Google invests $8 million to be administered by IDB Lab to ensure the continuity of microfinance institutions in the region
The current COVID-19 crisis poses an unprecedented challenge to the continuity of microfinance institutions (MFIs), especially small- and medium-sized ones, in a context where financial services are needed more than ever for small businesses. As the effects of COVID-19 crisis impact the economy of the Latin American and Caribbean (LAC) region, small and medium microfinance institutions face serious liquidity problems and currency mismatches as their loan portfolio quality deteriorates, their funding sources dry up, and volatile currencies enhance their foreign exchange (FX) risks.
To ensure that microfinance institutions can continue to provide essential financial products and services in the short term, but also to accelerate the post-COVID-19 economic recovery process in Latin America and the Caribbean, Google is supporting Locfund Next—the first permanent regional vehicle, managed by local managers, dedicated to providing financing in local currency and supporting digital transformation to MFIs. The $8 million in funding from Google, provided through the Inter-American Development Bank’s innovation lab IDB Lab, complements $4.5 million provided by IDB Lab.
This initiative is being launched as part of an announcement made by Sundar Pichai, CEO of Google, on the creation of a $200 million fund that seeks to support non-governmental organizations (NGOs) and financial institutions around the world to strengthen their access to credit initiatives for SMEs. It is the only initiative of its kind for the LAC region.
"We are enormously proud to have been selected by Google to manage its economic recovery resources in the face of the pandemic," said Irene Arias, CEO of the IDB Lab. "This joint investment will allow IDB Lab to accelerate its work in financial inclusion by creating permanent solutions that facilitate access to financing and support the digitization of financial intermediaries. "
Adriana Noreña, VP for Latin America at Google, stated that “for Google, supporting small and medium-sized businesses has always been a fundamental part of our philosophy. For this reason, we feel a deep responsibility to work with SMEs in their recovery process from the COVID-19 crisis. This initiative with IDB Lab increases the capital available so that SMEs can access formal microcredits and, based on this, strengthen their economic recovery and resume a path of growth and prosperity. We are very proud of this partnership with the Inter-American Development Bank, with whom we have a long history of working together to promote economic development in Latin America. "
"With this new collaboration, we are demonstrating how high social impact can be achieved with investments in public-private partnerships by large companies," added Bernardo Guillamon, manager of the IDB’s Office of Outreach and Partnerships. "It is a very innovative complement to the achievements obtained in the more than 10 years of partnership between Google and the IDB."
Examples of this historic partnership between Google and the IDB include: ConnectAmericas, an initiative that helps SMEs strengthen their businesses by providing them access to clients, suppliers, and investors in the region and around the world; an IT certification program to enhance employment opportunities for vulnerable young people in Brazil and Panama, with a focus on women, thereby creating a sustainable and inclusive model for training and labor force insertion; and FAIr LAC, an alliance between the public sector, private sector, and civil society which strives to influence public policy and the entrepreneurial ecosystem, with the ultimate goal of promoting the responsible and ethical use of artificial intelligence.
About the IDB
The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.
About IDB Lab
IDB Lab is the innovation laboratory of the Inter-American Development Bank Group, the leading source of development, finance and know-how for improving lives in Latin America and the Caribbean. The purpose of IDB Lab is to drive innovation for inclusion in the region, by mobilizing financing, knowledge, and connections to co-create solutions capable of transforming the lives of vulnerable populations affected by economic, social or environmental factors. Since 1993, IDB Lab has approved more than US$2 billion in projects deployed across 26 LAC countries. www.idblab.org
Google's mission is to organize the world's information and make it universally accessible and useful. Through products and platforms like Search, Maps, Gmail, Android, Google Play, Google Cloud, Chrome and YouTube, Google plays a meaningful role in the daily lives of billions of people and has become one of the most widely-known companies in the world. Google is a subsidiary of Alphabet Inc.
About Locfund Next
Locfund Next is a debt fund that provides financing in local currency to microfinance institutions in Latin America and the Caribbean. The fund is managed by the Bolivian firm “Bolivian Investment Management” (BIM) with the vision of working together to strengthen financial inclusion through the microfinance ecosystem in an environment that increasingly requires digital transformation.
Office of Outreach and Partnerships