The EIB has committed support to micro, small and medium sized enterprises (MSMEs) in the Caribbean country of the Dominican Republic. Three local banking institutions, Banco ADEMI, Banco ADOPEM and FONDESA will benefit from EIB lines of credit totalling EUR 20 million and up to EUR 2 million in equity participations. EIB funds will be used to finance the banks’ portfolio of loans to the MSME sector.
The EIB has been instrumental in the transformation of ADEMI and ADOPEM from microfinance to banking institutions through previous lines of credit, equity and technical assistance. The new EIB facility will be extended initially to ADEMI, ADOPEM and FONDESA, a third emerging institution; however, the Bank will appraise other microfinance organisations in 2008 and 2009 in a bid to extend access to the funds.
David Crush, Head of Caribbean and Pacific Division, underlined the importance of the development of the microfinance sector in the Caribbean at the signature which took place on 11th August. “The EIB’s support to microfinance in the Dominican Republic is an example of how small finance can make a big and lasting difference. We are proud of our previous relations with ADEMI and ADOPEM and we would like to see other microfinance institutions on the same path, evolving into banks. With this in mind, we have introduced a high level of flexibility into this facility to address the specific development issues of each organisation. We look forward to opening it to other, smaller institutions in the future.”
The EIB has been involved in microfinance in the Dominican Republic for 12 years, spanning periods of social and economic unrest and helping to develop the country’s economy. The current facility comes at a time of stability in the country and as such has potential to encourage real economic development by catalysing local and international investment.
Promotion of small businesses is key to the Dominican Republic’s developing economy. 90% of the country’s workforce is employed by companies with fewer than 50 employees, 60% in enterprises with a staff of fewer than 10 people. In 2007, the three main recipients of funds from the new EIB facility supported a total of 111,000 jobs across a wide range of sectors.
Background notes:
EIB Activity in Africa, Caribbean and Pacific
The European Investment Bank (EIB) is instrumental in implementing the EU’s development and economic cooperation policy in countries outside the Union. The EIB has been a development partner in many African, Caribbean and Pacific (ACP) countries since 1963 through a series of lending mandates from the European Council. The current mandate is based on the Cotonou Agreement of June 2000.
EIB loans in the ACP regions support the alleviation of poverty and the development of sustainable economic growth. The Bank lends from two sources – EIB own resources and the Investment Facility, a revolving fund financed by the EU Member States through the European Development Fund. In 2007, the EIB invested EUR 869m in the ACP region.
The EIB has been active in the Dominican Republic since 1992. The Bank has lent over EUR 195 million to support infrastructure, financial services and small and medium sized enterprises in the country.