WASHINGTON, 18 November 2016 – The World Bank Board of Executive Directors approved a US$50 million loan today to improve access to long-term financing for micro, small, and medium sized enterprises (MSME) in Argentina. Improved access to financing aims to promote productive investment in MSME, which account for more than 70 percent of the country’s jobs.
“This financing facilitates the expansion of credit to micro, small and medium sized enterprises to increase their competitiveness and generate quality employment,” said Francisco Cabrera, Minister of Production of Argentina.
The “Access to Longer Term Finance for Micro, Small and Medium Enterprises” Project seeks to strengthen the Foreign Trade and Investment Bank (BICE, in Spanish), which will administer the funds. As a second-tier bank, BICE will catalyze financing by lending to commercial banks that will then in turn offer more long-term financing to MSMEs.
“This project establishes a new financial instrument between BICE and commercial banks to support the growth of micro, small and medium sized enterprises, which are a significant source of income and employment in Argentina,” said Jesko Hentschel, World Bank Director for Argentina, Paraguay and Uruguay.
BICE will also enhance its environmental and social standards thanks to the incorporation of an Environmental and Social Management Framework and an Indigenous Peoples Planning Framework. These frameworks seek to guarantee appropriate socio-environmental management and respect of indigenous rights by the projects BICE finances.
"This operation is an integral part of the Bank's funding strategy, which seeks to bring international organizations’ conditions for financing closer to SMEs across the country. This is another step to position ourselves in our role as a development bank, which provides quality services, with competitive terms and rates for financing investment projects," said Pablo Garcia, President of BICE.
A fund of up to US$1 million in loans will be directed to MSME investment sub-projects that benefit people belonging to indigenous groups and/or businesses that demonstrate an active gender-equality policy.
The Project consists of two key pillars:
- An intermediate line of credit from BICE for those financial institutions providing long-term loans to MSME at competitive rates.
- Institutional strengthening of BICE that will include capacity building of the credit risk unit and the modernization of IT systems. It also envisages technical assistance to promote an adequate environment for accessing MSME credits and program support at the Entrepreneur and Small and Medium Sized Enterprise Secretariat (SEPYME, in Spanish).
The US$50 million World Bank loan has a variable margin, a 32.5-year maturity period, and a 7-year grace period.
