The FINANCIAL — IFC, a member of the World Bank Group, is investing $81.2 million in Banco Industrial do Brasil (BIB), a Brazilian medium-sized bank focused on providing credit to small and medium enterprises (SMEs), to help expand access to finance for a sector that is critical to Brazil’s economic growth.
The investment is particularly supporting women’s entrepreneurship, as at least 25% of the total amount of the financing will be directed to women-owned enterprises.
IFC’s financing is comprised of a 5-year $26.7 million loan on IFC’s own account, and a 2-year $34.5 syndicated loan, which lenders are: responsAbility Investments AG, Commerzbank AG, Itaú BBA International plc, and Sunstate Bank. The financing package also includes a 5-year $20 million loan through the IFC Managed Co-Lending Portfolio Program, a syndications platform that offers institutional investors the ability to passively participate in IFC’s future senior loan portfolio.
“We at BIB feel honored with our partnership with IFC, established more than 10 years ago. It demonstrates their confidence in our management and strategy,” comments Eduardo Guimarães, BIB Chief Financial Officer.
“IFC is pleased to partner with Banco Industrial do Brasil once again,” says Ramiro Garcia, IFC’s Head of Financial Institutions Group for Brazil and the Southern Cone. “Expanding access to finance for SMEs is a priority of IFC’s strategy in Brazil due to that sector’s enormous potential to spur economic growth and job creation,” he adds.
SMEs play a key role in Brazil’s economy as they represent about 99% of the country’s formal enterprises, accounting for 52% of the total formal employment and 27% of Brazil’s Gross Domestic Product (GDP). A World Bank Enterprise Survey shows that women-owned businesses represent half of the registered SMEs in the country. However, nearly half of these enterprises identify access to, or cost of, finance as a major constraint in operating their businesses, resulting in an estimated $ 45 billion potential credit need, according to IFC.
The loan is connected to the Women Entrepreneurs Opportunity Facility (WEOF), a global facility dedicated to expanding access to capital for women entrepreneurs. The WEOF was launched in 2014 as a partnership between IFC’s Banking on Women program and the Goldman Sachs 10,000 Women initiative to radically expand access to finance for women-owned businesses. Since then, it has made over $700 million in commitments to financial institutions in 14 countries to spur lending to women entrepreneurs.
“Access to capital is a major obstacle to growth for women entrepreneurs,” said Lisa MacDougall, Vice President and Global Head of Goldman Sachs 10,000 Women. “Goldman Sachs research shows that closing this gender credit gap could increase income per capita by up to 28% in Brazil by 2030. This new commitment will place more capital in the hands of women entrepreneurs in Brazil who will drive future economic growth and job creation.”
IFC’s Banking on Women program is playing a catalytic role in helping financial institutions meet the needs of women entrepreneurs in a sustainable and profitable way. The program has committed 46 investments globally, totaling around $1.4 billion, and undertaken 33 advisory projects since its launch in 2010.
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