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IDB approves $11 million grant to Haiti for business development services

Project to help expand access to credit for micro, small and medium-size enterprises

An $11 million grant from the Inter-American Development Bank (IDB) to Haiti will support a program to provide business development and training services to micro, small and medium-size enterprises (MSMEs) to expand their access to credit, strengthen their management, and boost their productivity.

By some estimates there are some 10,000 small and medium-sized businesses with more than 10 and fewer than 100 employees in Haiti. Microenterprises, which employ fewer than 10 workers, number about 375,000.

Small enterprises typically face obstacles to obtain loans in Haiti, where the financial system has focused on the opposite ends of the potential client range: corporate borrowers with formal financial records, and informal entrepreneurs who rely on short-term microcredit.

The project will help MSMEs obtain professional assistance to gather and organize their financial information, as well as to prepare proper business plans to present to local financial institutions in their efforts to gain access to credit for expansion and improvement investment projects.

In addition, the project will offer small businesses access to training to improve management and worker skills and other services to increase their productivity once they have obtained credit.

Training and advisory services will also be available for eligible local financial institutions to improve credit officers’ ability to analyze business plans and expand the range of financial products for MSMEs.

The project will be carried out by the Haitian Central Bank’s Industrial Development Fund, which is also running a $35 million partial credit guarantee program for restructuring loans to companies hit by last year’s earthquake.

The business development and training services project dovetails with other initiatives backed by the IDB and other donors to promote private sector investment and employment in Haiti.

With $65 million in financial support from Spain, the IDB’s Inter-American Investment Corporation has established the Social Investment Fund, which will work with local financial institutions to expand lending to Haitian SMEs.

The IDB and other donors are also preparing projects to provide quasi-equity to SMEs and to promote their participation in value chains with larger businesses, particularly in manufacturing and agriculture.

The IDB is Haiti’s leading multilateral donor. Since the earthquake it has approved more than $350 million in new grants and disbursed more than $255 million to support recovery and long-term investments in sectors such as energy, agriculture, water and sanitation, transport and education.

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