Guatemala City, October 10, 2020—More than 1000 micro, small, and medium enterprises (MSMEs) in Guatemala will have improved access to finance, as a result of a partnership between IFC, a member of the World Bank Group, and Banco Agromercantil, BAM, that aims to address a $14.2-billion MSME finance gap in the country.
With the unprecedented challenges of an ongoing pandemic, this partnership will allow smaller businesses to continue operations and preserve jobs, thereby contributing to the resilience of financial markets and accelerating the nation’s post pandemic recovery.
IFC is providing a $20 million loan to Banco Agromercantil, BAM, a member of Grupo Bancolombia, as part of the Working Capital Solutions Program from IFC’s global COVID-19 response.
IFC will be mobilizing another $20 million from the Eco-Business Fund in Latin America, managed by Finance in Motion.
“IFC’s timely support will help us strengthen our position in the SME segment and allow us to expand financing to local companies, thus creating jobs.
We are keen to work toward a defined strategy that will help preserve the market’s ability to foster economic recovery in Guatemala,” said Bolaños Coloma, Executive Director and CEO of Banco Agromercantil, BAM.
MSMEs are a key driver of the national economy, providing an equivalent to 3.1 percent of gross domestic product (GDP). Yet, about 41 percent of MSMEs are credit-constrained and 25 percent of them perceive financing to be a major or severe deterrent to growth, according to the country’s MSME Finance Forum.
The situation may further deteriorate in the context of the COVID-19 crisis, with Guatemala’s GDP likely to contract by 3 percent in 2020.
“With the ongoing pandemic, it is essential to bolster Guatemala’s financial sector,” said Sanaa Abouzaid, IFC Country Manager for Central America.
“IFC’s COVID-19 fast track facility will help keep smaller businesses solvent. This will save jobs, companies, and support Guatemala’s sustainable and resilient recovery process,” Abouzaid added.
BAM has been a client of IFC since 2019. The loan to BAM is aligned with IFC’s strategy in Guatemala, which focuses on supporting economic growth and securing opportunities for the most underserved segments of society.
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