News

Paraguay to reduce housing deficit with help from the IDB

The Inter-American Development Bank (IDB), through its Opportunities for the Majority Initiative (OMJ), approved a partial credit guarantee of up to $2.5 million for Vision Banco S.A.E.C.A., a leading Paraguayan commercial bank specialized in microfinance, to help it expand loan offerings for micro-entrepreneurs that wish to make housing improvements.

With the IDB credit guarantee, Vision Banco will be able to borrow the equivalent in local currency of $3 million, from Citibank N.A. Paraguay, and will subsequently use these funds to provide financing for housing improvements for up to 2,500 micro-entrepreneurs.

The project’s primary objective is to improve the housing conditions of low-income micro-entrepreneurs in the country by facilitating access to long-term finance from the private sector for home improvements or expansions.

Vision Banco has partnered with the Habitat for Humanity, a renowned NGO with global experience in providing simple, affordable and high-quality housing solutions for low-income people.

"This innovative project will help low income families, who would otherwise been shut out from the credit market, to finance improvements to their existing homes,” said Lourdes Gallardo, IDB team leader for the project. “OMJ is facilitating Vision Banco’s access to long term financing in local currency through the Citibank N.A. Paraguay in order to launch the first financial product that will address the significant qualitative housing deficit affecting this population in Paraguay. In addition, the project is a model for how the IDB can leverage the private sector in order to provide market-based solutions for majority markets."

With the implementation of this project, the IDB hopes to demonstrate the potential market opportunity for providing long-term financing for low-income housing projects so that other financial institutions will be more inclined to offer similar solutions to the low-income population in Paraguay.