DEG and FMO are providing the Latin American Agribusiness Development Corporation (LAAD) with a US$30mn loan. This will enable the privately-owned DFI to increase its financing of small and medium-sized agribusiness companies and projects in countries that encourage trade and investment.
Though agriculture plays a vital role in Latin America, long-term capital for private investment is rarely available. This has prompted the German Investment and Development Company (DEG) and Dutch development finance institution FMO to each loan US$15mn to LAAD.
LAAD grants loans to export-oriented small and medium-sized agricultural companies in 16 countries of Latin America. “By promoting this special type of agricultural development bank, we make a contribution to the diversification of the Latin American financial sector. LAAD will be able to expand its credit volumes and offer its customers longer maturities,” said Philipp Kreutz, member of DEG’s board of management, at the signing ceremony in Cologne.
Kreutz added that the loans facilitate the financing of developmentally important projects in the Latin American agricultural sector, thereby contributing to the improvement of the food situation.
DEG and LAAD have been partners since 2001. In cooperation with FMO and the Norwegian development finance institution Norfund, DEG has already provided the institute with two long-term loans to a total amount of US$40mn. In 2006, DEG acquired 8.3% of the voting shares of LAAD.
LAAD was founded in 1970 – as a Bank of America initiative – with the aim of facilitating the access to long-term capital for agricultural companies. The shareholders include multinational agricultural enterprises and banks. LAAD financings helped create 14,000 new jobs and another 14,000 temporary jobs last year alone.
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