The Inter-American Development Bank (IDB) approved a loan for $25 million that will permit Banco Continental S.A.E.C.A. de Paraguay (“BC”) to finance a lending program to small and medium sized enterprises (SMEs).
SMEs play a fundamental role in the economy of Paraguay. According to the most recent National Industrial Census, nine out of ten enterprises comprise this segment, generating 80% of total jobs and 60% of gross national product.
In spite of their importance, SMEs in Paraguay find it difficult to access credit and to reach markets outside of national boundaries. IDB’s financing facility will help SMEs overcome these obstacles. Likewise, it will permit Banco Continental to diversify its funding sources, support its liquidity position and contribute to the strengthening of the financial system of Paraguay.
The proposed project will support the area known as accessBanking within IDB’s beyondBanking program, to promote a higher participation by financial intermediaries in Latin America and the Caribbean in historically underserved segments of the population.
“We are happy to support Banco Continental, a Paraguayan owned financial institution, with an excellent track record, especially in the SME segment, and a commitment to a sustainable business model,” said Gema Perez, head of the project team at IDB.
This facility falls within IDB’s strategy of credit democratization in the region, using solid financial institutions, familiar with the local market and that play a fundamental role in assisting in the economic growth of their home countries, commented Daniela Carrera-Marquis, head of IDB’s division of Financial Markets.
With this goal in mind, IDB will incorporate Banco Continental to its Trade Finance Facilitation Program (TFFP) and will offer training in international trade to SMEs that show a potential for export.
“This transaction will lay the foundation for a strategic relationship with IDB, that will help us reach a common objective, that is, to focus our efforts on the growth of the SME sector in Paraguay, crucial to the development and progress of the country”, said Carlos Raul Moreno, General Manager of Banco Continental.
IDB’s Multilateral Investment Fund (MIF) will help Banco Continental develop a system for environmental management for small enterprises, offering technical assistance to Banco Continental and its clients so they can learn how to transform environmental and social risks into business opportunities.
About Banco Continental
Founded in 1980, Banco Continental is one of the principal banks in Paraguay. With more than $1 billion in assets, Banco Continental counts on the second largest network in the country with 38 branches, 13 departments and more than 722 employees.
The Inter-American Development Bank is the principal source of long-term financing for projects of economic development in Latin America and the Caribbean. Its Structured and Corporate Finance Department is responsible for projects without sovereign guaranties that include loans and partial credit guaranties for clients in both the private and public sectors.