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Oct 5, 2011

Costa Rica’s Huétar Norte Region to boost competitiveness of micro and small firms with MIF support

$1 million investment will foster innovation and create first carbon footprint management model for firms in the nation

With a vast agricultural, scenic and environmental richness, the Huétar Norte Region is little known outside of Costa Rica, and even internally its productive and touristic potential is not fully explored. More than half the milk produced in the country comes from that area, which covers 20 percent of the national landscape and it is home to only 7 percent of Costa Rica’s population.

The region is known for having areas of rural poverty, a low income level and a low social development index, particularly in cantons near the border with Nicaragua.

The Multilateral Investment Fund (MIF), a member of the IDB Group, will invest almost $1 million to expand the participation of the micro, small and medium-sized enterprise (MSMEs) in the agricultural value chains and bolster innovation of products, processes and services offered by both the agricultural and tourist sectors.

Likewise, the project will also assist in a better coordination between the local and national government and private institutions in order to improve the formulation, implementation and conflict resolution related to productive development strategies in the region.

“The project seeks to take advantage of regional assets in a way that is environmentally responsible and sustainable, based on an effective public-private relationship,” said Betsy Murray, the MIF’s project team leader. “In fact, we expect to increase the role of the most vulnerable population in production chains and contribute to reducing poverty in the region.”

The project aims to improve the capacity of producers and agricultural MSMEs to compete in the market by promoting the concepts of partnerships, productive chains and cleaner processes to reduce environmental impact. At least four production chains have been identified—pineapple, chile picante, ipecacuana (medicinal root) and palm heart—that can be potentially improved in terms of product quality, processing and industrialization.

The goal: carbon neutrality

In terms of the tourist sector, the project proposes the creation of the first carbon footprint management model for companies at the national level. It is expected that other sectors will replicate this model and thus contribute to the Costa Rican government’s goal to reach national carbon neutrality in 2021.

The project will finance technical assistance to more than 30 tourist and agricultural SMEs to measure their carbon emissions and cleaner production plans; improve their handling of agricultural waste; and design new tourist products that take advantage of the UNESCO declaration of the area as the Agua y Paz Biosphere Reserve.

IDB President Luis Alberto Moreno will sign the project agreement with the “Asociación Agencia para el Desarrollo de la Región Huétar” as part of the activities in the XIV Inter-American Forum on Enterprise (FOROMIC), the most important event of this sector which is taking place in San Jose, Costa Rica, from October 10th to 12th.

During the event, Moreno will also sign an accord providing $1 million in financing for the Rural Credit Services Expansion project in the Central Sur region. As much as $750,000 of the total MIF resources for the project will be in the form of reimbursable financing from the Bank’s Social Entrepreneurship Program. The project aims to expand access to credit for small producers and rural microentrepreneurs that lack resources to improve their socioeconomic condition.

This project comes at a critical time for the Costa Rican microfinance sector, whose growth has slowed down in recent years following the global financial crisis.

About the Multilateral Investment Fund

Established in 1993 as a member of the Inter-American Development Bank Group, the Multilateral Investment Fund (MIF) was created to develop effective approaches to support economic growth and poverty reduction through private sector-led development. Its mission is to act as a development laboratory —experimenting, pioneering, and taking risks in order to build and support successful micro and small and medium enterprise business models. The MIF works through grants, lending, and equity investments and is the largest international technical assistance provider to the private sector in Latin America and the Caribbean. For more information, visit www.fomin.org.

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