Enrique Garca, president and CEO of the Andean Development Corporation (CAF), and Juan Carlos Durn, president of Fondo Nacional de Garantas (FNG), have signed a risk participation agreement for US$10mn. Under the agreement, CAF will partially refinance guarantees issued by FNG in favor of Colombian banks, with a view to mobilising credit for working capital in Colombian SMEs.
The operation aligns with the corporation’s mission and strategic objectives because it reinforces the private sector as an actor in sustainable development, and strengthens Colombian competitiveness and productivity, claims CAF.
The operation provides US$80mn for refinancing of loans which will benefit about 5,800 SMEs, achieving an important multiplying effect. The agreement is a valuable precedent in the Andean region as the first operation of this nature that either FNG or the corporation has carried out.
Small and medium-sized enterprises are a very important part of the industrial fabric and make a significant contribution to the generation of employment, stimulating sustainable economic development. SMEs also offer important opportunities for accessing international markets. However, they face a series of internal and external restrictions, especially difficulties in gaining access to credit. Both CAF and FNG are making constant efforts to overcome these limitations and the financing operation is a joint step in that direction.
FNG claims that between January 1 and August 31, 2005 the institution guaranteed loans for Ps1.5tn. This year’s target is Ps2.4tn, which should benefit 160,000 users.