WASHINGTON, (The Southern African Times) – The International Finance Corporation (IFC), member of the World Bank Group, announced a green loan of US$80 million to Latin American Agribusiness Development Corporation (LAAD), a private investment and development company oriented to finance agribusiness projects in Latin America and the Caribbean, to support Small and Medium Enterprises (SMEs) in the adoption and improvement of water use efficiency projects, sustainable practices and renewable energy generation.
IFC’s financing package to LAAD includes a seven-year US$50 million loan from IFC’s own account and a seven-year $30 million loan mobilized from Symbiotics S.A. The loan will help LAAD to improve access to finance to SMEs and reinforce LAC’s agricultural supply chains, which have been weakened in the context of COVID-19. Farmers are often the smaller players in a value-added chain that includes larger manufacturers, distributors, and retailers of crop inputs. Improving access to finance for agribusiness SMEs is an important way to address bottlenecks to the sector’s growth.
Martin Spicer, director of IFC in Latin America and the Caribbean, said: “The COVID-19 pandemic has put huge stress on the entire agribusiness supply chain. While global food stocks remain sufficient, local risks to food security have increased on the back of supply chain disruptions and rising prices. With this investment, IFC is looking to support and enhance its on-lending activities toward climate-smart assets to a category of borrowers historically underserved by the banking sector. We´re happy to be a part of LAAD´s efforts to improve the lives and economic conditions of Latin American farmers”.
Gustavo Martinez, LAAD’s Chief Executive Officer, said: “Latin America is a big player in the food supply chain and despite the challenges imposed by the pandemic, its enthusiasm and efforts to continue providing its share to feed some of the world population has not decreased. As the population grows, so will food demand. LAAD has been committed to adopting and adapting climate-smart agriculture practices to assist agribusinesses and farmers in producing more sustainable agriculture. This loan focused on green finance is evidence of our commitment.”
This investment follows IFC’s Green Framework and is the first green loan provided to a Non-Bank Financial Institution (NBFI) for Climate-Smart Agriculture in the world. The use of proceeds will be exclusively focused on financing eligible green agribusinesses, the promotion of climate-resilient practices and boosting an inclusive economic recovery.
IFC has made agribusiness a priority because of its potential for broad development impact and especially strong role in poverty reduction. We combine investments and advisory services to help the sector address higher demand and escalating food prices in an environmentally sustainable and socially inclusive way. IFC invests across the agribusiness supply chain—from farm to retail—to help boost production, increase liquidity, improve logistics and distribution, and expand access to credit for small farmers.