The Inter-American Development Bank (IDB) has approved a USD 1 billion loan to the Brazilian Development Bank (BNDES), the country’s federal public bank for development. The 20 year loan will go towards financing long-term credit to microenterprises and small and medium-size businesses . It is the third loan of the same size by the IDB made from a USD 3 billion conditional credit line launched in 2004 for BNDES.
The BNDES has operated in the microcredit sector since 1996, and in 2004 the Brazilian government established a national microcredit policy in an attempt to expand financial access to formal and informal microentrepreneurs in the country. The policy instituted a Microcredit and Microfinances Inter-Ministry Team, which partnered the BNDES with several government ministries and the Central Bank of Brazil towards increasing microfinance.
The IDB’s USD 3 billion credit line with the BNDS was a part of this new policy, and will involve more than 80 Brazilian banks with a projected 30,000 businesses benefitting from the latest loan.
“Microenterprises and small businesses have always been a priority for the IDB. At this time, given their capacity to generate jobs and boost competitiveness in supply chains, these businesses are crucial for strengthening exports and the economy as a whole,” said Jose Luis Lupo, the IDB Representative in Brazil.
The BNDES was established in 1952 and is associated with Brazil’s Ministry of Development, Industry and Foreign Trade. It supports investments in the agricultural, commerce, SME and service industries. The bank also supports social investments aimed at education, health, family agriculture, basic sanitation and mass transportation. The bank reported USD 198.6 million in total assets in 2007 and in 2006 financed BRL 50 million (USD 23.5 million) in 16 microcredit projects with several Brazilian banks. For more information on the BNDES’ activities, please see this MicroCapital story.
The Inter-American Development Bank was founded in 1959, and is a multilateral institution with 47 member countries. Over the past year, the bank has provided close to USD 10 billion in loans and grants, and holds over600 projects in its current portfolio. For more information about the IDB’s activities in Latin America, please refer to this article.
By Yrenilsa Lopez, Research Assistant
ADDITIONAL SOURCES:
BNDES Financial Statements 2007
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