Loan for $50 million will benefit up to 25,000 microentrepreneurs, particularly women
Ecuador will expand access to microcredit, particularly among low-income women, through a $50 million loan approved by the Inter-American Development Bank (IDB) aimed at increasing employment opportunities and reducing poverty.
The National Program for Finance, Entrepreneurship, and Economic Solidarity (PNFPEES) will be the executing agency for the program, which will contribute to its strategy for fostering economic inclusion with particular emphasis on financing for women entrepreneurs.
"We expect that by 2015 the program will provide loans to approximately 25,000 microentrepreneurs," said Rosa Matilde Guerrero, IDB specialist."We also anticipate that these credits will lead to the creation of at least 5,000 new jobs over the next four years."
The program is intended to result in an 60 percent increase in credit available in districts with high levels of poverty, and at least 54 percent of the credit operations will benefit women microentrepreneurs.
Ecuador has seen a significant expansion in microfinance over the past eight years.The total loan portfolio of microfinance institutions has increased from $73.2 million to nearly $2,5 billion, an average annual growth of 405 percent.In addition, the total number of entrepreneurs served by this sector has expanded at an annual average of 232 percent over the same period, rising from about 60,000 to more than one million customers.
Nevertheless, says the IDB’s Guerrero, the sector has still has much room for growth, as evidenced by an insufficient supply of microfinance products, especially credit.This is due to the high geographic concentration of credit for microenterprises, high operating costs, and difficulty in meeting collateral requirements.
The PNFPEES was created in 2009 to provide loans to financial services organizations in high-poverty areas that have limited access to credit. The IDB loan will help meet this goal.
The IDB loan is for a term of 25 years with a grace period of four years and an interest rate based on LIBOR.
- Paul Constance