Through credit facilities and financial intermediation, CABEI contributes to the resilience of MSMEs in the face of the COVID-19 pandemic
With the development of the Financial Sector Support Facility for Financing MSMEs, more than 60,000 jobs have been protected at the regional level.
Tegucigalpa, January 20, 2022.- The measures taken in the different countries to prevent the spread of COVID-19 had adverse effects on their economies, reflected in lower sales, business closures, layoffs, and loss of income in various sectors, such as micro, small, and medium-sized enterprises (MSMEs).
In response to their needs and aware that this sector represents a strong driving force in the regional economy, in 2020 the Central American Bank for Economic Integration (CABEI) structured the "COVID-19 Emergency Support and Preparedness Program and its Economic Reactivation" with the purpose of boosting the countries' economies and included the "Facility to Support the Financial Sector to Finance MSMEs" as one of its components.
"It is estimated that there are at least 1.3 million MSMEs in the region, which contribute close to 33% of the Gross Domestic Product (GDP), generate more than 40% of jobs and constitute 85% of the productive base, which is why for us at CABEI it is vitally important to protect them, which translates into employment and well-being for the inhabitants of each country," said CABEI Executive President Dante Mossi.
Through the Facility, made available to CABEI's allied intermediary financial institutions in all countries, more than 60,000 jobs have been protected, of which 6,588 are re-hires of people who had been laid off at the beginning of the pandemic. Of the total number of beneficiaries, 79% are men and 21% are women.
By the end of December 2021, the Bank had disbursed US$405.9 million to sectors such as trade, hotels and tourism, agri-food chain production, renewable energy, energy efficiency, cleaner production, construction and infrastructure, creative industries, information and communication technologies, service providers, transportation and storage, manufacturing, and other affected sectors.
Most of the loans granted have been for small enterprises, followed by micro and medium-size companies, under financing conditions that vary according to the type of enterprise, with a maximum amount of US$5,000,000.
In addition, most of the resources channeled by intermediary financial institutions to MSMEs are oriented to working capital and payment of obligations, followed by debt consolidation or readjustment and the expansion or modification of business models, totaling US$363.5 million of the total US$405.9 million placed.
The Guarantee Fund is another component of this Facility, which provides complementary support to those companies that do not have 100% collateral at the time of applying for a loan, covering up to 75% of the financing amount.
"This Fund has been really successful and key to the economic reactivation of the MSME sector, since 81% of the microenterprises that have obtained a loan with resources from the Facility have benefited from a guarantee, and today US$34.8 million have been committed for this purpose," explained Mossi.
This program for the benefit of MSMEs is granted with resources from CABEI, the Government of Germany through KfW, the European Union and TaiwanICDF, the International Development Finance Corporation DFC and UN Women. CABEI, as the region's multilateral bank, will continue its mission to support Central America in its efforts to achieve higher levels of economic and social development.