The World Bank (WB) executive board approved a $ 260 million loan on Wednesday to boost MSMEs in Ecuador to revive the economy, severely affected by the COVID-19 pandemic.
In a statement, the Washington-based international financial entity specified that the loan will go to the National Finance Corporation BP (CFN) of Ecuador, “with the aim of promoting access to financing for productive purposes for micro, small and medium-sized enterprises. Business”.
The CFN is the oldest public financial institution in Ecuador, with a range of services aimed at promoting the development of the country’s productive and strategic sector.
The loan is expected to strengthen the capacity of the CFN and the country’s financial institutions, in addition to developing and improving financial products to promote access to financing for MSMEs.
Likewise, the monetary injection seeks to promote complementarity between public banks and private financial system institutions through the expansion of operations at the national level and to develop productive liquidity for small and medium-sized companies.
The loan components include a special emergency guarantee program to alleviate the economic effects of the crisis caused by the pandemic, which particularly affect MSMEs.
“In this way, thousands of small entrepreneurs will benefit by guaranteeing their liquidity and meeting the needs of working capital and investment that will allow them to maintain their productive activity and job creation,” the note states.
The Ecuadorian Minister of Economy and Finance, Richard Martínez, referred to the loan that “the World Bank is accompanying us in this firm decision to reactivate the economy and protect the employment of Ecuadorians, with a priority focus, mainly, on women entrepreneurs and sectors that demand priority attention “.
In Ecuador there are around 900,000 companies, of which 90% are micro, 7% small, and 2% medium, which means that MSMEs represent 90% of the country’s companies and generate 60% of the jobs.
In addition, female-led ventures in the Andean nation are among the highest levels in the world, although access to finance is more limited compared to similar male-led ventures.
The resources that will be destined with the WB loan will additionally allow a greater number of indigenous, black and Montubio peoples and nationalities to access credits for their companies through the CFN.
The loan is a fixed-margin loan, repayable in 24 years and has a 5-year grace period, the statement concludes.