The Inter-American Development Bank has approved a $2 million loan to help finance the expansion of operations of Mi Tienda, a Mexican company with a social mission to benefit low-income families by improving rural supply chain efficiency and raising small grocery stores' sales and productivity.
The lending from the Bank's Opportunities for the Majority Initiative will help leverage an additional $13 million in upfront equity to be contributed by Mexican shareholders and various socially-oriented international investors.
Mi Tienda, which currently operates one warehouse in the town of Atlacomulco serving 620 stores, will use the funds to set up 36 additional warehouses distributed throughout Mexico's central-south region to reach an additional 22,000 stores.
The project has the potential to turn small rural stores from a basic survival undertaking to a successful business which can become a true transformative asset for their owners–typically rural women with limited formal education–and their families.
It will do so by providing door-to-door supply of basic food, hygiene, and health products, among others, as well as free customized consultancy and training services on store operations to small store owners in low-income, rural communities with populations of up to 5,000 inhabitants.
Mi Tienda also assists with the redesign of store layouts from the traditional over-the-counter concept to a modern self-service model which in Atlacomulco has led to an average 35 percent increase in sales for redesigned stores.
An improved and extended rural supply chain will allow rural families access to better products and enjoy an estimated 2 to 3 percent savings on basic groceries.
The IDB's Opportunities for the Majority Initiative promotes market-based, sustainable business models that engage private firms, local governments and communities to deliver quality products and services to improve the quality of life of low-income sectors.
The Bank's loan is for an eight-year term, with a five-year grace period, at a LIBOR-based interest rate.