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IDB to finance six projects to improve credit access and competitiveness for small and medium-size firms

The Inter-American Development Bank (IDB) will provide funding to six small innovative projects selected in the second call for proposals for the Better Conditions for Productivity program (MAP, for its initials in Spanish). 

The topic of the call for proposals was access to credit for SMEs. According to various estimates, only half of the 50 million micro and small enterprises in the region have a bank account. There is also a funding gap that hampers SME growth and quality employment generation even when they have sound business projects. 

MAP winners include projects to pioneer the application of innovative credit risk analysis, financial development of value chains, and the use of impact evaluation techniques for technical and financial support programs for SMEs.

The MAP received some 235 proposals from 15 countries in this round. In its call for proposals, MAP requested innovative projects aimed at producing relevant policy lessons resulting from the application of rigorous methods of impact evaluation, and small-scale projects that provide lessons learned.

"Our principal goal is to support projects that generate knowledge about what works and what doesn’t work in order to improve access to credit and improve competitiveness. This is the fundamental basis for the quality of the technical policy dialogue, which is the key to the design of better Bank projects”, said Joan Oriol Prats Cabrera who heads the MAP program in the IDB’s Capital Markets and Financial Institutions Division. 

MAP will finance, with resources from the IDB and General Trust Fund of Spain, research projects to develop the private and financial sector, improve the business environment and help governments create policies that promote private sector competitiveness. 

The Winners

The MAP Committee selected six proposals for funding in 2011. Projects to improve the business capacity of companies will receive up to €125,000, and research projects will receive up to €15,000 each. 

The winning entries in the area of improving business capacity are: 

  • Entrepreneurial Financial Lab (EFL), a spin off from the Center for International Development at Harvard University in Boston, will implement a new credit risk analysis technology in Peru, and, in collaboration with the Center for the Implementation of Policies for Equity and Growth (CIPPEC), in Argentina. This methodology, based on proven psychometric tests, seeks to expand the capacity of financial institutions to detect productive SMEs in low levels of information and high uncertainty. 
  • High Technology Advisory Committee (CAATEC) in Costa Rica, will coordinate an impact evaluation of the financial services in the Costa Rican Association of Development Organizations (ACORDE for its initial in Spanish), as well as new and innovative non-financial services provided by the Cisco Business Development Institute.
  • Proexpansión S.R.L. in Peru will coordinate and assess the impact of a program of financial inclusion and capacity building techniques to improve the profitability of small farmers in the Cañete Valley in Peru. The coordination of this project will involve activities and agreements among 50 small farmers, a Caja Rural (Credi Chavín), a distribution company (Viñasol Agricultural Company-AVSA) and a technical training center (NGOs Valle Grande). 

‪In the area of research and technical assistance, winners are Spain’s ETEA Foundation, the Study Group in Economic Organization and Social Policies (GEOPS) of Uruguay, and the National Banking and Insurance Commission (CNBS) of Honduras. Research topics include, a study based on micro data of causes and effects of credit access and a statistical analysis of credit guarantee schemes in the region.All these projects share their innovative approach to the topic on Competitiveness and Access to Credit, as well as their ability to produce important policy lessons through rigorous evaluations. 

About MAP

MAP is a public-private initiative that provides grants for projects that seek to address the impact of the informal sector on economic activity, access to financing, the implementation of policies for productive development, and activities that improve performance and productivity of micro and small-size enterprises.