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IDB loan to support innovative social investments delivered by Microfinance Institutions

The Inter-American Development Bank has approved a $5 million loan from the Opportunities for the Majority initiative, to support a $25 million fund for microenterprise that will combine lending for productive activities with innovative social investments to reduce poverty. The Fund's remaining $20 million will be supplied by other private and institutional investors.

The fund is sponsored by Global Partnerships, a nongovernmental organization with its main offices in Seattle, Washington, and Managua, Nicaragua, that is dedicated to strengthening sustainable microfinance institutions in Latin America that are committed to fighting poverty with multiple, innovative approaches. These microlenders not only provide loans on sound financial terms to low-income entrepreneurs, but they also have the capacity to bundle the loans with affordable social investments that will improve the life of the borrowers with investments such as health services, training and low-cost pensions and insurance.

The project will support 20 private microfinance organizations in at least 12 countries in Latin America, mainly in Central American and the Andean regions, and provide financing and technical and social services to an estimated 500,000 low-income microentrepreneurs. Simultaneously, the program will develop and apply innovative technologies in areas such as loan management, insurance, evaluation and foreign currency hedging.

“Global Partnerships has demonstrated that it is possible to simultaneously protect the health and well-being of microentrepreneurs while providing them with small-scale financing necessary for their productive activities,” commented Luiz Ros, manager of the IDB Opportunities for the Majority initiative, which is providing the Bank’s resources to support the fund through a special financing facility.

Opportunities for the Majority

“The financing from the IDB’s Opportunities for the Majority initiative and our other  partners opens the door for more capital to reach a greater number of people at the base of the economic and social pyramid and assist them to rise out of poverty in creative ways,” commented Global Partnerships CEO Rick Barrett.

Among the successful, multiple-approach projects supported by Global Partnerships is a program in Nicaragua, managed by the nongovernmental organization Promujer, that offers cervical cancer screening to all women loan recipients.

“The projects financed by this fund may serve as models that can be repeated throughout Latin America, showing that it is possible to simultaneously profitably finance loans to low-income entrepreneurs, develop new technologies and have an impact in breaking the cycle of poverty,” said Elizabeth Boggs Davidsen, the IDB project team leader.

Founded in 1994, Global Partnerships has developed a sound and professional track with a 100 percent loan repayment rate. Two of its three previous investment funds were supported by investments from the IDB’s Multilateral Investment Fund.

The IDB's Opportunities for the Majority Initiative promotes market-based, sustainable business approaches that engage private firms, local governments and communities to deliver quality products and services to improve the quality of life of low-income sectors.

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