IFC Invests $100 Million in Produbanco to Promote Sustainable Development in Ecuador
Cali, Colombia, October 29th, 2024 – In a significant move aimed at bolstering sustainable development in Ecuador, the International Finance Corporation (IFC), a member of the World Bank Group, has announced an investment of up to US$100 million in Produbanco. This investment is designed to support projects that conserve and restore biodiversity, promote climate-smart initiatives, and enhance access to finance for women-owned small and medium-sized enterprises (SMEs).
A Pioneering Loan for Biodiversity Finance
Produbanco will utilize the proceeds from this loan to finance projects that are critical for the conservation and protection of Ecuador’s rich biodiversity. Notably, this marks the first loan in Ecuador specifically earmarked for biodiversity finance, highlighting the IFC’s commitment to addressing environmental challenges in the region. The investment consists of a direct commitment of US$50 million in a senior loan from the IFC, alongside an additional US$50 million mobilized through credit insurance from the Managed Co-Lending Portfolio Program (MCPP), which serves as IFC’s syndication platform for institutional investors.
Addressing Biodiversity Loss and Climate Vulnerability
Ecuador is renowned for its extraordinary biodiversity, yet it faces significant threats from deforestation and environmental degradation. The loss of forest cover not only jeopardizes the country’s natural resources but also impacts the agricultural sector, a vital contributor to Ecuador’s economy and exports. The need for investments that protect biodiversity and promote sustainable agricultural practices has never been more urgent.
Moreover, Ecuador’s vulnerability to climate change poses additional challenges, particularly for its coastal regions. The country ranks 118th out of 187 on the University of Notre Dame’s Global Adaptation Initiative index for climate vulnerability, underscoring the necessity for climate resilience initiatives. The IFC’s investment aims to address these pressing issues by promoting access to finance for climate-smart projects.
Stimulating Economic Growth and Supporting SMEs
Following a robust recovery from the fiscal crisis of 2020, Ecuador’s economy has recently experienced a slowdown due to various factors. To stimulate economic growth and job creation, it is crucial to expand access to finance for SMEs, which currently face a significant financing gap. By focusing on women-owned SMEs, Produbanco aims to empower a critical segment of the economy, fostering inclusive growth and innovation.
Rubén Eguiguren, CEO of Produbanco, expressed pride in the bank’s pioneering role in introducing a biodiversity-focused approach in collaboration with the IFC. “Aligned with our purpose and values, Produbanco is committed to supporting its clients, particularly small and medium-sized enterprises, in integrating project execution with biodiversity conservation and habitat restoration,” he stated.
Commitment to Sustainable Financing
Alfonso García Mora, IFC’s vice president for Europe, Latin America, and the Caribbean, praised Produbanco’s commitment to sustainable financing. He noted that the bank has demonstrated a strong dedication to expanding access to SMEs and promoting initiatives related to climate and the blue economy. “This investment marks the extension of Produbanco’s sustainability strategy into specifically supporting projects that prevent biodiversity loss,” he said, emphasizing the importance of stimulating economic activity while protecting Ecuador’s natural resources.
Attracting Institutional Investors and Providing Advisory Services
The IFC’s involvement is expected to attract additional institutional investors to the project, thereby mobilizing further resources for sustainable development in Ecuador. In addition to financial support, the IFC will provide advisory services to enhance Produbanco’s understanding of biodiversity finance and climate risks, ensuring that the bank is well-equipped to manage and mitigate these challenges.
Context of the Announcement
The announcement of this landmark investment was made during the COP16 activities held in Cali, Colombia, from October 21 through November 1, 2024. This timing underscores the global focus on climate change and sustainable development, aligning with international efforts to address environmental issues.
About Produbanco
Produbanco, part of Grupo Promerica, operates across nine countries in Central and South America. With a mission to create sustainable value, Produbanco has a successful track record spanning 45 years, earning numerous accolades for its commitment to excellence in financial services. The bank has been recognized as the Best Financial Institution for Women-Led SMEs in 2023 and has consistently ranked as the Best Bank in Ecuador from 2017 to 2024. For more information, visit Produbanco’s website.
Conclusion
The IFC’s investment in Produbanco represents a significant step towards promoting sustainable development in Ecuador. By focusing on biodiversity finance and supporting women-owned SMEs, this initiative not only addresses pressing environmental challenges but also fosters economic growth and resilience in a country rich in natural resources. As Ecuador navigates the complexities of climate change and economic recovery, partnerships like this will be crucial in building a sustainable future.