On March 27, the Japan International Cooperation Agency (JICA) signed a loan agreement with Banco de la Producción S.A. Produbanco (Produbanco) of the Republic of Ecuador for up to US$50 million to improve access to finance for environmentally friendly industries and micro, small, and medium enterprises (MSME). The project will be financed by the International Finance Corporation (IFC). The project will be implemented as a co-financing with the International Finance Corporation (IFC).
Since Ecuador’s economic structure is dependent on the oil industry, the Ecuadorian government is working to develop and strengthen the agriculture and fisheries industries, which are the main export industries after the oil-related industries. On the other hand, the environmental impact of agriculture and fisheries is high, and the development of environmentally friendly industries is an important issue for the country. The financing gap for MSMEs in the country is large compared to neighboring countries, and they are not able to fully meet their financing needs. Limited access to financial services is one of the factors contributing to the country’s widespread poverty and low income, and the promotion of MSMEs is also an important issue.
Produbanco is a pioneer in the environmentally friendly industry sector, being the first in Ecuador to issue sustainable bonds, and provides consultation to its clients to help them reduce their environmental impact. Produbanco is also an important partner in the development of the MSME sector, providing financing products for MSMEs that emphasize dialogue with their customers. Through Produbanco, JICA’s financing for this project will be 50% for loans to environmentally friendly industrial businesses throughout Ecuador, 40% for loans to MSMEs, and 10% for loans to women-owned MSMEs that meet the 2X Challenge level (see note).
This project will improve access to finance for environmentally friendly industries and MSMEs in Ecuador, thereby contributing to the development of environmentally friendly industries and contributing to SDGs (Sustainable Development Goals) Goal 8 (both job satisfaction and economic growth), 14 (protect the wealth of the sea) and 15 (also protect the wealth of the land).
（Note: “2X Challenge: Financing for Women”: An initiative adopted by national development finance institutions, including JICA, at the G7 in June 2018. The goal was to mobilize US$3 billion by 2020 for projects that contribute to women’s economic empowerment, which was more than doubled to US$7 billion. 2X represents a goal to double the volume and impact of investments in women.
In this context, the 2X Challenge level refers to the level defined in the 2X Challenge, such as women having 51% or more of management control, being founded by women, etc.
© Source JICA