The $20 million loan with Green Climate Fund resources will scale up the small and medium enterprises investments in energy efficiency in the industrial sector

Paraguay will promote improved long-term productivity and energy efficiency investments by Small and Medium Enterprises (SMEs), with a $20 million loan approved by the Inter-American Development Bank (IDB).

The program, financed with resources from the Green Climate Fund, is to be executed by the Agencia Financiera de Desarrollo (AFD). It will increase access to medium and long-term finance for energy efficiency investment projects by SMEs, and reduce greenhouse gas emissions, supporting the country’s climate change goals. 

The operation is expected to have an important transformational impact in increasing access to finance and SME productivity.  Paraguayan SMEs represent 97.1 percent of businesses in the country and generate 65.2 percent of employment. However, they face difficulties accessing new technologies and introducing business models that increase their productivity, due to their low investment levels and difficulty to access credit.

While the program will benefit industrial firms investing in energy efficiency projects, the Paraguayan population will benefit from the environmental and economic impacts of the program, through reductions in firewood consumption and GHG emissions, as well as job creation.

The program also supports Paraguay’s National Energy Policy and plan to encourage the growth of energy efficiency investments.

In addition to this program, the IDB is supporting Paraguay with $3 million in technical cooperation grants geared at promoting energy efficiency investments by small and medium enterprises. The idea is to replicate the IDB’s Energy Savings Insurance strategy, which was endorsed by the Global Innovation Lab for Climate Finance as one of the most promising instruments to mobilize private sector investments in energy efficiency.

The IDB financing is for a 20-year term, with a 5.5-year grace period and a 0.75-based interest rate.