Ecuador to Expand Financing and Investment for Amazonian Bio-Businesses, with IDB Support

The Inter-American Development Bank (IDB) has approved a $16 million loan to expand access to credit so bio-businesses in the Ecuadorian Amazon can grow and diversify, boosting the region's socioeconomic development.

The Bio-business Financing for a Sustainable Amazon (BASE) program, which has been approved by the IDB Board of Executive Directors, is the first global credit operation for Amazonian bio-businesses in the Andean region under Amazonia Forever - a holistic, regional umbrella program launched in June 2023 to accelerate sustainable development in the Amazon.

The BASE program will benefit approximately 1,800 bio-businesses in the solidarity economy, primarily enterprises run or owned by women and indigenous communities. Of the beneficiary companies, 80% are expected to be micro-enterprises and small producers, 15% associations and cooperatives, and 5% mid-sized or anchor companies.

"This program will focus on offering loans to bio-businesses in the Ecuadorian Amazon, with the underlying idea that sustainable access to financing is key to overcoming other challenges that these businesses face, like limited access to technology and training and a lack of structured value chains," said Anderson Caputo, chief of the IDB's Connectivity, Markets, and Finance Division.

The program has three components. The first will center on financing bio-businesses by channeling resources through the National Corporation for Popular and Solidarity Finance (CONAFIPS) to savings and loan cooperatives, which will then offer loans with cost and repayment terms that meet the needs of this business segment. The second component aims to establish a fund- be managed by CONAFIPS- to mitigate risks and mobilize additional resources. Finally, the third component will focus on strengthening the institutional capacity of CONAFIPS and savings and loan cooperatives

CONAFIPS, as a founding member of the Green Coalition of Development Banks in the Amazon, will form the Bioeconomy Financing Task Force with the support of the IDB to coordinate actions and build consensus among multilateral, bilateral, and other institutions working on bioeconomy financing projects in Ecuador.

The program's first component will be financed by an $8 million investment loan from the IDB's ordinary capital and $8 million from the Green Climate Fund's Amazon Bioeconomy Fund. The IDB loan has a 25-year repayment term, a 5.5-year grace period, and an interest rate based on the Secured Overnight Financing Rate (SOFR), while the Green Climate Fund's financing has a 20-year repayment term, a 5-year grace period, and an interest rate based on the Secured Overnight Financing Rate (SOFR). The two additional components-for risk mitigation and capacity strengthening-will be financed with Green Climate Fund resources.