnerships
for Growth
Date of Approval
2010
Loan Size
$10 million
Total Project Cost
$20 million
Country
Brazil
Sector
Retail
Small and micro entrepreneurs in Brazil
face several challenges in financing
their operations and accessing training
opportunities that could help their
business grow from a survival-only
mode to a more sustainable path.
This scenario is particularly evident in
the food and retail sector - a strong
contributor to Brazil’s economy: cafés
and restaurants represent 2.4% of
Brazil’s GDP and account for six million
direct jobs. In the absence of suitable
financing and training opportunities,
these Base of the Pyramid (BoP)
entrepreneurs resort to informal
lenders, find it difficult to expand their
businesses, and lack technical skills.
“Tenda’s objective
with its credit
program is not to
sell to clients, but to
create shared value
with those that walk
into our stores.”
Source: Tenda Company
manager.
Within Latin America, the value
of the credit gap for MSMEs
is estimated to be from $330
billion to $410 billion.
In order to help address this funding
gap, the IDB Group approved a $10
million loan to Tenda Atacado, a leading
Brazilian retail and wholesale distributor,
in order to expand its credit program,
VoxCred, to an additional 70,000 microentrepreneurs. Additionally, the Korea
Poverty Reduction Fund approved a
$270,000 grant to design and launch a
training and capacity building program
to complement the credit scheme that
will engage 6,000 micro-entrepreneurs.
At present, more than 180,000 clients
use VoxCred, representing 15% of Tenda’s
total sales. In addition, 85% of the credit
lines were below R$400 (approximately
US$200).
89,000
BASE OF THE
For further information on Tenda
Atacado, please see
PYRAMID
CLIENTS FINANCED
Through Tenda Atacado’s
program targeting microentrepreneurs, over 89,000
Base of the Pyramid clients
have access to finance
through VoxCred.
Early Stage Equity: Generating
Economic and Social Value
Small, young, and high-growth businesses - also known as “dynamic businesses”
- contribute significantly to economic growth, job creation and technological
development, thereby improving people’s lives. However, many of those businesses
face substantial challenges to growth due to a lack of access to long-term financing,
limited industry knowledge, informality, and low professionalization. In fact,
approximately 40% of SMEs suffer from credit constraints and report that limited
access to finance is a major barrier to growth.
The IDB Group plays a catalytic role in supporting these companies by providing equity
and capacity building to seed and venture capital funds which offer financing to early
stage, dynamic enterprises. By investing in funds, the IDB Group shares investment
risk with other partners in the region and demonstrates that financial sustainability
and positive social and environmental impact can be mutually attainable. Since 1996,
the IDB Group has committed over $323 million in financing to more than 65 Venture
Capital (VC) and seed funds. Including co-investments, the IDB Group has supported
funds that total over $1.2 billion and reach SMEs in every sub-region of Latin America
and the Caribbean (LAC). These funds not only provide long-term financing to SMEs,
but introduce structural changes needed to support growth: the adoption of good
corporate governance, the professionalization of management, and the improvement
of operational processes.
The IDB Group has found that VC investing is a powerful tool for generating economic
and social value. In fact, firms receiving VC from the IDB Group increased their
revenues by 25% on average.
For more information please click here
beyondBanking
Created in 2009, beyondBanking promotes sustainable social, environmental, and
corporate governance practices by Financial Institutions in Latin America and the
Caribbean through six strategic pillars:
• accessBanking promotes financial inclusion strategies.
• clearBanking strengthens corporate governance and transparency.
• connectBanking disseminates innovative information and communication
technologies.
• equalBanking supports gender equality and diversity in FIs.
• learnBanking fosters financial education as a tool for responsible decision making.
• planetBanking seeks to respond to the effect of climate change, thereby
reducing FIs’ direct and indirect environmental footprints.
beyondBanking contributes to the Bank of the Future—a bank business model
that balances financial returns with social and environmental returns in an effort
to foster a more inclusive financial sector.
Including coinvestments,
the IDB Group
supported venture
capital funds that
total over $1.2
billion and reach
SMEs in every subregion of Latin
America and the
Caribbean.
28,000
JOBS CREATED
THROUGH 350
SMALL BUSINESSES
The IDB Group Venture
Capital portfolio provided
capital to over 350 small
businesses, which have
generated over $1 billion in
revenues and created more
than 28,000 jobs.
CASE STUDY
PROGRAMA
EMPRENDER
A New Opportunity
for Dynamic
Entrepreneurs
Date of Approval
2006
Equity Investment
and Technical Assistance
$3.2 million
Country
Uruguay
Sector
Finance
Access to start-up or seed capital as
well as business contacts, are limiting
factors for new entrepreneurs in
Uruguay with high growth potential.
In 2007, Prosperitas Capital Partners,
in partnership with the IDB Group, the
National Development Corporation
(CND) and the Technological Laboratory
of Uruguay (LATU), created the
Comprehensive Program to Support
Dynamic Entrepreneurship, known as
Programa Emprender. The program
supports the development of dynamic
sectors in Uruguay through an integrated
business model that supports companies
with high growth potential. By building
their business networks, promoting
innovation and competitiveness, and
providing know-how and financing, the
program allows companies to expand
throughout the financial cycle and
achieve economic development.
Programa Emprender is structured
primarily around two subprograms: one
of financial services intended for the
most promising new companies and
another to provide technical support to
project ideas and entrepreneurs looking
to build a stronger entrepreneurial
ecosystem. In 2009, Fondo Emprender
promoted the creation of the “Angel
Investors Network,” made up of
Uruguayan investors interested in
ventures that have the potential for
global expansion. By establishing the
angel investment network, the program
created the first Prosperitas risk capital
fund, which helped fill the gap for seed
capital.
$3.7M
IN ANGEL AND
VENTURE
CAPITAL FUNDS
INVESTED
*as of 2013
Technical Assistance Grants
The IDB Group is increasingly using technical assistance grants to enhance the
development results associated with its private sector operations. Funding for
technical assistance supports client efforts to strengthen social responsibility,
promote sustainability, identify opportunities for shared value, and improve
environmental standards.
The IDB Group also tests innovative, market-based approaches for low-income
households, farms, and businesses. It has been a pioneer in supporting business models
that have the potential to enhance the lives of people at the base of the economic
pyramid in Latin America and the Caribbean. The IDB Group partners with institutions
from the private, public, and nonprofit sectors to help individuals and communities
overcome poverty in the long term by addressing the lack of access to basic services,
financing, markets, and skills.
For more information on technical
cooperation grants, please
refer to the Multilateral Investment
Fund’s (MIF) Development
Effectiveness report at:
At present, the IDB Group has 498 Technical Assistance grants under execution,
the majority of which assist IDB Group clients access finance. In 2013, 97 technical
cooperation grants were approved to support research, development of training
programs, and funding for private sector pilot projects. Of these, 33 grants were for
green growth initiatives or access to basic services; 37 provided access to finance;
22 focused on access to markets and skills for small businesses or youth, and 5 fell
outside these three thematic areas. Technical cooperation grants also help clients
learn how to achieve the highest social impact. Grants are instrumental in helping
companies address questions about risk, design, and feasibility before they launch
or scale up an initiative.
DEVELOPMENT EFFECTIVENESS
REPORT 2013
Technical Assistance Grants - Under Execution
Approved Amount
(USD million)
Counterpart
Amount (USD
million)
# of Operations
Market-driven solutions for providing basic
infrastructure and social services to low-income
households and enterprises with a focus on reducing
greenhouse gas emissions and supporting adaptation
to climate change.
$100
$79
51
Access to Finance
Access to financial products and services, such as
microfinance and microinsurance, for low-income
populations and access to SME finance, seed, and
early stage financing for SMEs.
$148
$84
149
Access to Markets and
Skills
Access to productive inputs, business skills, and
market opportunities for youth and MSMEs.
$232
$322
92
Other
Projects outside of the three thematic areas
mentioned above (Access Areas)
$27
$39
206
$507
$524
498
Thematic Area
Description
Access to Basic Services
and Green Growth
Grand Total
FINPYME Program: Reaching Micro,
Small, and Medium Enterprises
through Direct Investments and
Knowledge Transfer
MSMEs require more than financing for sustainable growth. They also need
www.iic.org
technical assistance. Companies face constant management, planning, strategic,
and other challenges that hinder their ability to compete on open markets. Over
the years, the IDB Group has identified several key areas in which MSMEs are
regularly in need of assistance. To respond to these needs, the IDB Group offers
a comprehensive package of loans and value-added services for MSMEs through
the FINPYME Program.
The FINPYME family of programs includes FINPYME Credit; FINPYME Diagnostics,
FINPYME ExportPlus, FINPYME Family Business, FINPYME Integrity: GREENPYME,
FINPYME Mujer Empresaria and FINPYME Technical Assistance. Through FINPYME,
the IDB Group has deployed close to $5 million in technical assistance to the region,
through 600 direct and indirect trainings and services benefiting more than 1,681
MSMEs. Over the same period, donors have approved more than $15 million in
contributions to support key IDB Group initiatives. In 2013, donor approvals of
technical assistance amounted to $5.9 million.
2013 AnnuAl RepoRt
evolv i ng
evolving with our region/evolving with our clients
In 2013, donor approvals
of technical assistance
amounted to $5.9 million.
More information on
the FINPYME family of
programs can be found at
Video – FINPYME Caribe
PRIVATE
SECTOR
WITH
PURPOSE
CHAPTER 3
Building Sustainable
Infrastructure
Chapter 3: Building Sustainable Infrastructure | 23
As a key provider of development finance in Latin
America and the Caribbean, the IDB Group plays
a significant role in meeting the region’s critical
infrastructure needs.It works to expand access to
reliable, affordable, and sustainable energy, water,
sanitation services, and to improve the transportation
grid that enables companies to more efficiently bring
their goods to market.
2,800
900
Low-carbon Capacity
installed (MW)
Total capacity
installed (MW)
8,200
*
Energy produced
(GWh)
6,500
*
Renewable energy
produced (GWh)
616,000
upgraded water supply
628,000
upgraded sanitary connections
“I have witnessed firsthand the galvanizing role of
sustainable infrastructure projects to systemically
transform energy matrices, markets and the definition of
‘business-as-usual’ in the region.”
Hans Schulz
Vice President for the Private Sector and Non-Sovereign Guaranteed Operations, a.i.
and General Manager of the Structured and Corporate Finance Department,
Inter-American Development Bank.
THE CHALLENGE
In many parts of the region, a shortage of clean, reliable, and
affordable energy and water puts companies—and countries—
at a major competitive disadvantage. Technology gaps and
insufficient access to financing often stand in the way of
implementing renewable energy projects, making it harder for
countries to diversify their electric supply and reduce dependence
on polluting fuel sources. In the transportation sector, meanwhile,
inadequate roads, congested seaports, and outdated airports
increase costs, complicate logistics, dampen business growth, and
obstruct regional trade integration. While many people tend to
think of infrastructure as a problem for governments to solve, the
private sector can play a critical supporting role.
Video: Infrastructure that works
PROJECT HIGHLIGHTS:
Portfolio
Energy:
35 projects, Total project cost =
$6.9 billion
Renewable Energy:
$4.6 billion
Transportation:
$5.3 billion
Water & Sanitation
1 project, Total project cost =
$250 million
2013 Approvals
Energy
$2.5 billion
Infraestructura – Una Asignatura
Pendiente (Spanish)
The IDB Group has invested in numerous
energy, transportation, and water
and sanitation projects in the region.
In 2013, it approved $427 million in
private sector loans for infrastructure
projects and mobilized another $30
million in investment from other
institutions. Complementing its lending,
the IDB Group has provided technical
assistance and capacity-building
products to enhance results. Such
offerings, designed to address technical
or regulatory shortcomings, often lead
to stronger partnerships between the
public and private sectors.
Energy projects have focused on
alternatives to fossil fuels. With a goal
of supporting $12 billion in private
investment in climate change by
2015, it finances projects aimed at
increasing power generation capacity
from renewable sources—solar, wind,
hydroelectric, biomass, and geothermal
energy. It also fosters innovation by
providing financial support to pilot
projects and viability studies for the
development of low-carbon, energyefficient solutions.
Transportation is also a priority. As
of December 2013, private sector
operations in this sector amounted to
a combined value of over $5.3 billion,
leveraging over $850 million from its
own account. Since 2011, the IDB Group
has helped finance the construction of
over 2,300 kilometers of roads, as well
as two airports and a seaport, across
seven countries in Latin America and the
Caribbean.
CASE STUDY
PALMATIR
WIND FARM
Diversifying Uruguay’s
Energy Matrix
Date of Approval
2012
Loan Size
$41.7 million
Total Project Cost
$154 million
Country
Uruguay
Sector
Energy
In times of low rainfall, Uruguay
supplies a greater portion of its
electricity from fossil fuels—a more
costly source that increases the
country’s carbon footprint. Almost
everyone in Uruguay has access to
electricity; in 2012, nearly 98 percent
of all households were connected
to the grid. However, 60 percent of
total generation capacity comes
from hydroelectric power, so in times
of low rainfall the country supplies
a greater portion of its electricity
from fossil fuels—a more costly
and less predictable source that
also increases the country’s carbon
footprint. Given a limited ability to
pass along higher energy costs to final
users, the government has enacted a
power-saving plan to restrict energy
consumption and avoid shortages.
Still, domestic demand grew by nearly
2.6 percent in 2012 and is expected to
increase by an average of 3.5 percent
per year through 2033. This makes the
need for additional generation capacity
even more urgent. Uruguay has sought
to diversify its energy matrix by
promoting private sector participation
in wind power generation.
In times of low rainfall, Uruguay
supplies a greater portion of its
electricity from fossil fuels—a
more costly source that increases
the country’s carbon footprint.
In 2012, the IDB Group approved an 18year loan valued at approximately $42
million to finance the construction of one
of the biggest wind farms in Uruguay:
Palmatir. It will add 50 megawatts of
clean, more affordable energy to the
system and ease dependence on both
hydroelectric and fossil fuel sources.
126,000
TONS OF CO2
AVOIDED
The Palmatir Wind Farm
will avoid emitting 126,000
tons of CO2 per year.
CASE STUDY
BLUE
POWER
ENERGY
Easing Nicaragua’s
Dependence on
Fossil Fuels
Date of Approval
2012
Loan Size $50 million
Total Project Cost $115 million
Country
Nicaragua
Sector
Energy
A lack of investment in power generation has
been a major problem in Nicaragua, which relies
heavily on outdated diesel power stations to
produce electricity.
In 2007, 63 percent of Nicaragua’s
electric grid capacity came from oil
and diesel combustion. While the
country gets some of its electricity
from renewable sources, the energy
sector remains dependent on fossil
fuels, which places enormous strain
on the environment and the economy.
Furthermore, constant power outages
signal that the electricity supply is still
insufficient in many parts of the country.
To help address this gap in electricity
supply, the IDB Group approved a $50
million loan to fund Nicaragua’s secondlargest wind farm, Blue Power & Energy,
S.A. located in the southwestern part
of the country. The project increases
the share of renewable energy in the
country’s energy mix from 29 to 34
percent. The IDB Group funded the project
together with the Danish export agency
Eksport Kredit Fonden.
Infrastructure 360°: A Partnership
with Harvard University to further
Sustainability
The Harvard Zofnass Program for Sustainable Infrastructure (HZPSI) has developed
a comprehensive rating system to measure sustainability of infrastructure. HZPSI
has a mission to research, develop, and promote methods, processes, and tools that
define and quantify sustainability in infrastructure investments.
In collaboration with HZPSI, the IDB Group has implemented a rating system
for infrastructure sustainability, known as the Infrastructure 360° Awards. The
award program seeks to identify, assess, and reward sustainable infrastructure
investments made by the private sector and public-private partnerships in IDB Group
member borrowing countries.
As part of the award program, 12 finalist projects were selected out of more than
60 applications from 18 countries in the region. The HZPSI team prepared a case
study on each of the finalist projects and was reviewed by a jury of internationally
recognized experts. The first case study using the Infrastructure 360° criteria is the
Palmatir Wind Farm project.
For more information and video
links to the 2013 winners:
www.iadb.org/infrastructure360
Infrastructure 360° Awards
Ceremony at IDB Group Annual
Meeting, 2014
Winners
During the IDB Group Annual Meeting in March 2014, Metro Lima Line 1 (Peru), Los
Cocos Wind Farm (Dominican Republic) & Aura Solar Photovoltaic Plant (Mexico) were
announced as the 2013 Infrastructure 360° winners.
INFRAFUND:
PROMOTING THE DEVELOPMENT
OF RENEWABLE ENERGY PROJECTS THROUGH
PUBLIC-PRIVATE PARTNERSHIPS
InfraFund is a fast-disbursing fund created to support the preparation of climate
resilient and sustainable infrastructure projects. InfraFund is dedicated to assisting
public, private and mixed-capital entities in Latin America and the Caribbean in
the identification, development and preparation of bankable and sustainable
infrastructure projects.
Through Infrafund, the IDB Group provided an investment grant to the Taua Solar
photovoltaic project in Brazil to foster the development of the industry and replication
within the country. The Taua Solar project will be the first power generation project in
Brazil to connect a photovoltaic system into the National Interconnected System.
Infrastructure 360° Program
Description
The Taua Solar
project will be
the first power
generation project in
Brazil to connect a
photovoltaic system
to the national
electricity grid.
CASE STUDY
POZO ALMONTE
AND CALAMA
SOLAR
PHOTOVOLTAIC
Capturing Solar
Power to Diversify
Chile’s Energy Matrix
Date of Approval 2012
Loan Size $20.7 million
Canadian Climate Fund Loan
$20.7 million
Total Project Cost $82.7 million
Country Chile
Sector Energy
Chile’s dependence on fossil fuels has caused an increase in the cost of
energy, making electricity prices in Chile among the highest in the world.
Chile’s northernmost electrical grid
(Sistema Interconectado del Norte
Grande) has one of the highest emission
factors of any other major Latin American
electricity grids, and energy consumption
in Chile is estimated to grow annually
between 6 and 7 percent by 2020.
In 2012, the IDB Group approved
the Pozo Almonte and Calama Solar
Photovoltaic Project, which is one
of the first large-scale solar energy
projects in the region. It consists
of the construction, operation, and
maintenance of three solar power plants
located in northern Chile in the Atacama
Desert. The estimated total cost of the
project is $82.7 million, of which the IDB
Group has committed $20.7 million of
its own financing and another $20.7
million via Canadian Climate Fund (C2F)
financing.
The project will help to bridge the gap
between energy supply and demand by
using a local energy source that is clean,
competitive, and abundant in the country
and that can be developed quickly to
boost the growth of the Chilean economy.
The project will develop local energy
sources to diversify Chile’s energy matrix,
whose current generating capacity is 75
percent dependent on imported fuels.
THE CANADIAN CLIMATE FUND (C2F)
In 2012, Canada committed $250 million to create the Canadian Climate Fund (C2F). The
fund, which aims to catalyze private sector investment in climate change mitigation and
adaptation in Latin America and the Caribbean, will be managed by the Private Sector
of the IDB Group. The C2F, the Canadian government seeks to leverage up to $5 billion
in private sector investments and reduce greenhouse gas (GHG) emissions by up to 50
million metric tons.
The IDB Group works with private sector clients to identify climate-friendly investments
in need of financing. Investments can range from energy-efficient buildings for a
campus expansion to water reduction measures for upgraded hospital facilities. Priority
areas for the fund include renewable energy, energy efficiency, biofuels, sustainable
agriculture, forestry and land use, GHG emission reduction projects, as well as
adaptation projects to reduce climate change vulnerabilities. C2F will co-finance private
sector climate projects in Latin America and the Caribbean that need concessional
financing to be viable.
C2F Homepage
56,000
TONS OF CO2
EMISSIONS EXPECTED
TO BE AVOIDED
ANNUALLY
IDB Group Climate
Blog
The project will replace fossil fuels with
a renewable energy resource for power
generation for the mining industry,
which consumes 18 percent of the
country’s electricity and accounts for 19
percent of the country’s gross domestic
product. This project is the first step in
reducing the long-term cost of energy
and is expected to reduce carbon dioxide
emissions by 56,000 tons annually.
C2F Fact Sheet
C2F Video
Pozo Almonte video link
PRIVATE
SECTOR
WITH
PURPOSE
CHAPTER 4
Fostering
Innovation
Chapter 4: Fostering Innovation | 33
Throughout the region, the IDB Group supports private
sector initiatives to modernize operations, employ new
technologies, and implement best practices across all
sectors—critical steps to thrive in a competitive global
economy. The IDB Group works with clients to rethink
the way they do business and nurtures innovation from
the farm to the production line to the boardroom.
1,400,000
People Trained
336,000
Smallholder Farmers Supported
“If you want to invest in global food security, if you want to
invest in preventing hunger in all corners of the world, then
invest in Latin American agriculture.”
Luis Alberto Moreno
President, Inter-American Development Bank
THE CHALLENGE
PROJECT HIGHLIGHTS:
Portfolio
Agriculture
$1 billion
Manufacturing
$5.2 billion
In most Latin American and Caribbean countries, investment
in innovation is markedly lower in than the world’s most
advanced economies. This gap puts the region at a competitive
disadvantage, since the capacity to innovate generates improved
productivity and added value. While public policies and public
resources can lay a solid foundation for innovation—for example,
by investing in the educational system and giving priority to
research institutions and technology centers—the private sector
plays a pivotal role in putting innovation into practice.
2013 Approvals
Agriculture
$265 million
Manufacturing
$47 million
One area in which innovation is especially critical is agriculture,
which accounts for one in five jobs in the region and 30 percent
of all trade, with half the region’s food produced by small-scale
farmers.6 Latin America and the Caribbean as a whole is already
the world’s largest net food exporting region, and the agricultural
sector has enormous potential for growth. As IDB President Luis
Alberto Moreno has said, “If you want to invest in global food
security, if you want to invest in preventing hunger in all corners
of the world, then invest in Latin American agriculture.” Farmers
and producers throughout the region have an opportunity to
improve their own livelihoods and help meet the demand for
food, fuel, and fiber around the world. To do this effectively and
sustainably, they need to boost productivity, update technologies,
and adopt climate-friendly practices.
The IDB Group supports a range of
private sector projects that focus
on innovation. In the agricultural
sector, They work with small farmers
throughout the region—from sesame
producers in Bolivia to mango growers
in Haiti to dairy producers in Uruguay—
to improve production techniques,
capture more value and create inclusive
business models. Whether the
project aims to make an agricultural
practice more sustainable, modernize
a manufacturing operation, improve
packaging, streamline distribution,
redesign the way a service is delivered,
or promote cleaner energy, the focus
is on using technology and knowledge
transfer to achieve greater efficiency,
productivity, and competitiveness.
Innovation can also be a powerful tool
to meet social goals, such as when a
new financing mechanism expands
women’s access to loans or a renewable
energy project shrinks a company’s
carbon footprint. Through its initiatives
to promote “shared value,” the IDB
Group works with businesses to identify
steps they can take to improve their
own competitiveness and at the same
time address critical needs in the
communities where they operate. 6.“The Next Global Breadbasket: How Latin America Can Feed the World” Inter-American Development Bank, 2014
CASE STUDY
SUBSOLE
Partnering with
Industry Leaders
to Promote
Climate Smart
Agribusiness
Date of Approval
2011
Loan Size $32 million
Country
Chile
Sector
Agribusiness
Chilean labor is becoming increasingly
competitive. For the agribusiness sector,
the competition is heightened by a
shrinking labor pool, which in effect
increases labor cost.
Within this context, Subsole, the largest
Chilean-owned fruit exporter in the
country, needs to attract and retain a
Subsole is the first
fruit exporter in Chile
to rely on solar energy
to power its irrigation
needs.
reliable and sustainable workforce to
keep productivity high while remaining
competitive. One of the company’s
biggest challenges is how to tackle the
seasonality associated with agricultural
labor markets. With a workforce of over
2,300 employees and a total labor force of
22,740 during harvesting season, Subsole
has become increasingly dependent
on seasonal workers. These labor
constraints place stress on company
resources to promote steady growth.
In 2011, the IDB Group approved a
$32 million loan to support Subsole’s
capital expenditure program to increase
production, expand cold storage and
processing facilities, and create jobs
throughout its supply chain. A portion
of the IDB loan financed a 300 kilowatt
solar photovoltaic plant, which is the
first industrial-size installation of this
type in the Atacama Desert. Subsole
is the first fruit exporter in the country
to rely on a renewable energy to power
its irrigation needs. In addition, under
the Shared Value pilot program, the IDB
Group provided Subsole with tailor-made
consulting services to help the company
create a strategy to stabilize and retain
its workforce. The IDB Group is currently
working with the company to implement
this innovative approach that aims to
improve productivity, reduce operating
costs, and include women in agriculture.
Subsole has achieved strong results
including an increase in output by 21
percent, the creation of 2,400 direct jobs
as well as 22,000 indirect jobs in 2012
THE SHARED VALUE INITIATIVE: INNOVATIVE
AND INCLUSIVE BUSINESS MODELS
In 2012, the IDB Group expanded its strategy to maximize development results
by offering tailored consulting services to its clients. The IDB became the first
multilateral development bank to join the global Shared Value Initiative, a
group of like-minded leaders and investors seeking to maximize business and
development results. Members include the Rockefeller Foundation, Nestlé, and
Intel among others. The IDB Shared Value practice provides clients with tailormade consulting services that are focused on developing inclusive business
strategies to help the client overcome a current business challenge by finding
a community-based solution.
The shared value approach integrates business growth opportunities and local
communities’ needs. It identifies investments or programs that produce higher
financial returns and simultaneously deliver positive social or climate impacts,
benefiting both companies and their stakeholders.
The IDB Group Shared Value Appraisals were created to increase the social
impact of private sector investments. This approach seeks to match business
objectives with socioeconomic needs or constraints, affecting both the
competitiveness of the company and its surrounding communities, with an
emphasis on women, indigenous peoples, and African descendants. Shared
value appraisals are designed and implemented in a way that incorporates
relevant aspects that target the development of these three key groups.
Shared value appraisals assist private sector clients in identifying innovative
solutions and improving the design and implementation of operations while
optimizing resource allocation. Increasing the social effects of private sector
investments through a shared value approach is particularly relevant in Latin
America and the Caribbean, where the private sector plays a key role for
economic growth, job creation, and poverty alleviation.
alone. Project benefits affected the
entire value chain and included 1,300
suppliers—among them many small
and medium agricultural producers.
The IDB Group partnered with Subsole to develop an actionable business strategy that generates financial returns and social benefits for the surrounding community. For details see: “The Fruits of Their Labor: A Case Study in Shared Value”
For more information on the Shared Value Initiative including case studies and
videos please visit: www.iadb.org/sharedvalue
OVER 2,400
SHARED VALUE CASE STUDIES
DIRECT AND 22,000
INDIRECT JOBS CREATED
Subsole - Chile,
agribusiness
IN 2012.
Universidad San
Ignacio de Loyola –
Peru, education
Caribe Hospitality –
Jamaica, tourism
CASE STUDY
BANCO
AGRÍCOLA
Innovative Business
Models to Finance
MSMEs
Date of Approval
2013
Loan Size
$5 million guarantee
Country
EL Salvador
Sector
Financial Sector
Small shop owners are a vital part of the
cultural, social, and economic landscape
of El Salvador. Almost two-thirds of such
microbusinesses are owned by women.
Overall, micro, small, and medium
enterprises (MSMEs) account for 43 percent
of the country’s GDP and employ 65 percent
of the workforce. Shop owners and other
small-scale entrepreneurs find it difficult
to obtain commercial loans, as they often
lack financial track records or sufficient
assets to qualify. Women face particularly
high obstacles: they tend to have smaller
businesses, fewer savings, less education,
and more family duties than men.
Banco Agrícola, the largest bank in El
Salvador, has expanded its customer
base to provide financial services to
MSMEs, including mom-and-pop shop
owners at the base of the economic
pyramid. It has two partners in this effort:
Industrias La Constancia, the country’s
largest soft drink distributor, which will
screen and select microbusiness owners
who qualify for financing; and FUNDES, an
international organization that supports
MSMEs, which will provide technical
assistance to the loan recipients. These
two partners had already been working
together to provide training to small
businesses, making them ideally suited
to join this large-scale project.
The IDB Group is mitigating Banco
Agrícola’s risk with a $5 million
guarantee that will provide credit risk
coverage to the bank’s microbusiness
segment. The loans will help cover
entrepreneurs’ needs for equipment,
physical infrastructure improvements,
and working capital.
The joint effort by Banco Agrícola and
its partners provides an innovative way
to effectively serve microenterprises
and address a market failure that has
long undermined growth. The business
model capitalizes on the organizations’
expertise and core business in a way
that benefits an important sector of the
Salvadoran economy. With the support of
the IDB Group, Banco Agrícola is expected
to increase its MSME portfolio by 23.5
percent—mainly in commerce, industry,
and services—and reach over 15,000
entrepreneurs by 2017.
For more information about innovative
business models focusing on the Base
of the Pyramid, click here
Innovations in Sustainability Awards
In 2012, the IDB Group launched the Innovations in Sustainability Awards, in order
to recognize and reward projects that embody innovation and support greater
development impact in the region.
2013 winners:
• Best Sustainability Operation Award: MSME Downscaling Facility / BanBif Risk
Sharing Guarantee Facility. BanBif uses psychometric testing to increase access
to credit to MSMEs.
• Best Sustainability Product or Process Award: Infrastructure 360º Awards.
The awards recognize outstanding sustainability practices in infrastructure
investments in the region. Projects are assessed through a partnership with the
Harvard Zofnass Program.
• Best Sustainability Technical Cooperation or Fund Award: Expanding Private
Sector Investment in Biodiversity and Ecosystem Services. The IDB Group
developed a technical cooperation to make the business case for investing in
biodiversity by assessing a company’s impact and dependency on ecosystem
services.
IDB Innovations in Sustainability
Awards video:
PRIVATE
SECTOR
WITH
PURPOSE
CHAPTER 5
Providing Basic
Goods and Services
Chapter 5: Providing Basic Goods and Services | 41
How can private sector investment be harnessed
more effectively to fill people’s unmet needs for
basic goods and services? The IDB Group has been
a pioneer in addressing this question. Within its
private sector operations, it works with companies
to develop market-based solutions to expand access
to housing, insurance, health care, education, and
other essentials. The goal is to address market
failures, bring low-income populations into the formal
economy, and create jobs—in other words, to expand
access to opportunities.
17,000 6,200
Students benefitted
by education projects
Teachers trained
664,000
Households with new or upgraded
dwellings
7,700,000
Micro-entrepreneurs financed
“This is the decade in Latin America with an unprecedented
number of its citizens being lifted from poverty, and yet 70% of
the population remains either poor or vulnerable and excluded
from access to basic goods and services. The private sector
has demonstrated that it is capable of delivering quality and
affordable goods and services to underserved markets through
new innovative business models. New Base of the Pyramid
business models are an essential part of the solution. With
public sector support through enabling frameworks and access
to long term development financing, these models can grow into
a transformative ecosystem and a robust industry focused on
serving the Majority.”
Luiz Ros
Manager, Opportunities for the Majority.
THE CHALLENGE
Governments in Latin America and the Caribbean have made
major strides in tackling extreme poverty, but large percentages of
people in the region are still poor or struggle just above the poverty
line. In fact, the broad base of what is known as the economic
pyramid (see box below) comprises as much as 70 percent of the
population in some countries and represents a huge untapped
potential. Yet private sector investment targeting this group has
been fragmented and insufficient. This has further hampered
people’s access to markets and exacerbated social exclusion.
In some countries, meanwhile, the growing demands of an
emerging middle class have put a strain on basic services.
One case in point is higher education. Expanding access to a
university education boosts productivity, fosters innovation,
and promotes development—yet supply cannot always keep
pace with demand. Private institutions are stepping in to fill
the gap, and in some underdeveloped areas, they provide the
only option for a higher education.
For more information on Base of the
Pyramid projects:
click here
To read the brochure on Opportunities
for the Majority, click here.
PROJECT HIGHLIGHTS:
Portfolio
Health & Education
$138 million
Housing
$654 billion
2013 Approvals
Health & Education
$120 million
Housing
$94 million
Video: - Opportunities for the Majority
In 2007, the IDB Group became the first
development finance institution to
establish an investment unit to focus
exclusively on bringing market-based
solutions to the base of the economic
pyramid (BoP). The strategy is to promote
and finance sustainable business
models that engage private companies,
local governments, and communities in
developing and delivering quality products
and services for those in the lower income
levels in Latin America and the Caribbean.
The unit also invests in innovative social
funds that aim to bring goods and services
to low-income areas, and partners with
other “impact investors” to expand access
to capital for microenterprises.
Private sector initiatives are also helping
companies fill unmet demands for
higher education while creating more
opportunities for low-income students.
In Peru, for example, the IDB Group is
helping to finance a campus expansion
at the Universidad San Ignacio de
Loyola, a private university that focuses
on technical and business-oriented
disciplines. A student loan guarantee
fund created as part of the project aims
to put a degree within the reach of more
students from disadvantaged groups. In
2013, the IDB Group approved 7 projects
in higher education with a total value
of $67 million—initiatives that together
benefited more than 14,000 students.
The Base of the Pyramid (BoP) is defined
as the population with income below
$3,260 per capita per year (2005 PPP).
Through the use of Purchsing Power Parity
(PPP) exchange rates, it is feasible to make
comparisons across countries, ensuring
that the income values correspond to a
similar standard of living in each country.
CASE STUDY
VINTE
Affordable,
EnvironmentallyFriendly Housing
for Low and
Middle-Income
Families
Date of Approval
2012
Project Size
- MXN$200 million, Partial
Credit Guarantee
- MXN$ 150 million – Loan
- MXN$ 106.5 million – Equity
- MXN$ 50 million – 5-year
Revolving Credit Line
Total Project Cost MXN$ 506.5 million ($ 41 million)
Country
Mexico
Sector
Housing
78,500
BENEFICIARIES IN 6
MEXICAN CITIES EXPECTED
BY 2017.
Vinte is a midsize homebuilder engaged
in the construction of sustainable
housing for low- and middle-income
families in Mexico. Vinte focuses on
developing environmentally-friendly
construction materials and materials that
use new technologies to find affordable
The project will construct
20,000 homes for 78,500
low- and middle-income
people in six cities by 2017.
and sustainable housing solutions.
Innovations include rooftop solar cells and
wall meters to monitor electricity, water
and gas consumption. Such innovation
not only saves homeowners maintenance
costs and reduces their environmental
footprint, but also helps maintain or
increase their property’s value.
In order to support an innovative
homebuilder while simultaneously
reducing Mexico’s mortgage lending
gap, the IDB Group in coordination with
According to the Mexican Housing
Authority, Mexico has an estimated
deficit of approximately 8.9 million
homes - a number that increases
annually by 200,000. Furthermore,
mortgage financing is limited to
approximately 10% of the total
labor force.
Grupo Financiero Banamex, approved
a partial credit guarantee to support
Vinte’s successful MXN$200 million
bond issuance in 2012 and took an
MXN$106.5 million equity stake in
order to enable Vinte to expand its
operations to other Mexican states.
The combined IDB Group exposure also
includes a 5-year revolving line for up
to MXN$50 million.
With the IDB Group's support, Vinte’s
5-year business plan includes the
construction of approximately 20,000
dwellings for low- and - middle income
families by 2017. The new homes are
expected to benefit at least 78,500 people
in six Mexican cities. In 2013, Vinte
built 3,166 homes and increased the
company’s revenue by more than 20%.
3,000
HOMES BUILT
IN 2013
CASE STUDY
ALTERNATIVE
INSURANCE
COMPANY
Providing Insurance
to Base of the
Pyramid Clients
Date of Approval
2012
Loan Size
$2 million
Country
Haiti
Sector
Financial Markets
In Haiti, less than 3
percent of the total
population of 10
million receives social
insurance7 and less
than 2 percent health
insurance. Optimistic
calculations indicate
that at most 300,000
people are insured
countrywide.
In 2012, after the magnitude 7.0
earthquake that hit the country in
January 2010, the IDB Group approved a
$2 million subordinated loan to support
a recapitalization plan of the Alternative
Insurance Company (AIC), which is one
of the leading local insurance companies
in Haiti. It offers traditional products
such as auto, commercial, property,
health, and life insurance and has been
expanding into Base of the Pyramid (BoP)
markets with micro-insurance products,
in partnership with leading Haitian
microfinance institutions.
The company was left in a vulnerable
financial condition after the earthquake,
but the recapitalization allowed AIC to
implement a strategic plan and expand
its services to more people at the BoP.
In the past two years, AIC has grown 35
percent and since 2012, the company has
served 67,000 BoP clients, of whom 44% are
female beneficiaries, with life insurance,
health insurance, funeral insurance, and
micro-insurance. In addition, through AIC,
23,000 individuals have access to a basic
package of health services.
67,000
BOP BENEFICIARIES
44% FEMALE
7. Social insurance is defined as government assistance in case of sickness or unemployment. Traditionally these programs are funded through taxes.
CASE STUDY
ECONOMIC
AND SOCIAL
INCLUSION OF
RECYCLERS
Date of Approval
2011
Technical Assistance $2.2 million
Total Project Cost
$6.6 million
Country
Regional
Sector
Waste Management
In the Latin America and Caribbean region
(LAC) there are an estimated 4 million
people who derive their livelihood from
the hazardous and unsanitary work
of recycling street trash. Despite its
importance, recycling work is accorded
neither social nor economic recognition.
While informal recyclers are in some
cases supplying 90% of the recycled
materials used in industry, those persons
receive only a tiny fraction (perhaps 5%) of
what is reaped by the intermediaries to
whom they sell their materials. Moreover,
in most cases this is their only source
of livelihood, meaning that they remain
trapped in the cycle of poverty.
In May of 2011, the IDB Group launched
a regional program to help transform the
recycling market in LAC. The program
has adopted a collective approach
to bring about systemic change in
three areas: (i) in the economic and
social conditions of informal recyclers
and their families, by upgrading their
skills and making their activities more
profitable and secure, providing them
better access to basic services, and
changing the public perception of the
recyclers from that of a “social problem”
to that of a “social, environmental and
economic asset”; (ii) in public policies,
by improving municipal capacities to
work with informal recyclers and to
develop inclusive waste management
systems, while strengthening the
regulatory framework and creating
laws for enforcing rules and policies
in the sector; and (iii) in the private
sector, in various aspects that range
from including recyclers in the value
chains and encouraging greater market
responsiveness and transparency to
facilitating the traceability of recycled
materials used as inputs.
To date, 10 municipalities have signed
exclusive collection contracts with
recyclers’ organizations bypassing
intermediaries, 10 municipalities
have approved the local requirements
regulating separation at origin for
domestic waste making it more efficient
for recyclers to manage waste, and 2
firms have incorporated supply policies
that include buying materials directly
from recyclers’ organizations.
CASE STUDY
UNIVERSIDAD
SAN IGNACIO
DE LOYOLA
Education as a Path
for Development
Date of Approval
2013
Loan Size $23.5 million
Country
Peru
Sector
Education
ENROLLMENT EXPECTED
TO INCREASE FROM
12,000 TO
25,000
BY 2022.
Through the Universidad San Ignacio de
Loyola Project (USIL), the IDB Group will
support the expansion of a university
that seeks to include students from a
more economically diverse background
and will double its enrollment from
12,000 to 25,000 students over the next
10 years. Currently, approximately half
of USIL’s students are women, and
about one quarter (3,088 students) are
young working adults. In addition, over
half of USIL’s students receive tuition
discounts of 50% or more. Universidad
San Ignacio de Loyola (USIL), a leading
top-tier private university that offers
a curriculum focused on technical and
business-oriented disciplines.
In order to decrease the drop-out rate
of low-income students, a portion of the
IDB Group loan will be used to establish
a $2 million student loan guarantee
fund and support the expansion of a
Peruvian government scholarship program
(“Beca 18”) that provides scholarships to
economically disadvantaged youth at risk.
The USIL project also received a shared
value appraisal which focused on
developing a financially viable business
strategy to strengthen the socioeconomic
diversity of USIL’s student population.
Although USIL already has indigenous
and female students within its student
body, the university strives to further
diversify enrollment and to attract
outstanding students from marginalized
In 2010, 309,000 students sought
admission to Peru’s public
universities though only 64,000
places were available. As of 2013,
only 3 out of 10 high school
students had access to higher
education. For people without
access to higher education, the
opportunity for advancement
through higher-paying jobs is
simply out of reach.
geographic areas and vulnerable family
backgrounds. Especially for Peru’s
growing lower and emerging middle
class, affordable student financing
from commercial sources is scarce or
even impossible to obtain. By offering
these students and commercial banks a
guarantee fund backing both loans and
scholarships in case vulnerable students
drop out, USIL and the IDB Group are
making the case that, regardless of
gender, race, or class, everyone should
have access to higher education.
Shared Value in Education:
USIL Student Guarantee Fund Video.
click here
EDILAR - SUPPORTING TEACHERS
WITH EDUCATIONAL MATERIALS AND
TECHNOLOGY
In order to improve the quality of education offered in Mexico, the
IDB Group approved $11.4 million in loans to purchase educational
materials, technology, and continuing education services designed to
support teachers in their role as educators. As a result, more than 11,400
teachers have been able to finance purchases of Edilar educational
products and services with microloans. In 2013, the FINPYME Family
Program helped formalize the company’s corporate structure by
establishing a board of directors and training key members of
management in good governance practices.
PRIVATE
SECTOR
WITH
PURPOSE
CHAPTER 6
Encouraging
Green Growth
Chapter 6: Encouraging Green Growth | 51
Investment and innovation must come together on a
large scale to mitigate and adapt to the risks of climate
change. The IDB Group works hand in hand with the
private sector throughout Latin America and the
Caribbean to enhance energy efficiency and expand the
use of clean technologies. It provides extensive financing,
as well as technical expertise and assistance, to cultivate
green, sustainable growth.
2,800
900
Total capacity
installed (MW)
Low-carbon capacity
installed (MW)
8,200
*
Energy produced
(GWh)
6,500
*
Renewable energy
produced (GWh)
11,700
Households accessing clean energy for
the first time
600,000
Hectares of forest under
sustainable management
“Green growth is the best way to meet the region’s growing
energy needs, leverage innovation in technology and processes,
and significantly reduce the costs of climate impacts.”
Hans Schulz
Vice President for the Private Sector and Non-Sovereign Guaranteed Operations, a.i.
and General Manager of the Structured and Corporate Finance Department,
Inter-American Development Bank.
THE CHALLENGE
The Latin America and Caribbean region is vulnerable to climate
change because of its geography, population distribution,
infrastructure, and reliance on natural resources for economic
activity. The cost of climate impacts to the region is estimated
to reach $100 billion per year by 2050, and a similar annual
investment would be needed to reduce the region’s carbon
footprint to levels in line with global climate stabilization goals.8
The scale, timing, and scope of these efforts will require both
public and private sector initiatives. The private sector needs
to strengthen its environmental commitment and adopt
internationally accepted best practices to avoid and mitigate
harmful impacts. It can also take the lead in implementing
energy-efficient production methods, using low-carbon
technologies, and creating new economic, financial, and business
opportunities that contribute to sustainable development.
PROJECT HIGHLIGHTS:
Portfolio
Renewable Energy
$4.6 billion
The cost of climate
impacts to the region is
estimated to reach $100
billion per year by 2050.
The IDB Group supports private sector
investment in clean energy throughout
the region. Wind farms in Uruguay and
Mexico and large-scale solar energy
projects in Chile and Peru will expand
the capacity for power generation and
diversify the region’s energy mix. In
Central America, meanwhile, private
sector projects supported by the IDB
Group enable companies to reduce
dependence on low-quality, polluting
bunker fuel. The IDB Group is also a
key player in financing green growth.
It supports venture capital funds that
emphasize low-carbon technologies,
create incentives for banks to offer
loans for energy upgrades, and work
with microfinance institutions that
develop green lending programs
for small businesses. By mobilizing
resources from international sources,
it has lowered barriers to private
investment in energy efficiency, as a
way to demonstrate the commercial
viability of going green.
8. “The Climate and Development Challenge for Latin America and the Caribbean: Options for climate-resilient,
low-carbon development.” Washington: IDB, 2013.
Over $9.3 billion in climate
& environmentally friendly
investments supported
since 2010.
CASE STUDY
USING
REMITTANCES
FOR CLEAN
ENERGY
IN HAITI
Date of Approval
2011
Technical Assistance
$757,000
Total Project Cost $1,050,000
Country
Haiti
Sector
Renewable energy
Remittances & Solar energy in Haiti
Remittances have the potential to be
an innovative financing mechanism
for clean energy, where the sender
uses remittances to purchase energy
products for family members in Haiti.
Over 1 million Haitians live in the United
States, contributing in large part to the
estimated $1.8 billion in remittances
that the country receives, or about 20%
of its GDP as of 2008. This revenue
increased the availability and number of
sustainable energy products for Haitian
consumers using remittances as the
financing source. Simultaneously, a
new business model was created for
a remittance partner, Food Express,
enabling it for it to diversify its activities
and scale up quickly.
The IDB Group and its partners provided
funding for Arc Finance to work with
Food Express / SogeXpress to test the
remittances model in Haiti. By 2013,
over 5,000 products were sold, mostly
consisting of small solar systems
to power lanterns, lights, and small
appliances. The program is estimated
to have helped over 26,000 people, half
of whom lived in provinces outside of
the country’s capital of Port-au-Prince.
Improvements to living standards
included the use of electricity in general
household use, extending studying
time and supporting child education,
increasing levels of safety and security,
and providing energy cost savings of
$220,000, with an estimated $760,000
in savings through early 2014. By 2013,
Almost 88% of Haiti’s population
had no access to electricity – the
lowest coverage in the Western
Hemisphere even before the
devastating 2010 earthquake.
the project avoided the emissions of
489 tons of CO2e and it is estimated
that 1,200 tons of savings are expected
by 2014.
This effort continues to grow and the
IDB Group is exploring ways to expand
the business models using agents
for increased distribution. The project
showcases a promising business model
– one that does not rely on government
subsidies – to sell lamps locally, thus
stimulating the market for renewable
energy products in Haiti while also
providing opportunities for income
generation for the beneficiaries.
By 2013, the project helped
over 26,000 people gain
access to clean energy
products such as small solar
systems to power lanterns,
lights, and small appliances.
26,000
PEOPLE GAINED ACCESS TO
CLEAN ENERGY
PRODUCTS
GREENPYME: Technical Assistance
Focusing on Climate Change
GREENPYME seeks to boost the competitiveness of SMEs in Latin America and the
Caribbean by promoting a more rational use of energy resources through good energy
practices and investment in more efficient, environmentally friendly technologies
and equipment. In 2013, the IDB Group GREENPYME program continued to transfer
knowledge and tackle issues related to climate change. GREENPYME consultants
have conducted 180 energy audits during this business planning period in Costa Rica,
El Salvador, Guatemala, Honduras, and Nicaragua. As of December 2013, the program
has also conducted 24 energy-efficiency workshops, which were attended by 775
entrepreneurs; 13 trainings benefiting 165 engineers from the region; and 7 trainings
benefiting investment and credit officers of local banks.
GREENPYME
consultants have
conducted 180 energy
audits in Costa Rica, El
Salvador, Guatemala,
Honduras, and
Nicaragua.
Green Credit Lines
Green credit lines help mitigate climate change or provide environmental benefits.
• To date, more than $1 billion in loans and guarantees provided throughout the
region
• Banco General in Panama = 1st green credit line, $20 million loan Banco General
to raise a green credit line portfolio of $65.95 million allocated to 14 projects9 that
jointly have contributed to reduce carbon dioxide emissions by 68,000 tons.
• 11 green projects10
• This initiative has been replicated in other countries in Central America, where
four additional green credit lines totaling $62.5 million have been approved.
INTER-AMERICAN DEVELOPMENT BANK
Sustainability
Report 2013
IADB 2013 Sustainability Report
9. Final beneficiaries of the facility are 5 small and medium enterprises, 3 small-scale renewable energy projects (two projects with hydroelectric capacity of 10MW
and one project with hydroelectric capacity of 3.51 MW), 5 construction projects that are LEED (Leadership in Energy and Environmental Design) certified, and 1 project
for acquisition of energy-efficient manufacturing machinery.
10. Balam Fund I, $50 m, (Mexico) Banco Itau, $100 m (Brazil) Banco BICE, $50 m (Chile), Banco Promerica, $15 m (Costa Rica), Banco Atlantida, $20 m (Honduras), BHD
Bank, $17.5 m (Dominican Republic), Bancolombia, Col $50 m, (Colombia), Banco Ficohsa, $10 m (Honduras), Leasing Operations de Mexico, MX$ 45 m, (Mexico) Banco
General, $20 m (Panama) BBVA Bancomer, $20 m (Mexico)
Technical Assistance: Identifying
Investment Opportunities in Climate
Change
In 2012, the IDB Group approved technical assistance funding for climate-friendly
projects in Mexico. The initiative helps Mexican financial intermediaries identify
investment opportunities related to climate change and develop and commercialize
appropriate financial products and services.
The Mexican government has estimated that energy efficiency measures could
reduce the country’s projected 2030 energy consumption by 18 percent, significantly
reducing greenhouse gas emissions. Financial intermediaries, including commercial
banks and national development banks, are well positioned to invest in energy
efficiency through loans and guarantees.
Energy efficiency
measures could
reduce Mexico’s
projected
2030 energy
consumption by
18 percent.
Thanks to resources from the Clean Technology Fund, the IDB Group can assist
participating banks with both financial and technical support in a number of areas:
energy efficiency, clean production, cogeneration, biomass, and other projects
intended to reduce energy consumption. The technical assistance effort is expected
to include energy audits and feasibility studies to analyze whether the climate and
environmental projects can be implemented.
Climate Solutions within
the Private Sector
Energy Efficiency Finance Facility
with the Nordic Development Fund
In 2012, the IDB Group approved a $50 million Energy Efficiency Finance Facility to
provide small-scale loans to companies investing in energy efficiency or looking to
meet their own energy needs from renewable sources. The facility—which includes
$9.4 million in support from the Nordic Development Fund (NDF) to mitigate risk—
offers loans ranging from $500,000 to $5 million per project. Thanks to an additional
$1.4 million from NDF, the program also provides technical assistance grants for
energy audits and feasibility and engineering studies. More than 25 of these detailed
studies have been conducted for a wide range of agribusiness clients producing
everything from beef to shrimp to wheat to peanuts; a hospital, university, and
airport; and commercial buildings, recycling centers, and manufacturing plants. The
studies have identified challenges but also demonstrated the financial viability of
implementing innovative biomass and solar projects and energy efficiency measures,
with estimated investments of over $60 million that could result in reductions of one
million tons of greenhouse gas emissions.
IDB Group approved
a $50 million Energy
Efficiency Finance
Facility to provide
small-scale loans to
companies investing
in energy efficiency or
looking to meet their
own energy needs from
renewable sources.
PRIVATE
SECTOR
WITH
PURPOSE
CHAPTER 7
Promoting
Gender Equality
Chapter 7: Promoting Gender Equality | 59
Recognizing the critical role women play in economic
and social development, the IDB Group invests in
projects that foster gender equality in the workplace
and enable women-led small businesses to reach
their full potential. Through a range of business
solutions—including financing, training, and technical
assistance—the IDB Group empowers women in
the private sector and helps bridge the gender gap in
entrepreneurial success.
14,200*
Female jobs created
163,000
Women trained
4,445,000
Women microentrepreneurs
supported
8,200
Female students supported
*This number is for 2013.
“Latin American women are among the most entrepreneurial in
the world. But they are still greatly underrepresented as owners
of SMEs. If we can help them grow their businesses, it will be
a triple win: for the women and their families, for the banks
that serve them or could serve them, and for raising the growth
rates of the economies of the region. Empowering women is
fundamental to our hopes for achieving systemic impact.”
Nancy Lee
General Manager, Multilateral Investment Fund.
THE CHALLENGE
In Latin America and the Caribbean, as in the rest of the
world, women are powerful drivers of the economy. They are
participating in the labor force in ever-greater numbers, and
their rising incomes have contributed to a 30 percent reduction
of extreme poverty in the region over the last decade. Women
also have tremendous clout as consumers, making an estimated
80 percent of a family’s purchasing decisions—food, clothing,
appliances, child care, education. Yet with all the progress,
women in Latin America and the Caribbean still face significant
barriers. Female employees are often concentrated in low-paying
jobs in the service sectors, earn less than their male counterparts
in the same positions, and have less access to training,
technology, and business support. Of the top 500 companies in
Latin America and the Caribbean, only 15 percent have women
in upper management.11 Women entrepreneurs, meanwhile,
represent a vast underutilized resource. The number of womenled small businesses is increasing, yet these entrepreneurs often
lack the credit, technology, networks, and training required to
access large corporate clients and export markets.
PROJECT HIGHLIGHTS:
Portfolio
$142 million lent through the weB
$5 million for Technical Assistance
11. http://www.catalyst.org/knowledge/women-labor-force-latin-america
The IDB Group is committed to
promoting gender equality and women’s
empowerment by implementing a
diverse portfolio of projects designed to
help women entrepreneurs - including
farmers - grow their businesses,
increase women’s participation in
quality jobs, and enhance women’s
leadership in business and in the
community. Beyond improving access to
finance through the signature women
entrepreneurship Banking initiative
women entrepreneurs also benefit from
projects like one with the Bucaramanga
Chamber of Commerce in Colombia
which spawned nearly 250 women-led
businesses and created 1,400 jobs.
Other initiatives help women gain
access to markets: The Haiti Hope
Project—a $9.5 million public-private
partnership with Coca-Cola, USAID, and
TechnoServe—is creating sustainable
economic opportunities for Haitian
mango farmers and their families. In
partnering with larger corporations such
as the Chilean fruit company Subsole,
the IDB Group has been able to identify
and leverage opportunities to advance
gender-sensitive practices and improve
the work environment for women
employees.
The IDB Group is also committed to
promoting gender equality throughout
its projects and ensuring the equal
participation of women and men in
project decision-making and access to
project-related benefits. For example, a
project with Grupo CEIBA in Guatemala
found that male ex-gang members
had trouble securing jobs due to many
reasons including their tattooed bodies.
The project assisted these young men
by developing their skills and worked
with private sector companies to
sensitize them on the need to hire
qualified young men.
CASE STUDY
CLOSING
THE GAP:
Providing Female
Entrepreneurs
with Financing
and Training
Date of Approval
2011
Loan Size
$10 million
Total Project Cost $36.2 million
TC Grant
$3 million
Country
Peru
Sector
Microfinance
56,000
FEMALE
ENTREPRENEURS
FINANCED
In Peru, the microenterprise sector is one
of the most dynamic of the region, serving
as the main source of employment in the
country and providing jobs for nearly 70%
of the economically active population.
In total, there are approximately 3.1
million microenterprises with less than
10 workers. This constitutes 98% of all
the entrepreneurial units and generates
approximately 42% of the country’s total
GDP.
In 2010, in order to help address this
financing gap, the IDB Group developed
two interlinked projects: a $36 million
loan to Mibanco, the fifth largest bank
in Peru and the largest specialized in
micro and small enterprises, and the
$7.4 million Strengthening Women’s
Entrepreneurship in Peru (SWEP) project
to provide women entrepreneurs with
training and direct assistance.
The Mibanco loan focused on providing
financing for women-led businesses by
tailoring existent product lines to serve
the needs of women entrepreneurs.
Since 2010, Mibanco has had substantial
impact by providing loans to over
95,000 women microentrepreneurs,
a quarter of whom were first time
borrowers, to finance projects to
upgrade business facilities or purchase
new equipment. With the support of
the IDB Group, Mibanco has expanded
its “Crecer Mi Negocio” product
targeted at microentrepreneurs to
reach an additional 56,000 female
microentrepreneurs to date.
Microenterprises led by women are more likely
to face difficulties in accessing credit because
of reasons traditionally associated with legal
impediments or cultural norms restricting
female labor force participation and business
activity, as well as lower education levels. In
Peru, over 65% of women have not completed
high school thereby decreasing their access to
credit.
The SWEP project, which provided
training and direct assistance to micro
and small women-led businesses, was
organized into two components the
‘Salta Program’ and the ‘10,000 Women
Certificate Program’.
Mibanco is currently the financial
institution with the largest number of
clients from the microenterprise sector
(more than half a million) in Peru. It is also
the Peruvian financial institution with the
highest number of first-time clients in
the banking system (23.3%), making it the
most powerful agent in providing access
to finance in Peru
THE SALTA TRAINING AND IMPACT EVALUATION
The International Food Policy Research Institute (IFPRI) conducted an impact
evaluation of the Salta Program encompassed within the Mibanco Project. The
evaluation assessed the effects of the short group sessions on the 100,000 women
beneficiaries and their businesses.
The evaluation showed that:
• 80% of training participants began to separate their household and business finances
• 70% started preparing growth strategies for their businesses
•More women assigned themselves a fixed salary
•Fewer women made use of informal credit
• Women-led firms were more efficient in their use of labor
10,000 WOMEN CERTIFICATE PROGRAM
The 10,000 Women Training Program , sponsored by Goldman Sachs, provided over
700 women with intensive tailor-made training to assist them in developing their
micro-businesses. The program was evaluated by IFPRI, and determined that training
participants modified their behavior which resulted in positive business outcomes
including an increase in employees, salaries and sales.
Women Entrepreneurship Banking
(weB)
Women entrepreneurs have tremendous potential to contribute to job creation, growth
and competitiveness in Latin America and the Caribbean (LAC). Between 2000 and 2010
income growth among women in LAC contributed to a 30% reduction in extreme poverty.
However, women-led businesses continue to be smaller, have lower growth rates over
time and have less access to finance than those led by their male counterparts.
The IDB Group works to strengthen women’s roles as entrepreneurs and to increase
access to quality financial products for women-led MSMEs in Latin America and the
Caribbean. Launched in April 2012 during the Summit of the Americas in Cartagena,
Colombia, weB is an initiative implemented through the Promoting Small Enterprise
Financing Program. The weB initiative resulted from research and on-the-ground
experience demonstrating that women-led SMEs make up a high-growth yet
underserved segment of economic activity in Latin America and the Caribbean.
The weB initiative provides two kinds of incentives. The IDB Group's initial goal was
to finance up to $50 million in credit lines, partial credit guarantees, and risk-sharing
mechanisms to strengthen tenor and liquidity in institutions seeking to expand
loans offered to women-led MSMEs. The IDB Group will also provide up to $5 million
in technical assistance grants to transfer knowledge of effective lending models
for women-led MSMEs and to train loan officers and credit managers in these
products and services. This unique combination of capital and technical assistance
is maximizing the success of forward-looking financial institutions to ensure that
women-led MSMEs have equal access to financing.
The goal of this initiative is to provide an array of incentives to help financial
intermediaries fund the costs of finding and implementing strong models suited to
women-led MSMEs and to share some of the initial risk. To achieve this objective, the
IDB Group is tapping its regional experience, and its knowledge of relevant models in
other regions, to bring the best ideas to interested financial intermediaries.
Banco Pichincha, the leading bank in Ecuador, was the first to officially inaugurate
the weB initiative in 2012. The IDB Group signed a $12.8 million loan that will expand
lending to women-led businesses in Ecuador. To date, the weB has achieved earlystage results by enrolling 11 institutions to receive either financing or technical
assistance, or a combination of both. Through the approved projects, over 100,000
women beneficiaries will be reached within the next five years.
With US$ 110 million
in operations and
currently eleven
banks executing
operations, weB
projects are
expected to reach
approximately
100,000 women
beneficiaries within
5 years.
CASE STUDY
SUSTAINABLE
WOMEN-LED
BUSINESSES IN
COLOMBIA
Date of Approval
2008
Technical Assistance
$1.2 million
Total Project Cost
$2 million
Country
Colombia
Sector
Retail
In Colombia, as in the rest of the
world, women-led businesses are still
underrepresented, but are increasingly
important for economic performance,
innovation, and growth in general. An
estimated 96% of all enterprises are
microenterprises; of these, more than
50% have been created by women. Due
to the significant difficulties women
face in developing their businesses (lack
of information, lack of capital, limited
access to financial services and marketing
channels), close to 40% of microenterprises
created by women closed during the first
three years. Promoting the creation of
women-led businesses is a key factor in
improving Colombia’s economy.
In 2008, the IDB Group partnered
with the Bucaramanga Chamber of
Commerce to promote the creation
and growth of women-led businesses
with a $2 million grant for the cities
of Bucaramanga, Barrancabermeja,
Cucuta, and Cartagena, Colombia. The
project activities included: (i) trainings
for women entrepreneurs in business
management and ICT (Information,
Communications and Technology) skills;
and (ii) supporting women entrepreneurs
in the design and implementation of
business plans, identification of sources
of financing, and development of
business networks.
As a result of project activities, 247
women-led businesses were created,
reaching average sales of $25,000 during
the first year. These newly created
businesses increased sales by 134% in the
second year of the program and created
1,400 new jobs. The project also supported
172 existing women-led businesses to
improve sales, productivity, and processes.
Furthermore, the project sensitized 6,000
women on the importance of generating
their own income by conceptualizing,
developing, and starting up new
productive businesses.
6,000
FEMALE
ENTREPRENEURS TRAINED
IN BUSINESS SKILLS
FINPYME Mujer Empresaria
In 2013, the IDB Group launched FINPYME Mujer Empresaria, a program aimed at
women-led SMEs to make to their businesses more competitive. The program is the
result of the WEAmericas (Women’s Entrepreneurship in the Americas) initiative and
the FINPYME Mujer Empresia Trust Fund with the support of the U.S. government.
Through the initial launching events held in Peru and El Salvador, 98 beneficiaries
from Peru and 86 beneficiaries from El Salvador participated. As part of this program,
a diagnosis of each SME’s competitive position, strengths, and weaknesses was
provided, and a detailed plan to improve company competitiveness was handed
out to each participant. In addition, technical assistance was offered to 70 percent
of the SME participants, depending on their level of commitment to the program.
The assistance offered will address the following key areas: financial management,
strategic planning, marketing, human resource management, and innovation.
Through the FINPYME
Mujer Empresaria
events held in Peru
and El Salvador in
2013, 98 beneficiaries
from Peru and 86
beneficiaries from
El Salvador received
tailor-made services
on how to strengthen
their businesses
and increase their
competitiveness.
CASE STUDY
DANPER
Promoting
Sustainable
Agribusiness and
Positive Social
Impact
Date of Approval
2014
Loan Size
$38.5 million
Total Project Cost
$66 million
Country
Peru
Sector
Agribusiness
A $38.5 million loan from the IDB Group
will strengthen efforts by a Peruvian agroindustrial company to help the community
in general and women in particular.
The loan will enable DanPer—which
produces fresh, frozen, and preserved
food—to increase asparagus and
avocado production, invest in irrigation
infrastructure, and evaluate energy
efficiency measures at the company’s
industrial facilities. The project will include
a rigorous Social Impact Assessment to
analyze how DanPer’s extensive corporate
social responsibility programs have been
effective in addressing employee and
community needs in ways that make good
business sense.
The company’s programs include an onsite
health clinic through which employees
and their families access to preventive
health care. Because many employees are
women, the clinic focuses on pregnancy,
mothers, and children. DanPer has also
acted on behalf of local communities and
negotiated with municipal authorities to
secure the delivery of basic water and
electricity services. The company has a
nongovernmental organization which
provides basic business training, funding,
and advice to local microenterprises, an
effort that has spawned a bakery, an
Internet business, a grocery store, and a
taxi service. The company also supports
more than 250 smallholder farmers
with work-related financial services,
and generates business opportunities
for more than 600 suppliers of services
in transportation, packaging, and metal
mechanics.
Currently, DanPer employs about 6,500
workers, including 3,100 women (80
percent of whom have children). With the
addition of 1,500 direct jobs, total direct
and indirect employment is estimated to
exceed 15,000 jobs.
8,000
EMPLOYEES AND
THEIR FAMILIES
ACCESS FREE HEALTH AND
EDUCATION SERVICES
CASE STUDY
SOCIALLY
INCLUSIVE
HOSPITALITY
in Jamaica
Date of Approval
2013
Loan Size
US$ 6.75 million
Total Project Cost US$ 21.42 million
Country
Jamaica
Sector
Tourism
“The key to success
in this mutual
cooperation project
was coordinating
regular meetings with
several key players,
always trying to make
efficient use of time.”
- Daniel Campos, General
Director of Caribe Hospitality.
While Jamaica is one of the Caribbean’s
top tourist destinations, beyond the
sun-splashed image most tourists
see it is a country that struggles with
high rates of poverty, unemployment,
and crime. At year-end 2013,
unemployment was over 15 percent,
with disproportionate rates for young
men and even worse for young women.
As a mission-driven lender, the IDB
Group looks for opportunities to drive
sustainable and impactful private
investment. One such investment was
a $6.75 million loan to Caribe Hospitality
to build the Marriott Courtyard Kingston
Hotel. The Caribe investment offered the
IDB Group an opportunity to promote
green growth and drive sustainable
business performance through the
company’s engagement with local
stakeholders and community.
The Bank worked with the client to
pursue a sustainable carbon footprint
for the project, resulting in the Marriott
Courtyard becoming the first Leadership
in Energy and Environmental Design
(“LEED”) certified building in Jamaica.
Beyond the environmental angle,
the Bank wanted to discover where
potential gains for the hotel’s bottom
line intersected with social value
creation, especially in terms of jobs
and empowerment. The Bank deployed
its Shared Value Appraisal to surface
potential investments that could benefit
both the company and the community.
After interviews with the multiple
players, the Shared Value team did
an extensive cost benefit analysis of
particular actions—for the construction
company, the hotel’s developers and
operators, local training organizations,
and the community at large—and came
At year-end 2013, unemployment in Jamaica
was over 15 percent, with disproportionate
rates for young men and even worse for
young women.
up with recommendations for optimizing
cost savings for the hotel and generating
value creation for the community.
Two promising shared value
opportunities for the project in Kingston
were identified. The first revolved around
increasing the involvement of locally
owned businesses, too often bypassed
by large tourism operators which
instead source materials and raw goods
from Miami. This recommendation
focused on helping the company with
how to integrate micro, small, and
medium enterprises—especially those
owned or run by women—into its supply
chain.
The second recommendation addressed
the high youth at risk problem thanks
to high youth unemployment and
how to improve the employability for
economically disadvantaged youth
in Kingston, who in absence of job
opportunities engage in marginal
activities—such as street vendors or
windshield cleaners —or turn to outright
crime. With the help of the Private
Sector team, the hotel construction
company worked with a local training
program to identify high-potential
at-risk young men from volatile
neighborhoods to participate in a paid
internship program on the construction
site. This internship program provided
them with new professional skills which
they can market to future employers.
“The key to success in this mutual
cooperation project was coordinating
regular meetings with several key
players, always trying to make efficient
use of time,” said Daniel Campos,
General Director of Caribe Hospitality.
He said the process was a positive
experience for the company — and most
importantly, he added, it will have a
positive impact in Jamaica and Caribe’s
business success there.
While the Kingston hotel project is
expected to bring considerable benefit
to the community, some returns on
social investments won’t be evident
until the hotel opens for business in
mid-2015. But one modest step forward
— taken as a result of the IDB Shared
Value Appraisal — has already made
a difference in the lives of five young
men, who participated in the six-month
paid internship for at-risk youth and
were subsequently hired as full-time
employees by the construction company.
CHAPTER 8
PRIVATE
SECTOR
WITH
PURPOSE
Catalyzing Development
through Partnerships and
Knowledge Creation
Strategic Events and Forums
The value proposition of the IDB Group goes beyond its financial products,
encompassing significant non-operational work activities, such as local business
executive roundtables, regional conferences, multi-stakeholder dialogues involving
many of the key thought leaders in this space, and dissemination of mapping studies
and information regarding the business models it finances.
By sharing knowledge and establishing best practices, the IDB Group promotes
development and fosters innovation. Through its strategic events, the IDB Group
strives to stimulate the exchange and dissemination of best practices, lessons
learned, new trends and successful experiences from practitioners in Latin America
and the Caribbean. It seeks to generate a space where synergies between various
actors can take place, both from the public and private sectors.
The BASE Forum has become the regional platform to discuss issues regarding the
BoP. The BASE I Forum took place in São Paulo, Brazil, in June 2011 and gathered more
than 800 people from all around the world, including business leaders, thought leaders,
representatives of multilateral organizations, government officials, impact investors,
members of the media, and representatives of not-for-profit organizations. The event
PRIVATE SECTOR APP
Check out the IDB Group tailormade App featuring private sector
operations, case studies, videos,
slideshows, an interactive project
cycle, and an online loan application
form. The app is available on the
iTunes App Store and google play
(search “IDB Private Sector”).
Chapter 8: Catalyzing Development through Partnerships and Knowledge Creation | 71
focused on innovation and small and medium enterprises (SMEs) and had more than
70 experts from 15 countries attend the event. In June 2013, BASE Forum II was held
and focused on how to implement business models that serve low-income markets
without putting commercial viability at risk. The event took place in Medellín, Colombia
and had 1,700 attendees. It attracted massive media coverage and had 19 sponsor
companies. During the two-day event, 93 panelists participated and hailed from Latin
American, Asia, Europe, and the United States.
IIC’s Sustainability Week offered workshops to raise awareness about environmental
and social risks and helped participants recognize the advantages of using strategic
methods to manage these risks and turn them into business opportunities. The
event also provided an opportunity to offer companies the specialized knowledge and
tools they need to identify and adopt energy-efficiency measures that will lower their
energy costs and reduce their ecological footprint.
The Inter-American Forum on Microenterprise (Foromic) is Latin America and the
Caribbean’s leading forum on issues related to microfinance and micro, small and
medium enterprise development. Experience shows that financially active and
empowered MSMEs constitute one of the most effective ways to overcome the
challenges of poverty. Over 3,200 participants attended the event, exchanging
knowledge and ideas across sectors.
PPPAmericas facilitates knowledge exchange and new relationships, so that
governments and the private sector may both benefit from developing projects
together. Through the IDB Group's work to strengthen capacity for Public Private
Partnerships (PPPs) in the region, PPP project investment has increased by over
50% and the number of projects has grown 25% over the last decade. In 2013, 500
participants from 27 countries gathered in Cartagena, Colombia to attend the 5th
PPPAmericas conference.
Impact Investors. The IDB Group has developed strong relationships with several
impact investors such as Oikocredit, Calvert Foundation, Dexia, and Inconfin and has
become part of important networks such as the Global Impact Investing Network,
Impact Base, and Global Impact Investment Map. Through its participation in GIIN’s
Investors’ Council, the IDB Group promotes impact investments to further the
sustainable economic development in Latin America.
Partnership with NextBillion. The IDB Group promotes inclusive business models
through blogs written by its investment officers or clients on NextBillion.net, which
was created in 2005 by the World Resources Institute’s Market and Enterprise
Program and which brings together the community of business leaders and
practitioners in the field of BoP business. The IDB Group is featured as a partner
on the website, along with Ashoka, the Citi Foundation, Acción, and the Calvert
Foundation.
VIDEO STORYTELLING
The IDB Group selected several
highly developmental projects,
including the University of San
Ignacio de Loyola, Panama Canal,
and Pozo Almonte projects, and
worked on site with clients to
discover the development results
of each project. View the videos at:
http://iadb.org/scf.
The IDB Group uses the
Impact Reporting and Impact
Investment Standards
(IRIS) to track social and
environmental performance
across its portfolio.
Abbreviations
AIC
BA
BoP
C2F
DE
DFI
FI
GHG
GIIN
HZPSI
IDB
IIC
IFPRI
ILC
IRIS
LEED
MDB
MIF
MSMEs
NDF NSG
OMJ
SMEs
SCF
SG
SWEP TC
USIL
WEAmericas
weB
Alternative Insurance Company
Banco Agrícola S.A.
Base of the pyramid
Canadian Climate Fund for the Private Sector in the Americas
Development Effectiveness
Development finance institution
Financial intermediary
Greenhouse gas
Global Impact Investing Network
Harvard Zofnass Program for Sustainable Infrastructure
Inter-American Development Bank
Inter-American Investment Corporation
International Food Policy Research Institute
Industrias La Constancia
Impact Reporting and Investment Standards
Leadership in Energy and Environmental Design
Multilateral development bank
Multilateral Investment Fund
Micro, small, and medium enterprises
Nordic Development Fund
Non-sovereign guaranteed
Opportunities for the Majority
Small and medium enterprises
Structured and Corporate Finance Department
Sovereign guaranteed
Strengthening Women’s Entrepreneurship in Peru
Technical cooperation grant
Universidad San Ignacio de Loyola
Women’s Entrepreneurship in the Americas
Women Entrepreneurship Banking
Inter-American Development Bank Private Sector
Group
The Structured and Corporate Finance Department (SCF) works with clients at all stages of the investment
process to realize breakthrough sustainable developmental and financial results. Backed by a broad mandate, SCF
offers unique industry experience and market knowledge. Tailored, long-term funding and risk mitigation products
are coupled with internationally recognized social and environmental practices. For every transaction, SCF forms a
custom, cross-disciplinary team that brings together the best financial and technical solutions, focused on finding
ways to turn investment objectives into financial results with high development impact.
SCF provides structured and corporate finance to a variety of entities — private utilities and infrastructure
operators, banks and financial market institutions, state-owned entities without a sovereign guarantee,
and private firms. Target sectors include energy, energy efficiency, transportation, water and sanitation,
manufacturing, agribusiness, sustainable natural resources, banking, healthcare, education, and tourism
among others. SCF also leverages its own funding with co-financing from global commercial banks, regional
banks, or institutional investors. Grant resources are often used to fund technical, economic, financial, credit,
environmental, social, and institutional studies to assess the feasibility of implementing project activities with
a high development impact.
Opportunities for the Majority (OMJ) is the only operational team in a DFI that is exclusively focused on
originating and financing Base of the Pyramid (BoP) business models with private companies. Through OMJ’s
work, the IDBG has forged new partnerships with social investors, investment funds, companies, other DFIs,
regional banks and business schools. Since its conception, OMJ has worked to enhance its value proposition to
its unique client market comprised of private sector players who are developing market-based models in Latin
America to serve unmet needs of the region´s BoP population. Through its variety of products (loans, credit
guarantees, and non-reimbursable technical assistance), OMJ reaches corporations, financial institutions of
all sizes, micro, small and medium enterprises (MSMEs) and funds, in order to support projects that directly
benefit BoP families.
The Inter-American Investment Corporation (IIC) promotes private sector development in Latin America and the
Caribbean with a focus on small and medium enterprises (SMEs). It helps companies streamline management
processes and provides them with financing in the form of equity investments, loans, and guarantees.
The IIC is focused on its mandate to promote the economic development of Latin America and the Caribbean by
encouraging the establishment, expansion, and modernization of the private sector, particularly SMEs. Through
its commitment to fulfill this mandate, the IIC has grown to become one of the most important partners for
SME financing in the region, providing a variety of loan and equity products as well as technical assistance
services. Supporting the private sector has helped the IIC not only maximize its development impact, but also
achieve its strategy to ensure the financial viability and long-term sustainability of its operations.
The Multilateral Investment Fund (MIF) promotes the development of private sector-led innovation benefitting
poor and vulnerable populations in Latin America and the Caribbean. It is the largest international technical
assistance provider to the private sector in the Region. The MIF complements other IDBG windows by serving
as a development laboratory, experimenting and testing development solutions which can be adopted by
private- and public-sector agents. The MIF is committed to results-based project measurement, rigorous
impact evaluation, and active knowledge sharing so that the most promising solutions are widely known and
can be taken to scale. The MIF’s MSME client focus, higher risk tolerance, and ability to combine grants, equity
and lending, give it a distinctive role within the IDBG private sector.
This report refers only to private and non-sovereign guaranteed operations of the IDB, the operations of IIC and
of MIF.
Lead authors and coordinators
Sandra Darville
Tracy Garcia
Sabine Prinz
Editing and proofreading
Pablo Anton Diaz
Helio Bertachini Neto
Tatiana Fontes Soares
Tracy Garcia
Max-Emanuel Hatzold
Ramona Kammerer
Sabine Prinz
Design coordination and typesetting
Ryan Clennan
Tracy Garcia
Amy Kimmett
Sabine Prinz
Contributing authors and analysts
Pablo Anton Diaz
Silvio Audi
Viviane Azevedo
Paola de Baldomero Zazo
Vanessa Ruperez Benito
Helio Bertachini Neto
Cynthia Boruchowicz
David Crowley
Ruben Doboin
Tatiana Fontes Soares
Karen Fowle
Maria Lourdes Gallardo
Rosalia Grassi Caorsi
Maria Kronsteiner
Rosario Londoño
Angela Miller
Tetsuro Narita
Elizabeth Nicoletti
Enrique Palacios Altamirano
Emmy Pepper
Elisabeth Resch
Cornelius Roschanek
Flavia Sandoval
Ichiro Toda
Special thanks to
Daysi Andrades
Veronica Reyna Arreaza
Bettina Boekle-Giuffrida
Kelle Bevine
Martin Chrisney
Sanola Daley
Patrick Doyle
Ana Lucia Escuerdo
Jozef Henriquez
Julie Katzman
Nancy Lee
Carl Muñana
Dana Martin
Luis Marquez
Leonardo Mazzei
Tomas Miller
Elee Ismael Muslin
Nicolas Reyes
Luiz Ros
Gema Sacristan
Hans Schulz
Yuri Soares
Katilin Solymosi
“It is clear that the private sector, and private
sector models, can be a major agent of change for
resolving what have been intractable problems. It
will take our commitment to promoting systemic
solutions and innovative environmental and social
programs to increase our impact and that of our
private sector partners.”
Julie Katzman
Executive Vice President, Inter-American Development Bank
Our deal is with the future.

PRIVATE SECTOR WITH PURPOSE: Stories of Development

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