The MIF, which has already provided equity for eight small enterprise funds and is planning investments into another 40 such funds, is actively seeking partners among the private sector, multilateral financial institutions, and nongovernment organizations to help finance the small- and medium-sized businesses through more equity investments.

"In MIF-supported funds, we can find a number of examples of solid, transparent businesses who have not only welcomed equity but also know that equity is exactly what they needed," the MIF said in a position paper distributed at a two-day conference in Washington held Feb. 23-24 on "Promoting Entrepreneurship through Equity Investment."

The conference was attended by more than 200 delegates, including equity fund managers, representatives of financial institutions, and members of the international development community, who exchanged experiences in equity investing in small- and medium-sized businesses and examined successful cases.

In the MIF experience, entrepreneurs in the region "have welcomed fresh share capital, complemented by the fresh intellectual capital, know-how, contacts, and experiences that our equity funds are bringing to their businesses," MIF said.

"We are looking for new partners, new industries, and new ideas," MIF said. "We make the claim that the ‘next step in development' is the use of equity to promote entrepreneurship."

In opening the conference Monday, MIF Manager Donald F. Terry called equity investments in promising small-and medium-sized companies "the best way to accomplish both venturing in profitable niche markets and having a developmental impact." MIF-backed investment funds "bring the discipline of the bottom line to economic development," he said.

John Rahming, manager of the Inter-American Investment Corporation, a member of the IDB Group, said that IIC investments of $105 million in 27 funds for small- and medium-sized businesses represent projects representing a total investment of $1.3 billion.

Massachusetts Institute of Technology Professor Rudiger Dornbusch said in a keynote address to the conference that equity investments in small- and medium-sized businesses in Latin America can lead to "high growth rates and big-time profits." He said sound macroeconomic policies, deregulation, and decentralization were the three main conditions for the development of the small enterprise sector.