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Peru to expand access to financing for small producers at the base of the pyramid

IDB loan to Cooperativa Abaco will focus on the country’s agricultural sector

The Inter-American Development Bank (IDB) has approved a loan of $5 million to Cooperativa Abaco, whose program Abaco Rural-Cadenas offers financing based on the productive cycles of small rural producers who are organized in associations based on their value chains.

The principal impact of the Abaco Rural -Cadenas program is attributable to the involvement of strategic partners to enable access to credit for the producers, thanks to their knowledge of the geographic areas in which crops are harvested and of the needs associated with each crop’s productive cycles.

In addition to providing financing on terms favorable to the launching of the project, the Bank has collaborated with Abaco to expand the network of strategic partners, thus reinforcing the Abaco Rural-Cadenas program. As one example, through an association with Backus, Peru´s largest beer producer, Abaco has increased the number of clients growing yellow corn, a highly valued crop for beer production in the country. The portfolio of Abaco Rural-Cadenas is expected to double over the life of the loan, from $8.4 million at the end of 2015, to $18.4 million in 2019.

“Thanks to financial intermediation with partners with a deep knowledge of the agricultural sector who can reliably evaluate the producers’ ability to repay, the Abaco Rural-Cadenas program help to fill gap in Peruvian financial markets, providing access to small rural producers,” said Susan Olsen, IDB project team leader. “The model has great potential for replication at scale throughout the entire region.”

“This operation builds upon the efforts undertaken with the IDB dating back to 2008 to develop methodologies to support the growth of small producers in rural areas,” said José Claros, General Manager of Cooperativa Abaco. “This new IDB initiative demonstrates its confidence in the solidity and potential impact on financial inclusion to support rural communities at the national level.”

The project is expected to benefit approximately 10,000 small rural producers, roughly 80 percent of whom own properties of five hectares or less and who form part of the base of the economic pyramid.

About the IDB

The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source oflong-term financing for economic, social and institutional development in Latin America and the Caribbean.The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.