MICROCAPITAL BRIEF: European Investment Bank (EIB) Lending $5.6m to FONDESA, BANFONDESA to Increase Energy Efficiency Finance for Schools, MSMEs, Homes in the Dominican Republic

The European Investment Bank (EIB), the long-term lending institution of the EU, recently pledged to loan a total of EUR 5 million (USD 5.6 million) to two related entities in the Dominican Republic in order to fund loans for renewable energy equipment and energy efficiency improvements. Fondo para el Desarollo (FONDESA), an NGO focused on educational finance, will borrow EUR 1.4 million (USD 1.6 million) to fund energy efficiency upgrades for schools and universities. Banco de Ahorro y Credito Fondesa (BANFONDESA), a microfinance unit of FONDESA, will borrow EUR 3.6 million (USD 4 million) to fund similar upgrades for microenterprises, small and medium-sized enterprises (SMEs), and households with low and medium incomes.

Cristian Reyna, the President of BANFONDESA, said “this agreement with the EIB allows us to differentiate ourselves in the market and to offer added value to a large number of clients (families, SMEs and agro-producers). Through this financing programme, we expect to reach around 1,600 families and more than 200 SMEs and agro-producers in the Dominican Republic, reiterating our social commitment to contribute to preserving the climate.”

FONDESA is a nonprofit institution that was established in 1982 in the Dominican Republic. It was active in microlending to rural and agricultural enterprises with the aim of increasing incomes and job opportunities until 2015, when it shifted to providing loans and technical assistance to students and educational institutions. That same year, it founded savings and credit bank BANFONDESA to take on the work of providing to rural families as well as enterprises. BANFONDESA has a network of 59 branches as of 2019. As of December 2018, the institutions reported combined assets of DOP 5.35 billion (USD 105 million), a loan portfolio of DOP 4.26 billion (USD 83 million) and deposits of DOP 1.48 billion (USD 29 million).

Created in 1958, EIB supports projects in EU member states, likely future member states and other EU partner countries, principally in the area of SMEs. As of 2018, EIB reported total assets of EUR 556 billion (USD 621 billion) and a loan portfolio of EUR 451 billion (USD 504 billion).

By Anna Gravois, Research Associate

Sources and Additional Resources

EIB press release
https://www.eib.org/en/press/all/2019-202-the-eib-provides-finance-to-banfondesa-and-fondesa-for-the-banks-to-provide-green-loans-to-micro-and-small-companies-in-the-dominican-republic

EIB homepage
https://www.eib.org/

BANFONDESA financials
https://banfondesa.com.do/nosotros/estados-financieros-interinos/

FONDESA annual report for 2018
https://www.fondesa.org/wp-content/uploads/2019/06/AF-Memoria-FONDESA-2018-NY-FINAL.pdf

FONDESA homepage
http://www.fondesa.org

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